103.465 Annotation
A clause that prohibited a former employee from contacting “past customers," defined as those who purchased from the former employer within one year prior to the employee's termination, was reasonable and enforceable. Star Direct, Inc. v. Eugene Dal Pra,
2009 WI 76,
319 Wis. 2d 274,
767 N.W.2d 898,
07-0617.
103.465 Annotation
A clause that prohibited a former employee from engaging “in any business which is substantially similar to or in competition with" the former employer was unreasonable and unenforceable. As the disjunctive “or" plainly separates a substantially similar business from one “in competition with" the employer, the only reasonable reading, giving meaning to every phrase, is that it attempts to bar the former employee not only from competitive enterprises, but also from engaging in a business that is not competitive. Star Direct, Inc. v. Eugene Dal Pra,
2009 WI 76,
319 Wis. 2d 274,
767 N.W.2d 898,
07-0617.
103.465 Annotation
The legislative history and text of this section do not eliminate or modify the common law rules on divisibility. In the context of multiple non-compete provisions in a contract, indivisibility will usually be seen by an intertwining, or inextricable link, between the various provisions via a textual reference such that one provision cannot be read or interpreted without reference to the other. Restrictive covenants are divisible when the contract contains different covenants supporting different interests that can be independently read and enforced. Overlap, even substantial overlap, between clauses is not necessarily determinative. Star Direct, Inc. v. Eugene Dal Pra,
2009 WI 76,
319 Wis. 2d 274,
767 N.W.2d 898,
07-0617.
103.465 Annotation
The common law's rule of reason, not this section, governed the validity of the covenant not to compete contained in the stock option agreement in this case. This section has been applied in circumstances where the restrictive covenant is contained in a document other than the employment agreement, but the employer nonetheless enjoys a bargaining advantage over employees. Here the employer had no bargaining advantage, there were no consequences attached to a refusal to accept the agreement, and the employee received the benefit of his bargain. The Selmer Company v. Rinn,
2010 WI App 106,
328 Wis. 2d 263,
789 N.W.2d 621,
09-1353.
103.465 Annotation
An employer's forbearance in exercising its right to terminate an at-will employee constitutes lawful consideration for a restrictive covenant. Although, theoretically, an employer could terminate an employee's employment shortly after having the employee sign a restrictive covenant, the employee would then be protected by other contract formation principles such as fraudulent inducement or good faith and fair dealing, so that the restrictive covenant could not be enforced. Runzheimer International, Ltd. v. Friedlen,
2015 WI 45,
362 Wis. 2d 100,
862 N.W.2d 879,
13-1392.
103.465 Annotation
Case law has made clear that this section applies to any covenant between an employer and an employee that seeks to restrain competition or operates as a trade restraint. It is no leap of logic to conclude that a provision aimed at restricting a former employee from systematically poaching the valuable and talented employees of a former employer is a restraint of trade. Regardless of how it is labeled, such a provision must comply with this section. The Manitowoc Company, Inc. v. Lanning,
2016 WI App 72, ___ Wis. 2d ___, ___ N.W.2d ___,
15-1530.
103.465 Annotation
An overbroad provision is not reasonable and enforceable simply because the employer enforces it in a reasonable manner. The employer seeking to enforce a provision has the burden to prove that the provision is necessary for its protection, pointing to a protectable interest justifying the restriction. The provision in this case prohibited direct or indirect solicitation, inducement, or encouragement by its former employee of any of the employer's employees to either work for a competitor, supplier, or customer, or to terminate his or her own employment for any reason including retirement, thus requiring the employer to prove that it had a protectable interest in preventing its former employee from encouraging any other employee to leave for any reason, or to take any job with any competitor, supplier, or customer. The Manitowoc Company, Inc. v. Lanning,
2016 WI App 72, ___ Wis. 2d ___, ___ N.W.2d ___,
15-1530.
103.465 Annotation
This section does not apply to franchisees under franchise agreements. H&R Block Eastern Tax Services, Inc. v. Vorpahl,
255 F. Supp. 2d 930 (2003).
103.465 AnnotationA restrictive covenant was not overbroad. Brunswick Corp. v. Jones,
784 F.2d 271 (1986).
103.465 Annotation
An agreement to accept an education loan funded by certain employers on the condition that the recipient repay it in kind by working for a contributor or repaying it in cash if the recipient accepts employment with a non-contributor was not a covenant subject to s. 103.465. Milwaukee Apprentice Training Committee v. Howell,
67 F.3d 1333 (1995).
103.465 Annotation
An obligation to repay an employer's costs for training an employee if the employee did not remain employed for a specified time was not a covenant not to compete under this section. This section applies only to the extent a consequence is linked to working for the employer's competition. Heder v. City of Two Rivers,
295 F.3d 777 (2002).
103.465 Annotation
The public policy underlying this section is that Wisconsin law favors the mobility of workers. Compliance with a contractual obligation to return property already belonging to an employer does not violate public policy concerning employee mobility. Genzyme Corporation v. Bishop,
463 F. Supp. 94 (2006).
103.465 Annotation
Nondisclosure agreements at issue in this case were not covered by this section. Even if a nondisclosure provision restricts disclosure of trade secret information, if it also restricts disclosure of information that is not a trade secret, this section requires a time limitation on the provision. Friemuth v. Fiskars Brands, Inc.
