Wisconsin Supreme Court Given Opportunity to Demystify Issue of Valid Consideration for Non-Compete Agreements

By:  Neal S. Krokosky and Andrew T. Frost

The Wisconsin Court of Appeals recently issued a certification to the Wisconsin Supreme Court in Runzheimer International, Ltd. v. Friedlen, asking the Supreme Court to decide whether continued employment is sufficient consideration to support a non-compete agreement entered into by an existing at-will employee.

In 1994, the Court of Appeals determined in NBZ, Inc. v. Pilarski, that a covenant not to compete must be supported by consideration. NBZ, Inc. argued that continued employment was adequate consideration for a non-compete agreement when the employee is an at-will employee. The Court of Appeals did not address this argument because it was determined that the employee’s employment was not conditioned on signing the non-compete agreement. In 2009, the Supreme Court cited NBZ, Inc. v. Pilarski in Star Direct, Inc. v. Del Pra for the proposition that “employers may not compel their existing employees to sign restrictive covenants without additional consideration.” However, the court did not specifically rule that continued employment is inadequate consideration because the case did not concern a non-compete agreement entered into by an existing at-will employee. Continue reading

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