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Buy – Sell Agreements: Be Sure to Say What You Mean; Keep Good Records

Posted by dempseylawfirm on July 26, 2010

Recently, the Wisconsin Supreme Court issued an opinion in Ehlinger v. Hauser, 2010 WI 54 (June 25, 2010). This case provides us with important reminders of (1) why it is essential in a contract to say what you mean and mean what you say and (2) why it is necessary to ensure that you have adequate financial records to support your company’s financial statements.

The Facts
 
Briefly, the facts in Ehlinger were as follows: Two equal shareholders in a corporation signed a buy-sell agreement, which is a typical way to provide a means of business succession in the event certain agreed upon events come to pass. Here, the agreement provided that if one shareholder became completely disabled, the other shareholder could buy out the disabled shareholder. So far, so good.
However, also typical in these types of agreements, the parties provided a means to arrive at a buyout price. This is, generally, a good thing. Unfortunately, this particular agreement provided that the non-disabled shareholder was entitled to purchase the disabled shareholder’s shares at “book value.” Nothing more was stated regarding this term.

One shareholder did become disabled, and the non-disabled shareholder presented an offer to buy the disabled shareholder’s shares. What was the dispute about? You guessed it – each shareholder calculated “book value” in a different way. Each shareholder wished to include different assets and liabilities in the calculation and calculated the value of the assets and liabilities in a different way.

By simply stating that “book value” was to be used, the parties left open the interpretation of that term. It could mean anything from simple adoption of the company’s internally generated balance sheet, i.e., book value being the assets less the liabilities as stated, or a balance sheet generated after a full-blown audit by an outside CPA firm.

Before the trial court, a special magistrate with a CPA background was appointed in an attempt to determine if GAAP (Generally Accepted Accounting Principles) was correctly applied and if the company’s books and records were sufficient to allow a determination of book value. The special magistrate found that, due to poor record-keeping, 76% of the company’s assets and 90% of the company’s liabilities could not be verified through available supporting documentation.

The Supreme Court’s Holding in the Case
 
A divided Supreme Court determined that the agreement was unenforceable. As the majority opinion characterized it, the question was not “what is required under GAAP, but what is required to determine the parties’ rights.” The Court stated:
“Here, regardless of whether the parties intended assets and liabilities to be computed on a cost basis, a tax basis, a fair market value basis, or any other basis, the unavailability of [the company's] financial records prevents Ehlinger from exercising his right to examine the books in order to assess the accuracy of the buyout price. From both a practical and a legal standpoint, the unavailability of the records precludes this agreement from being enforced.”

Additionally, the Supreme Court reviewed the issue of the non-disabled shareholder using the company’s money to defend himself in the seven year old lawsuit. The non-disabled shareholder, who was running the business day-to-day, asserted that he had a right to be indemnified by the company for the legal expenses he incurred. The disabled shareholder objected.

The Supreme Court determined that the dispute was primarily between the two shareholders. It would have been proper for the company to indemnify the non-disabled shareholder for actions he took solely in his capacity as a corporate officer or if the company spent funds in its own legal defense. Neither circumstance was present here. Moreover, if the non-disabled shareholder did contend that he was acting as a corporate officer and wished to use the indemnity for corporate officers provided by the Wisconsin Business Corporation Law, he needed to follow the notice procedure outlined in the statutes. He failed to do so here.

What We Can Learn from this Case
 

Buy – Sell Agreements still have great value and should be used appropriately;
 

Use a means, method or formula to establish the buyout price that is precise and not subject to interpretation;
define it in detail; and/or
agree to appoint a neutral 3rd party to determine;

Maintain adequate financial and business records and retain for a sufficient period of time;
Review the Buy – Sell Agreement periodically to make sure the means, method or formula for the buyout is still relevant and ascertainable;
Provide in the Buy – Sell Agreement for payment of legal expenses in the event of a dispute, e.g., each party to pay one half or “loser” pays all, or provide for a mediation or arbitration mechanism in the event of a failure to agree and allocate the expense in that mechanism;

As a shareholder, be aware of when you act on your own behalf, and when you act on behalf of the company.