681 F. Supp. 2d 985 (2010).
103.465 Annotation
Drafting and enforcing restrictive covenants not to compete. Richards, 55 MLR 241.
103.465 Annotation
Drafting enforceable covenants not to compete. Nettesheim. WBB Oct. 1986.
103.465 Annotation
Can Employers Force Employees to Sign Noncompete Agreements as a Condition of Their Employment? Cohen & Stuart. Wis. Law. May 1999.
103.465 Annotation
Protecting Business Interests With Covenants Not to Compete. Mc Neilly & Krzoska. Wis. Law. May 2006.
103.465 Annotation
Star Direct Takes Restrictive Covenant Law in a New Direction. Backer. Wis. Law. Nov. 2009.
103.503
103.503
Substance abuse prevention on public works and public utility projects. 103.503(1)(a)
(a) “Accident" means an incident caused, contributed to, or otherwise involving an employee that resulted or could have resulted in death, personal injury, or property damage and that occurred while the employee was performing the work described in s.
66.0903 (4), 2013 stats., or
s. 16.856 (2m) on a project of public works or while the employee was performing work on a public utility project.
103.503(1)(c)
(c) “Contracting agency" means a local governmental unit, as defined in
s. 66.0903 (1) (d), or a state agency, as defined in
s. 16.856 (1) (h), that has contracted for the performance of work on a project of public works or a public utility that has contracted for the performance of work on a public utility project.
103.503(1)(d)
(d) “Drug" means any controlled substance, as defined in
s. 961.01 (4), or controlled substance analog, as defined in
s. 961.01 (4m), for which testing is required by an employer under its substance abuse prevention program under this section.
103.503(1)(e)
(e) “Employee" means a laborer, worker, mechanic, or truck driver who performs the work described in s.
66.0903 (4), 2013 stats., or
s. 16.856 (2m) on a project of public works or on a public utility project.
103.503(1)(f)
(f) “Employer" means a contractor, subcontractor, or agent of a contractor or subcontractor that performs work on a project of public works or on a public utility project.
103.503(1)(g)
(g) “Project of public works" means a project of public works that is subject to s.
16.856 or that would be subject to s.
66.0903, 2013 stats., if the project were erected, constructed, repaired, remodeled, or demolished prior to January 1, 2017.
103.503(1)(h)
(h) “Public utility" has the meaning given in
s. 196.01 (5) and includes a telecommunications carrier, as defined in
s. 196.01 (8m), an alternative telecommunications utility, as defined in
s. 196.01 (1d), or, for purposes of
subs. (2) and
(4), a cooperative association organized under
ch. 185 for the purpose of producing or furnishing heat, light, power, or water to its members only.
103.503(1)(i)
(i) “Public utility project" means a project erected, constructed, repaired, remodeled, or demolished for a public utility on a public right-of-way. For purposes of
sub. (3), “public utility project" does not include a project erected, constructed, repaired, remodeled, or demolished for a cooperative association organized under
ch. 185 for the purpose of producing or furnishing heat, light, power, or water to its members only.
103.503(2)
(2) Substance abuse prohibited. No employee may use, possess, attempt to possess, distribute, deliver, or be under the influence of a drug, or use or be under the influence of alcohol, while performing the work described in s.
66.0903 (4), 2013 stats., or
s. 16.856 (2m) on a project of public works or while performing work on a public utility project. An employee is considered to be under the influence of alcohol for purposes of this subsection if he or she has an alcohol concentration that is equal to or greater than the amount specified in
s. 885.235 (1g) (d).
103.503(3)
(3) Substance abuse prevention programs required. 103.503(3)(a)(a) Before an employer may commence work on a project of public works or a public utility project, the employer shall have in place a written program for the prevention of substance abuse among its employees. At a minimum, the program shall include all of the following:
103.503(3)(a)2.
2. A requirement that employees performing the work described in s.
66.0903 (4), 2013 stats., or
s. 16.856 (2m) on a project of public works or performing work on a public utility project submit to random, reasonable suspicion, and post-accident drug and alcohol testing and to drug and alcohol testing before commencing work on the project, except that testing of an employee before commencing work on a project is not required if the employee has been participating in a random testing program during the 90 days preceding the date on which the employee commenced work on the project.
