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Manitowoc Co. v. Lanning - 2018 WI 6, 379 Wis. 2d 189, 906 N.W.2d 130

Rule:

Wis. Stat. § 103.465 (2013-2014) is broadly entitled "Restrictive covenants in employment contracts" and refers explicitly to a covenant by an employee not to compete with the employer during or after the term of employment. It states that any covenant described in § 103.465 imposing an unreasonable restraint is illegal, even as to any part of the covenant that would be a reasonable restraint.

Facts:

The Manitowoc Company, Inc. entered into an agreement with employee John Lanning that prohibited him from directly or indirectly soliciting, inducing, or encouraging any Manitowoc employee "to terminate their employment" with Manitowoc or to "accept employment with any competitor, supplier or customer of Manitowoc." After Lanning left Manitowoc to work for a competitor, Manitowoc alleged that he worked with his new employer to woo several of Manitowoc's employees in violation of the NSE provision. 

Issue:

Was a non-solicitation of employees (NSE) provision in an agreement between an employer and an employee  a restrictive covenant subject to and enforceable under Wis. Stat. § 103.465

Answer:

Yes

Conclusion:

Although a provision of an employment agreement that prohibited soliciting employees did not use the words "covenant not to compete" and did not restrict the employee from working for a competing company, it was a restraint of trade governed by Wis. Stat. § 103.465 (2013-2014) because it restricted access to the labor pool by a competitor that hired the employee. The provision was an unreasonable restraint of trade and, as such, was unenforceable in its entirety because it was overbroad for lack of a specified territory or class of employees to which it applied, and thus it did not meet the statutory requirement that a restriction be reasonably necessary for the protection of the employer. The reasonableness standard applied regardless of whether the provision was less burdensome than a traditional covenant not to compete.

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