Based on the results of this case, even recently drafted Buy – Sell Agreements should be reviewed to determine if they adequately and precisely identify the means, method or formula for the buyout. Additionally, periodic review of your company’s financial statements is in order to ensure that the necessary supporting documentation and detail is available and can be used in the event a Buy – Sell Agreement is triggered.

For more information about our firm, please go to www.dempseylaw.com.

 

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Tips for Employers Making Employment Decisions

Posted by dempseylawfirm on January 21, 2010

1.     Engage legal counsel early in the process.

2.     Review thoroughly the relevant facts and files prior to making the decision.

3.     Use our firm’s “independent” internal review process so that decisions are reviewed before being finalized.

4.     After discussion with counsel, prepare a note or memo to document the decision, the supporting evidence, and the legal basis at the time the decision is made.

5.     Spend time and effort writing a good position statement if responding to a charge.

6.     With the advice of counsel, assess the risks and identify the best strategy to defend or settle early on.

For more information about our firm, please go to www.dempseylaw.com.

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Checklist for a Deposition Witness

Posted by dempseylawfirm on January 21, 2010

  1. Be prepared to spend the necessary time with your attorney to get ready.
  2. Identify and have available all of the relevant documents and other records you need to prove the case.
  3. Unless advised otherwise, spend time going over the facts or files so that you are very familiar with them.
  4. Carefully listen to and understand any key points emphasized by your attorney.
  5. Get a good night’s sleep so that you are rested and alert.
  6. Dress comfortably, but appropriately, so as to make a good impression.
  7. Answer only the question asked – not what you think the questioner is seeking.
  8. Tell the truth.

For more information about our firm, please go to www.dempseylaw.com.

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Changes in Employment Law

Posted by dempseylawfirm on January 21, 2010

2009 Wisconsin Act 20, effective July 1, 2009, expands Wisconsin Fair Employment Law to make available compensatory and punitive damages for employment discrimination.  This is a significant change to the law, and presents new opportunities and new pitfalls for both employees and employers.  These damages are now available along with the other remedies of back pay, reinstatement, and attorneys’ fees in employment cases, and bring Wisconsin law more closely in alignment with Title VII of the federal Civil Rights Act.

Compensatory damages typically go beyond traditional remedies and would encompass “front pay,” e.g., wages or salary that would have been paid in the future but for the adverse employment action.  Punitive damages are special damages available where an employer has acted in a particularly unlawful manner or in bad faith, and are used to “punish” the employer into behaving better in the future.

Employee Considerations

Compensatory and punitive damages may be available to the aggrieved employee, but only if two things occur: (1) the employee must first be successful in an administrative proceeding with the Equal Rights Division and obtain a “probable cause” determination, and (2) must then commence an action in circuit court to obtain the additional damages.  The new law also provides for a jury trial on these issues.  Employees are required to exhaust their administrative remedies first before they can bring their case to the circuit court.

For employees who may have a cause of action, the new changes to the Wisconsin law allow for expanded remedies, and the opportunity to recover a larger amount from an employer who has violated the law.  Employers’ liability for compensatory and punitive damages is capped, however, with the maximum amount that can be recovered set at $300,000.  It becomes even more important now if you suspect that you may 

be a victim of employment discrimination, you should hire an attorney as early as you can in the process.  This is necessary to insure that all possible bases of discrimination are reviewed (including any potential retaliation claims), and that the charges filed in the administrative proceeding are handled correctly.  Our attorneys are very experienced with the filing of these charges and have represented numerous employees in successful outcomes.

Employer Considerations

Dempsey Law attorneys have long advised business clients about terminations and employment decisions and have brought significant value to employers in these cases.  For employers, the stakes of losing have gone up, with new potential for additional exposure.  Our lawyers believe in a “proactive” approach, and can ably assist the employer early on in the process to reduce or eliminate any liability. 

An employment lawyer should be involved as early as possible in the employment decision process with the employer.  This is an opportunity early on to discuss the planned action, assess the facts and the risks, and determine the appropriate strategy.  Yes, it may cost a little money up front for the employer, but it can pay huge dividends down the road if the discrimination charges, circuit court case, and alleged damages can be eliminated or substantially reduced.