103.503(3)(a)3.
3. A procedure for notifying an employee who violates
sub. (2), who tests positive for the presence of a drug in his or her system, or who refuses to submit to drug or alcohol testing as required under the program that the employee may not perform work on a project of public works or a public utility project until he or she meets the conditions specified in
sub. (4) (b) 1. and
2.
103.503(3)(b)
(b) Each employer shall be responsible for the cost of developing, implementing, and enforcing its substance abuse prevention program, including the cost of drug and alcohol testing of its employees under the program. The contracting agency is not responsible for that cost, for the cost of any medical review of a test result, or for any rehabilitation provided to an employee.
103.503(4)(a)(a) No employer may permit an employee who violates
sub. (2), who tests positive for the presence of a drug in his or her system, or who refuses to submit to drug or alcohol testing as required under the employer's substance abuse prevention program under
sub. (3) to perform work on a project of public works or a public utility project until he or she meets the conditions specified in
par. (b) 1. and
2. An employer shall immediately remove an employee from work on such a project if any of the following occurs:
103.503(4)(a)1.
1. The employee violates
sub. (2), tests positive for the presence of a drug in his or her system, or refuses to submit to drug or alcohol testing as required under the employer's substance abuse prevention program.
103.503(4)(a)2.
2. An officer or employee of the contracting agency has a reasonable suspicion that the employee is in violation of
sub. (2) and requests the employer to immediately remove the employee from work on the project.
103.503(4)(b)
(b) An employee who is barred or removed from work on a project under
par. (a) may commence or return to work on the project upon his or her employer providing to the contracting agency documentation showing all of the following:
103.503(4)(b)1.
1. That the employee has tested negative for the presence of drugs in his or her system and is not under the influence of alcohol as described in
sub. (2).
103.503(4)(b)2.
2. That the employee has been approved to commence or return to work on the project. If the employer is required to have in place a substance abuse prevention program under
sub. (3), that approval shall be granted in accordance with the employer's substance abuse prevention program under
sub. (3).
103.503(4)(c)
(c) Testing for the presence of drugs or alcohol in an employee's system and the handling of test specimens shall be conducted in accordance with guidelines for laboratory testing procedures and chain-of-custody procedures established by the substance abuse and mental health services administration of the federal department of health and human services.
103.503(4m)
(4m) Public utility projects; nonapplicability. 103.503(4m)(a)(a) This section does not apply to an employee performing work on a public utility project who is subject to drug or alcohol testing under
49 CFR Parts 40,
199, or
382.
103.503(4m)(b)
(b) Subsection (3) does not apply to an employer that performs work on a public utility project for a cooperative association organized under
ch. 185 for the purpose of producing or furnishing heat, light, power, or water to its members only.
103.503(5)
(5) Local ordinances; strict conformity required. A local governmental unit, as defined in
s. 66.0903 (1) (d), may enact an ordinance regulating the conduct regulated under this section only if the ordinance strictly conforms to this section.
103.505
103.505
Collective bargaining; definitions. When used in
ss. 103.505 to
103.61, and for the purposes of those sections:
103.505(1)
(1) A case shall be held to involve or to grow out of a labor dispute when the case involves persons who are engaged in a single industry, trade, craft, or occupation; or who are employees of one employer; or who are members of the same or an affiliated organization of employers or employees; whether such dispute is any of the following:
103.505(1)(a)
(a) Between one or more employers or associations of employers and one or more employees or associations of employees.
103.505(1)(b)
(b) Between one or more employers or associations of employers and one or more employers or associations of employers.
103.505(1)(c)
(c) Between one or more employees or associations of employees and one or more employees or associations of employees.
103.505(1)(d)
(d) Between any conflicting or competing interests in a labor dispute of persons participating or interested in the labor dispute.
103.505(2)
(2) A person or association shall be held to be a person participating or interested in a labor dispute if relief is sought against the person or association and if the person or association is engaged in the industry, trade, craft, or occupation in which the labor dispute occurs, or is a member, officer, or agent of any association of employers or employees engaged in that industry, trade, craft, or occupation.
103.505(3)
(3) “Labor dispute" means any controversy between an employer and the majority of the employer's employees in a collective bargaining unit concerning the right or process or details of collective bargaining or the designation of representatives. Any organization with which either the employer or the majority of the employer's employees is affiliated may be considered a party to the labor dispute.
103.505 History
History: 1993 a. 492;
1995 a. 225;
1997 a. 35;
1997 a. 253 ss.
104,
105; Stats. 1997 s. 103.505.
