Commercial Litigation and Non-Compete Lawyers Serving Milwaukee Businesses

In a September post, we discussed a recent Wisconsin Supreme Court case that cast doubt on the enforceability of “anti-poaching” provisions in Wisconsin employment contracts. As you will recall, such provisions provide that if an employee is terminated or otherwise leaves the employment, he or she may not solicit former co-workers to quit or accept employment with a competitor, supplier, or customer. We wondered then if the court was signaling a more general negative attitude regarding the enforceability of all types of restrictive covenants in Badger State employment agreements. A recent decision from the U.S. District Court for the Eastern District of Wisconsin provides some hope that reasonable employment restrictions can still be enforced.

BMO Harris Bank N.A. v. Lailer

The case, BMO Harris Bank N.A. v. Lailer, 2016 U.S. Dist. LEXIS 146143 (Oct. 21, 2016), involves an employment agreement in which a former bank employee agreed that, for a period of 12 months following her employment, she would not contact or solicit any of the bank’s clients regarding any product or service that was the same or similar to any of the bank’s products or services that she had marketed during her employment.

Court Grants Injunction

The bank sought a preliminary injunction against the former employee, contending that it would suffer greater harm if the agreement was not enforced than any harm the former employee and her new employer might suffer if the employee was required to abide by her contract. The court agreed and granted the injunction. The court noted that the restrictive covenant was reasonable since it applied only to bank customers with whom the employee actually worked and prohibited solicitation only for one year post-employment. The court also signaled that the customer-based restriction would operate as a narrower restriction than one based upon a geographic area.

Good Will Belonged – at Least for a Time – to Bank, Not Employee

The court noted that the former bank employee had served as a senior liaison between the bank and many of its wealthy clients. She had developed substantial good will while the bank employed her. Such good will appropriately belonged to the bank for a reasonable period of time.

White House Releases Report Critical of Non-Compete and Other Restrictive Agreements

Although there was no apparent tie to the decision in the BMO Harris Bank case, it should be noted that President Obama’s office, on October 25, 2016, released a “State Call to Action on Non-Compete Agreements,” repeating many of the points the administration has made in recent years regarding restrictive covenants and non-compete agreements. In particular, the White House argued that use of non-compete agreements artificially restricts competition and worker mobility. The administration also claims that such provisions create barriers to changing jobs and that they weaken employees’ bargaining power. That may be true in some instances, but as the recent federal district court decision notes, employers have rights as well.

Milwaukee Business, Employment, and Commercial Litigation Attorneys

Does your business employ persons who deal with sensitive information or valuable customer lists? Do you have competitors who would love to raid your employment ranks and utilize the information your business has spent so much to create? Does your business have other trade secrets that need protection? The Milwaukee business litigation firm of Kerkman Wagner & Dunn has more than 50 years of combined legal experience representing business owners in Wisconsin in complex situations, even those that involve litigation. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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