Another proactive approach we recommend for employers is to conduct an employment law “audit.”  This exercise, which could involve five to ten hours of an employment attorney’s time, results in a thorough review of the employer’s employment practices and documentation, a report, and recommendations, if called for, on how to better protect the employer’s interests.

Significant Deadlines

For both employees and employers, there are some significant dates and time periods to keep in mind during an employment case.  After a hearing examiner finds, or LIRC affirms a 

finding of probable cause, the employee must be notified in writing that he or she may bring a civil action in circuit court to recover compensatory or punitive damages.  Under the new Act, the time limit for bringing a civil action is 60 days from the time of the hearing examiner’s final decision is mailed to the employee, or if the examiner’s decision is reviewed by LIRC, 60 days after LIRC’s final decision is mailed to the employee.

Conclusion

As of July 1, 2009 the potential rewards for aggrieved employees and the potential risks for employers facing charges have gone up in employment discrimination cases.  Compensatory and punitive damages are now available, and the aggrieved employee is now entitled to a jury trial in circuit court on these damages, if probable cause is found.  This will require that both employees and employers understand their rights and take the appropriate steps to protect themselves and their economic interests.

For more information about our firm, please go to www.dempseylaw.com.

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The Art of Deposition Testimony (or “Oh my God, why do they want to talk with me?”)

Posted by dempseylawfirm on January 21, 2010

If you are ever involved in civil litigation as either a plaintiff, a defendant, or as a witness, you may be called upon to give a “deposition.”  A deposition means that you are testifying under oath but not in court.  Dempsey, Williamson, Kelly & Hertel, LLP has long maintained a substantial litigation practice.  Our experienced lawyers can ably assist you in litigation, whether you are party to a lawsuit, or called as a witness.

What is a Deposition? 

A deposition is the act of testifying under oath as a witness in a legal proceeding, with the testimony recorded to be used at a later date.

Why do attorneys use depositions?

They do so for several reasons, including: possible impeachment of later testimony; to obtain admissions; to obtain and preserve evidence; to clarify the issues for trial; and to evaluate the witness prior to trial.

What is the deposition process like?

It is an informal process, usually in an informal setting, such as a law office, conference room, or hotel conference room, rather than in a courtroom.  It usually occurs early on in a case, during what is called the “discovery” phase prior to trial.  There is no judge or magistrate in attendance and it is not open to the general public.  Attendees usually consist of the parties to the lawsuit, the parties’ legal counsel, the person whose deposition is being taken (the “deponent”), and a stenographer to transcribe testimony and produce a written transcript.  Other potential witnesses or interested parties are generally excluded.

Usually, all of the participants are seated around a conference table, with the deponent who is being questioned seated close to the stenographer.  The deponent will be asked questions by opposing counsel, often as though the deponent was under cross-examination at trial.  Opposing counsel will attempt to discover background information, new facts, and solicit damaging testimony, if possible.  Opposing counsel may, if he or she chooses, use “leading” types of questions with a deponent.

What are some practical tips to help me through this?

Spend time reviewing.  First and foremost, spend some time beforehand recalling and reviewing the facts that 

you will be testifying about.  Take a few moments to review any relevant records or notes, but do not bring any records, notes, or documents with you to a deposition unless you are told to do so.  Our lawyers are very experienced at preparing deponents for a deposition, and can fully assist you to prepare within legal and ethical boundaries.

Know facts and details and personal info.  Be familiar with all correspondence, photos, drawings, etc., or other documents which may be important to the case and about which you have direct knowledge.  Know your personal background information, current and past employers and addresses, and the department, division, or group organizational structure you work in if relevant.  These are all “everyday” facts that you should be familiar with, but you would be surprised at the number of people who are deposed who “draw a blank” when asked some very simple questions in this area.

Understand the question asked.  Be sure you fully and completely understand a question before you answer.  If you do not understand the question, or it seems too complicated, make no attempt to answer but instead ask that it be re-phrased, be stated in a different way, or broken down into smaller, simpler pieces.  An inaccurate answer to a misunderstood question could materially affect the results of the case.  As a deponent it is your responsibility to think before you answer – and give your legal counsel time to object to the question prior to your attempt to answer.