103.51
103.51
Public policy as to collective bargaining. In the interpretation and application of
ss. 103.505 to
103.61, the public policy of this state is declared as follows:
103.51(1)
(1) Negotiation of terms and conditions of labor should result from voluntary agreement between employer and employees. Governmental authority has permitted and encouraged employers to organize in the corporate and other forms of capital control. In dealing with such employers, the individual unorganized worker is helpless to exercise actual liberty of contract and to protect his or her freedom of labor, and thereby to obtain acceptable terms and conditions of employment. Therefore it is necessary that the individual worker have full freedom of association, self-organization, and the designation of representatives of the worker's own choosing, to negotiate the terms and conditions of the worker's employment, and that the worker shall be free from the interference, restraint or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.
103.51 History
History: 1995 a. 225;
1997 a. 253.
103.52
103.52 “
Yellow-dog" contracts. 103.52(1)
(1) Every undertaking or promise made after July 1, 1931, whether written or oral, express or implied, between any employee or prospective employee and that person's employer, prospective employer or any other individual, firm, company, association or corporation is declared to be against public policy if either party to the undertaking or promise undertakes or promises any of the following:
103.52(1)(a)
(a) To join or to remain a member of some specific labor organization or to join or remain a member of some specific employer organization or any employer organization.
103.52(1)(b)
(b) Not to join or not to remain a member of some specific labor organization or any labor organization, or of some specific employer organization or any employer organization.
103.52(1)(c)
(c) To withdraw from an employment relation in the event that the party joins or remains a member of some specific labor organization or any labor organization, or of some specific employer organization or any employer organization.
103.52(2)
(2) No undertaking or promise described in
sub. (1) shall afford any basis for the granting of legal or equitable relief by any court against a party to the undertaking or promise, or against any other person, who may advise, urge or induce, without fraud, violence or threat of fraud or violence either party to the undertaking or promise to act in disregard of the undertaking or promise.
103.52 History
History: 1993 a. 492;
1997 a. 253.
103.53
103.53
Lawful conduct in labor disputes. 103.53(1)
(1) The following acts, whether performed singly or in concert, shall be considered legal:
103.53(1)(a)
(a) Ceasing or refusing to perform any work or to remain in any relation of employment regardless of any promise, undertaking, contract or agreement in violation of the public policy declared in
s. 103.52.
103.53(1)(b)
(b) Becoming or remaining a member of any labor organization or of any employer organization, regardless of any undertaking or promise as is described in
s. 103.52.
103.53(1)(c)
(c) Paying or giving to any person any strike or unemployment benefits or insurance or other moneys or things of value.
103.53(1)(d)
(d) Aiding, by lawful means, any person who is being proceeded against in, or is prosecuting, any action or suit in any court of the United States or of any state.
103.53(1)(e)
(e) Giving publicity to and obtaining or communicating information regarding the existence of, or the facts involved in, any dispute, whether by advertising, speaking, patrolling any public street or any place where any person may lawfully be, without intimidation or coercion, or by any other method not involving fraud, violence, breach of the peace, or threat of fraud, violence or breach of the peace.
103.53(1)(f)
(f) Ceasing to patronize or to employ any person, except that nothing in this paragraph shall be construed to legalize a secondary boycott.
103.53(1)(g)
(g) Assembling peaceably to do or to organize to do any of the acts specified in
pars. (a) to
(f) or to promote lawful interests.
103.53(1)(h)
(h) Advising or notifying any person or persons of an intention to do any of the acts specified in
pars. (a) to
(g).
103.53(1)(i)
(i) Agreeing with other persons to do or not to do any of the acts specified in
pars. (a) to
(h).
103.53(1)(j)
(j) Advising, urging, or inducing without fraud, violence, or threat of fraud or violence, others to do the acts specified in
pars. (a) to
(i), regardless of any undertaking or promise as described in
s. 103.52.
103.53(2)
(2) No court shall have jurisdiction to issue any restraining order or temporary or permanent injunction which, in specific or general terms, prohibits any person from doing, whether singly or in concert, any of the acts specified in
sub. (1).
103.53 History
History: 1997 a. 253.
103.535
103.535
Unlawful conduct in labor controversies. No person may picket, or induce others to picket, the establishment, employees, supply or delivery vehicles, or customers of anyone engaged in business, or interfere with the person's business, or interfere with any person desiring to transact or transacting business with the person, when no labor dispute exists between the employer and the employer's employees or their representatives.
103.535 History
History: 1993 a. 492;
1997 a. 253.
103.54
103.54
Responsibility for unlawful acts. No officer or member of any association or organization, and no association or organization participating or interested in a labor dispute may be held responsible or liable in any civil action at law or suit in equity, or in any criminal prosecution, for the unlawful acts of individual officers, members, or agents, except upon proof by a preponderance of the evidence and without the aid of any presumptions of law or fact of all of the following:
103.54(1)
(1) That individual officers, members or agents of the association or organization committed those acts.
