SB566: Bill Text

MIM:cjs

2023 - 2024 LEGISLATURE

2023 Senate BILL 566

October 23, 2023 - Introduced by Senators Larson, Agard, Carpenter, Smith, Spreitzer, Taylor and Wirch, cosponsored by Representatives J. Anderson, C. Anderson, Bare, Cabrera, Conley, Considine, Emerson, Goyke, Haywood, Joers, Ohnstad, Ortiz-Velez, Palmeri, Ratcliff, Shankland, Shelton, Snodgrass, Stubbs, Subeck and Sinicki. Referred to Committee on Labor, Regulatory Reform, Veterans and Military Affairs.

SB566,1,3 An Act to renumber and amend 103.465; to amend 103.465 (title); and to create 103.465 (1m) and 103.465 (3) and (4) of the statutes; relating to: covenants not to compete in employment contracts.

Analysis by the Legislative Reference Bureau

Under current law, a restrictive covenant in an employment contract that prohibits an assistant, servant, or agent from competing with his or her employer or principal during the term of the employment or agency, or after the termination of the employment or agency, within a specified territory and during a specified time is lawful and enforceable if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Such a covenant that imposes an unreasonable restraint is illegal, void, and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint.

This bill makes most such covenants illegal, void, and unenforceable after the termination of employment or agency. A nondisclosure agreement related to personal information of the the employer or principal or the customers of the employer or principal or a restrictive covenant prohibiting the unauthorized use by a former employee or agent of a customer list or intellectual property owned or licensed by the employer or principal is not illegal, void, or unenforceable under the bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB566,1 Section 1. 103.465 (title) of the statutes is amended to read:

SB566,2,3 103.465 (title) Restrictive covenants Covenants not to compete in employment contracts.

SB566,2 Section 2. 103.465 of the statutes is renumbered 103.465 (2) and amended to read:

SB566,2,14 103.465 (2) Covenants in employment contracts not to compete while employed. A covenant by an assistant, servant, employee, or agent not to compete with his or her employer or principal during the term of the employment or agency, or after the termination of that employment or agency, 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 or principal. Any covenant, described in this section, imposing subsection, that imposes an unreasonable restraint on trade is illegal, void , and unenforceable even as to any part of the covenant or performance that would be a reasonable restraint on trade.

SB566,3 Section 3. 103.465 (1m) of the statutes is created to read:

SB566,2,16 103.465 (1m) Definitions. In this section:

SB566,2,19 (a) “Copyright” means a work of authorship, including writings, music, and works of art, that has been tangibly expressed and that is protected by the federal Copyright Act, 17 USC 101 to 1332, or common law.

SB566,2,22 (b) “Customer list” means any information about a customer that is not available to a competitor of an employer or principal, including personal information and past purchases of goods or services from the employer or principal.

SB566,2,24 (c) “Intellectual property” means copyrights, patents, trademarks, trade secrets, and any other type of commonly recognized intellectual property.

SB566,3,3 (d) “Nondisclosure agreement” means a written agreement or provision that prohibits the disclosure of personal information about an employer or principal or a customer of an employer or principal.

SB566,3,4 (e) “Patent” means a right to an invention protected under 35 USC 251 to 329.

SB566,3,5 (f) “Trade secret” has the meaning given in s. 134.90 (1) (c).

SB566,4 Section 4. 103.465 (3) and (4) of the statutes are created to read:

SB566,3,15 103.465 (3) Covenants in employment contracts not to compete after termination of employment or agency. A covenant by an assistant, servant, employee, or agent not to compete with his or her employer or principal after the termination of the employment or agency imposes an unreasonable restraint on trade and is illegal, void, and unenforceable even as to any part of the covenant that would be a reasonable restraint on trade. This subsection does not apply to a nondisclosure agreement or to a covenant not to compete that is limited to prohibiting or restricting the unauthorized use of a customer list or intellectual property owned or licensed by the employer or principal.

SB566,3,22 (4) Notice posted. Each employer and principal shall post, in one or more conspicuous places where notices to assistants, servants, employees, and agents are customarily posted, and in a conspicuous place on the employer's or principal's website, if the employer or principal maintains a website, a notice in a form approved by the department that explains that covenants not to compete after termination of employment or agency, subject to the exceptions in sub. (3), are an unreasonable restraint on trade and are illegal, void, and unenforceable.

SB566,5 Section 5. Initial applicability.

SB566,4,3 (1) Covenant not to compete in employment contracts. This act first applies to a covenant not to compete that is entered into, extended, modified, or renewed on the effective date of this subsection.

SB566,4,4 (End)