Wisconsin Non-Compete Agreement

Introduction

Key Things to Know

1. 1

   A non-compete restricts a former employee from competing with the business for a set time and territory. Wisconsin enforces one under Statutes Section 103.465 only if it passes a five-factor reasonableness test, and an unreasonable covenant fails in full.

2. 2

   Wisconsin enforces non-competes under Wisconsin Statutes Section 103.465: a post-employment covenant within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer.

3. 3

   Wisconsin has no salary or income threshold for a non-compete. An employee at any pay level can be bound if the covenant is reasonable. Do not rely on another state's wage floor when the worker is in Wisconsin.

4. 4

   Courts in Wisconsin apply a five-factor reasonableness test under Section 103.465: the restraint must protect a legitimate business interest, be reasonable in time, be reasonable in territory, not be harsh or oppressive to the employee, and not be contrary to public policy.

5. 5

   Courts in Wisconsin generally hold that continued at-will employment is adequate consideration for a non-compete an existing employee signs (Runzheimer International v. Friedlen), because the employer forbears its right to terminate, though firing the employee soon after signing can raise defenses.

6. 6

   Wisconsin does not blue-pencil. Section 103.465 makes an unreasonable restraint void even as to any part that would be reasonable, so courts will not narrow an overbroad covenant; under Star Direct v. Dal Pra a separate, textually divisible reasonable covenant can still be enforced.

7. 7

   Because an overbroad non-compete fails entirely, many Wisconsin employers also use a confidentiality or non-disclosure agreement under the Wisconsin Uniform Trade Secrets Act (Wisconsin Statutes Section 134.90) to protect trade secrets and customer data.

Wisconsin Requirements for Non-Compete Agreement

• Employee Non-Competes Are Enforceable

  In Wisconsin a reasonable employee non-compete is enforceable. Wisconsin Statutes Section 103.465 makes a post-employment covenant not to compete, within a specified territory and during a specified time, lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer. This is the statutory standard for the whole state.

• Five-Factor Reasonableness Test

  Courts in Wisconsin apply a five-factor test under Section 103.465: the restraint must be necessary to protect a legitimate business interest, provide a reasonable time limit, provide a reasonable territorial limit, not be harsh or oppressive as to the employee, and not be contrary to public policy. A covenant tied to the employer's actual customers, confidential information, or the area where the employee worked is more likely to satisfy it.

• No Income Threshold

  Wisconsin has no salary or income threshold that makes a non-compete valid. Section 103.465 turns on whether the restraint is reasonably necessary for the protection of the employer, not on the employee's pay, so an employee at any level can be bound by a reasonable covenant. Do not substitute another state's wage floor for a Wisconsin worker.

• No Blue-Pencil (All or Nothing)

  Wisconsin does not blue-pencil. Section 103.465 provides that a covenant imposing an unreasonable restraint is illegal, void, and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint. A court will not narrow or rewrite an overbroad clause to save it, so a single unreasonable term can void the whole covenant. Drafting each restriction narrowly matters in Wisconsin.

• Divisible Covenants Can Survive

  Under Star Direct, Inc. v. Dal Pra (2009 WI 76), a court in Wisconsin may enforce a separate, textually divisible covenant that is itself reasonable even when another covenant in the same agreement is void, but only if the covenants can be read and enforced independently. Drafting the non-compete, non-solicitation, and confidentiality terms as standalone covenants helps a reasonable one survive if another fails.

• Consideration for the Covenant

  Courts in Wisconsin generally hold that continued at-will employment is adequate consideration for a non-compete an existing employee signs (Runzheimer International v. Friedlen, 2015 WI 45), because the employer forbears its right to terminate. The court cautioned that firing the employee shortly after signing can support a fraudulent-inducement or good-faith-and-fair-dealing defense, so timing and good faith still matter.

• No Occupation Carve-Out

  Wisconsin's statute has no occupation-specific carve-out. Physicians, broadcasters, and other workers are judged under the same Section 103.465 reasonableness standard as everyone else, with no separate statutory exemption or special rule. The enforceability of any Wisconsin non-compete turns on the five-factor reasonableness test, not the employee's profession.

• Protect Trade Secrets With an NDA Too

  Because an overbroad non-compete fails entirely in Wisconsin, many employers also use a confidentiality or non-disclosure agreement under the Wisconsin Uniform Trade Secrets Act (Wisconsin Statutes Section 134.90). It protects trade secrets and customer data without a court testing the reasonableness of a restraint, and it can back up a non-compete that a court declines to enforce.