What Constitutes Adequate Consideration for a Non-Compete in Wisconsin?
For a non-compete to be valid in Wisconsin, it must involve adequate "consideration." According to the state Supreme Court, continued employment can serve as lawful consideration, but specific financial bonuses, promotions, or specialized training provide stronger, undeniable legal backing.
In contract law, an agreement is only binding if both parties exchange something of value. This legal concept is known as "consideration." If you live in Wisconsin and are asked to sign a non-compete agreement, the contract must meet the strict requirements of Wis. Stat. § 103.465. One of the most contested issues in local employment disputes is whether the employee actually received sufficient consideration in exchange for signing away their right to work for a competitor. For employees in cities like Milwaukee, Madison, and Waukesha, understanding how local courts define consideration is essential to knowing whether your contract is enforceable.
Because the rules can be highly specific and heavily dependent on the timeline of when you signed the document, we strongly encourage residents to seek legal counsel. You can easily find an experienced local lawyer through our United States Attorney directory to review your specific situation.
Understanding Consideration Under Wisconsin Law
In many jurisdictions, just keeping your job is not enough consideration to support a mid-employment non-compete. However, Wisconsin handles this slightly differently. In the pivotal case of Runzheimer Int'l, Ltd. v. Friedlen, 362 Wis. 2d 100 (WI Supreme Court 2015), the highest court clarified that an employer's promise to continue employing an "at-will" employee can be lawful consideration, provided that the employer does not fire the employee shortly after the document is signed. Despite this ruling, relying solely on continued employment is risky for employers, which is why other forms of consideration are often used.
Signing at the Start of Employment vs. Mid-Employment Agreements
Timing plays a massive role in how consideration is viewed by courts. If you are handed a non-compete agreement on your very first day of work, the job itself, along with your initial salary and benefits, is universally recognized as adequate consideration. However, if you are asked to sign a restrictive covenant three years into your tenure, the legal landscape changes. While the Runzheimer precedent allows continued employment to act as consideration, courts will scrutinize whether you were genuinely threatened with termination if you refused to sign.
Financial Bonuses and Specialized Training
To avoid the legal gray areas of "continued employment," many wise employers in Wisconsin offer tangible benefits. Examples of undeniable consideration include a cash signing bonus, a significant increase in base salary, a promotion to a new title, or granting access to highly specialized, expensive training programs. If your employer gave you $2,000 explicitly in exchange for signing the agreement, local courts at the Waukesha County Circuit Court, Waukesha or the Dane County Circuit Court, Madison will almost certainly rule that adequate consideration was provided.
How Employers Can Ensure Their Agreements Hold Up
For businesses operating in Wisconsin, drafting a legally sound agreement requires clarity. The contract should explicitly state what the employee is receiving in exchange for signing. A simple "in consideration of continued employment" clause might survive court scrutiny, but coupling the agreement with a stock option grant or an annual bonus makes the contract virtually bulletproof regarding the consideration requirement. Employers must also ensure the restrictions remain reasonable under Wis. Stat. § 103.465.
Step-by-Step Guide to Reviewing Consideration
If you need to evaluate whether your non-compete agreement is supported by valid consideration, follow these procedural steps. Keep in mind that a lawyer from our directory can guide you through this process seamlessly.
Step 1: Establish the Timeline
Determine exactly when you signed the contract. Was it before you started your first day, or was it years into your employment? Gather offer letters, emails, and the signed contract itself.
Step 2: Identify the Benefit Received
Look at the exact wording of the contract. Did it promise a bonus, a promotion, or merely state "continued employment"? Cross-reference this with your pay stubs to see if a financial transaction actually occurred.
Step 3: Assess the Duration of Employment Post-Signing
If you signed a mid-employment non-compete for "continued employment" and were fired a week later, courts generally rule that the consideration was illusory and invalid. Note the dates of your termination or resignation.
Step 4: Legal Challenge
If you conclude that there was no valid consideration, your attorney may file an action to declare the contract unenforceable. Such cases are regularly heard in local venues like the Brown County Circuit Court, Green Bay or the Milwaukee County Circuit Court, Milwaukee.
Legal Costs and Litigation Fees
The cost of challenging a contract in Wisconsin varies based on complexity.
- Filing Fees: Initiating a civil case in a Wisconsin Circuit Court costs approximately $250 to $300 in court filing fees.
- Attorney Retainers: For a full defense against a non-compete lawsuit, lawyers generally require an upfront retainer of $3,000 to $10,000.
- Hourly Rates: Expect to pay $250 to $550 per hour for a skilled employment attorney in cities like Madison or Milwaukee.
| Type of Consideration | Court Persuasion Level | Example in Wisconsin |
|---|---|---|
| Initial Job Offer | Very High | Signing on day one for a $60,000 salary. |
| Financial Bonus | Very High | A $5,000 lump sum explicitly tied to the contract. |
| Continued Employment | Moderate (Dependent on facts) | Signing mid-year under threat of termination, then working 2 more years. |
Timelines for Resolution
If an employer attempts to enforce a contract without proper consideration, they may seek a temporary restraining order (TRO). A TRO hearing can be scheduled rapidly, often within 7 to 14 days of filing. If you successfully demonstrate a lack of consideration early on, the case may be dismissed quickly. However, a full trial to debate the nuances of consideration and the contract's reasonableness can take 12 to 18 months.
Frequently Asked Questions (FAQ)
What happens if I didn't receive the bonus promised in the contract?
If the employer promised a specific financial bonus as consideration but failed to pay it, the employer has likely breached the contract. This failure generally renders the non-compete unenforceable.
Is a one-dollar ($1) payment sufficient consideration?
While nominal consideration like $1 is sometimes accepted in general contract law, employment courts often scrutinize it heavily. In Wisconsin, relying on nominal consideration for a severe restrictive covenant is highly risky for the employer.
Can a promotion serve as consideration if it doesn't include a raise?
Yes. A genuine promotion that changes your title, increases your authority, or provides access to higher-level confidential information can be viewed as adequate consideration, even without a direct salary bump.
Do I need to go to court to prove lack of consideration?
Not always. Often, a well-crafted letter from a local attorney explaining the lack of consideration is enough to convince the employer to drop the issue and avoid a costly court battle.
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