On Friday, the Wisconsin Supreme Court issued a decision, Manitowoc Company v. Lanning, that limits the scope of non-solicitation provisions often used by Wisconsin employers. More specifically, the Court found for the first time that non-solicitation of employee (“NSE”) provisions are subject to the same enforceability requirements under Wisconsin law as non-compete provisions. Such provisions must therefore be narrowly tailored to protect the employer’s business interests and cannot be overbroad.
The decision is also significant because it demonstrates how courts must now apply Wisconsin’s enforceability limitations to an NSE provision. The NSE provision at issue in the case prohibited the former employee from encouraging or soliciting any of Manitowoc Company’s employees to leave or to take a position with a competitor, supplier or customer.
In finding the NSE provision overbroad and unenforceable, the Court noted that Manitowoc Company was a very large organization with 13,000 employees worldwide. The Court found that the NSE provision had the effect of preventing the former employee from “encouraging any Manitowoc Company employee, no matter the employee’s job or location, to terminate his or her employment with Manitowoc Company for any reason, or soliciting any Manitowoc Company employee to take any position with any competitor, supplier, or customer of Manitowoc Company.” The Court concluded that Manitowoc Company was unable to demonstrate a protectible interest in preventing a former employee from engaging in all of these activities.
Wisconsin employers with NSE provisions in their employment agreements should immediately and carefully review those provisions in light of this decision.