MIM:cjs
2023 - 2024 LEGISLATURE
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 1An Act to renumber and amend 103.465; to amend 103.465 (title); and to
2create
103.465 (1m) and 103.465 (3) and (4) of the statutes; relating to:
3covenants 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
1Section 1. 103.465 (title) of the statutes is amended to read:
SB566,2,3 2103.465 (title) Restrictive covenants Covenants not to compete in
3employment contracts.
SB566,2 4Section 2. 103.465 of the statutes is renumbered 103.465 (2) and amended to
5read:
SB566,2,146 103.465 (2) Covenants in employment contracts not to compete while
7employed.
A covenant by an assistant, servant, employee, or agent not to compete
8with his or her employer or principal during the term of the employment or agency,
9or after the
termination of that employment or agency, within a specified territory
10and during a specified time is lawful and enforceable only if the restrictions imposed
11are reasonably necessary for the protection of the employer or principal. Any
12covenant, described in this section, imposing subsection, that imposes an
13unreasonable restraint on trade is illegal, void , and unenforceable even as to any part
14of the covenant or performance that would be a reasonable restraint on trade.
SB566,3 15Section 3. 103.465 (1m) of the statutes is created to read:
SB566,2,1616 103.465 (1m) Definitions. In this section:
SB566,2,1917 (a) “Copyright” means a work of authorship, including writings, music, and
18works of art, that has been tangibly expressed and that is protected by the federal
19Copyright Act, 17 USC 101 to 1332, or common law.
SB566,2,2220 (b) “Customer list” means any information about a customer that is not
21available to a competitor of an employer or principal, including personal information
22and past purchases of goods or services from the employer or principal.
SB566,2,2423 (c) “Intellectual property” means copyrights, patents, trademarks, trade
24secrets, and any other type of commonly recognized intellectual property.
SB566,3,3
1(d) “Nondisclosure agreement” means a written agreement or provision that
2prohibits the disclosure of personal information about an employer or principal or a
3customer of an employer or principal.
SB566,3,44 (e) “Patent” means a right to an invention protected under 35 USC 251 to 329.
SB566,3,55 (f) “Trade secret” has the meaning given in s. 134.90 (1) (c).
SB566,4 6Section 4. 103.465 (3) and (4) of the statutes are created to read:
SB566,3,157 103.465 (3) Covenants in employment contracts not to compete after
8termination of employment or agency.
A covenant by an assistant, servant,
9employee, or agent not to compete with his or her employer or principal after the
10termination of the employment or agency imposes an unreasonable restraint on
11trade and is illegal, void, and unenforceable even as to any part of the covenant that
12would be a reasonable restraint on trade. This subsection does not apply to a
13nondisclosure agreement or to a covenant not to compete that is limited to
14prohibiting or restricting the unauthorized use of a customer list or intellectual
15property owned or licensed by the employer or principal.
SB566,3,22 16(4) Notice posted. Each employer and principal shall post, in one or more
17conspicuous places where notices to assistants, servants, employees, and agents are
18customarily posted, and in a conspicuous place on the employer's or principal's
19website, if the employer or principal maintains a website, a notice in a form approved
20by the department that explains that covenants not to compete after termination of
21employment or agency, subject to the exceptions in sub. (3), are an unreasonable
22restraint on trade and are illegal, void, and unenforceable.
SB566,5 23Section 5. Initial applicability.
SB566,4,3
1(1) Covenant not to compete in employment contracts. This act first applies
2to a covenant not to compete that is entered into, extended, modified, or renewed on
3the effective date of this subsection.
SB566,4,44 (End)
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