Restraints of Trade Come in Many Flavors

We get a ton of questions about “non-competes” at OGS. In legal terms, a “non-compete” is a specific kind of “restraint of trade” that is governed by Wis. Stat. Sec. 103.465. However, the type of “restraint of trade” that is right for you and your business may not be a “non compete” and could be several (and possibly, more enforceable) different types. This week, we discuss the general categories of restraints of trade, and in two weeks, we’ll discuss how to make sure they’re enforceable.

Non-Compete

Broadly, a non-compete is a specific agreement between a company and an individual that bars said individual from engaging in a similar business that competes with that of the company. These agreements are arguably the most direct type of “restraint of trade” because they specifically prohibit general business activities that are competing (not just the use of certain information or individuals in a competing business).

Confidentiality \ Non-Disclosure

A confidentiality agreement restricts an individual from using confidential information that is shared with him\her for their own purposes (which can include, use in a competing business). These agreements are sometimes between a company and an employee, but could be between individuals discussing an idea, or with independent contractors that could be exposed to mission critical information.

“Employee Non-Solicitation”

An employee non-solicitation agreement restricts an individual from soliciting employees to leave a company. These agreements are usually between a company and its employee, but can also be between a company and its customers (assuming that the employee not being solicited knows that the company’s customers are signing such an agreement), or a company and its independent contractors.

“Customer Non-Solicitation”

A customer non-solicitation agreement restricts an individual from soliciting customers to find products\services at a competing business. Most of time time, these agreements are also between a company and its employees, but can be between a company and independent contractor too, if that individual has access to certain customers.

Now, we’ve covered the basics – check back in two weeks to find out how to make sure your favorite “restraint of trade” can be enforced.

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