An engineer’s employment contract provision broadly limiting his post-termination solicitation of former co-workers for competitive employment is an unenforceable restraint of trade under a new decision of the Wisconsin Court of Appeals. Manitowoc Co. v. Lanning, 2015AP1530 (Aug. 17, 2016). The decision, written by Judge Brian Hagedorn of District II, reversed a judgment for more than $1 million in attorneys’ fees and costs won by the engineer’s former employer after the trial court found that the engineer had repeatedly breached the covenant by soliciting his former colleagues for a direct competitor. On appeal, the court held that the covenant against soliciting employees was a restraint of trade within the purview of section 103.465 of the Wisconsin Statutes, and failed to meet the law’s requirements.
The court rejected the employer’s argument that the clause was not a restraint on competition, holding that because the “provision does not allow for the ordinary sort of competition attendant to a free market, which includes recruiting employees from competitors,” it is a restraint of trade under Wisconsin law. The court then concluded that because the clause barred the engineer’s solicitation of “any employee” of the company – including employees in a division separate from the one in which the engineer worked, and other employees the engineer never even knew worked for the company – it was too broad to be enforceable.