Covenants not to compete in employment contracts.
If enacted, SB566 would fundamentally alter existing labor laws in Wisconsin by limiting the ability of employers to impose restrictive covenants on their employees post-employment. This means that many current practices by employers, which include non-compete agreements aimed at retaining talent and preventing competition, would face legal challenges. Additionally, exemptions for nondisclosure agreements and agreements protecting customer lists would still apply, allowing employers some means of safeguarding sensitive information without enforcing restrictive practices that hinder former employees' careers.
Senate Bill 566 proposes significant changes to the regulations surrounding restrictive covenants in employment contracts, particularly non-compete agreements. Under current Wisconsin law, such covenants can be enforceable as long as they are deemed reasonably necessary for the protection of the employer. This bill, however, seeks to make most restrictive covenants illegal, void, and unenforceable after the termination of employment or agency. The intention behind this legislation is to enhance employee mobility and prevent unreasonable constraints imposed by former employers when seeking new employment.
The introduction of this bill has sparked discussions regarding the balance between employer rights and employee freedom. Supporters argue that the bill would foster a more dynamic job market and support workers who may feel obliged to remain with an employer due to fear of legal repercussions stemming from non-compete agreements. Conversely, opponents may express concerns that such a broad prohibition on restrictive covenants could undermine businesses’ ability to protect their proprietary information and intellectual property, thus potentially harming the competitive landscape.