Answer the question as briefly as possible.  When answering a question, if possible, try to use a “yes” or “no” answer.  Do not volunteer additional information that a question does not call for, unless it is necessary to make your answer not misleading.  Answer only the question asked.  Do not guess or speculate about an answer.

Maintain a pleasant demeanor.  Answer all questions with a polite and cooperative attitude.  Try to remain calm, particularly if you think you are being “badgered” by the questioner.  Your lawyer will be present and he or she will do whatever is necessary and effective in the circumstances to protect you from any overzealous or intimidating tactics.

Avoid exaggeration.  Exaggerating is a form of untruthfulness.  Do not try to improve on the facts.  The facts are the facts.  Trying to exaggerate invariably is recognized by opposing counsel for what it is, and he or she will later exploit it to undermine your credibility at trial.

Make an effort to enunciate clearly.  Since your testimony is being recorded by a stenographer, make an effort to enunciate clearly.  Speak audibly and in a normal tone of conversation so the stenographer can 

record precisely what you say.  Avoid non-verbal communication, such as nodding your head, shrugging your shoulders, etc., as these physical gestures cannot be captured in writing by the stenographer.

Present your best appearance.  One of the objectives of a deposition is for legal counsel to get a “preview” of what you would be like as a witness at trial.  Opposing counsel will be appraising you and making some tentative evaluations of how you will impress the jury.  So, it is best to make a good first impression.  For the deposition dress neatly and conventionally.  Be articulate and confident.  Stay interested in the questions and the process, and project a sincere, candid demeanor.

Contemplate dates, times, and measurements accurately.  The case you are involved in may turn on a crucial fact.  Very often, deponents are careless with respect to dates, times and measurements.  An inaccurate answer is often the result of not giving the subject sufficient consideration.  It is important to review these kinds of details in advance.  Don’t allow yourself to be forced into a guessing game with opposing counsel.  If your best judgment is asked for, and based on the information you have, you are unable to make a reliable judgment, say so.  You can certainly also say that it is not possible to make a reasonable estimate with the information that you have, and you would only be guessing.  Also, if you cannot be certain of a fact, say so. 

Do not qualify favorable facts.  Answer questions concerning favorable details of your case as positively and definitively as possible.  If you know you are certain of your answer, avoid expressions like “I think” or “I guess.” 

Conclusion

With depositions, as with other things, we often fear what we do not understand.  This article is designed to give you that basic understanding.  Understanding the deposition process, and taking the time to prepare in advance, will enhance the prospects of a successful conclusion to your case.  Our attorneys can ably assist you with this preparation.

record precisely what you say.  Avoid non-verbal communication, such as nodding your head, shrugging your shoulders, etc., as these physical gestures cannot be captured in writing by the stenographer.

Present your best appearance.  One of the objectives of a deposition is for legal counsel to get a “preview” of what you would be like as a witness at trial.  Opposing counsel will be appraising you and making some tentative evaluations of how you will impress the jury.  So, it is best to make a good first impression.  For the deposition dress neatly and conventionally.  Be articulate and confident.  Stay interested in the questions and the process, and project a sincere, candid demeanor.

Contemplate dates, times, and measurements accurately.  The case you are involved in may turn on a crucial fact.  Very often, deponents are careless with respect to dates, times and measurements.  An inaccurate answer is often the result of not giving the subject sufficient consideration.  It is important to review these kinds of details in advance.  Don’t allow yourself to be forced into a guessing game with opposing counsel.  If your best judgment is asked for, and based on the information you have, you are unable to make a reliable judgment, say so.  You can certainly also say that it is not possible to make a reasonable estimate with the information that you have, and you would only be guessing.  Also, if you cannot be certain of a fact, say so.

Do not qualify favorable facts.  Answer questions concerning favorable details of your case as positively and definitively as possible.  If you know you are certain of your answer, avoid expressions like “I think” or “I guess.” 

Conclusion

With depositions, as with other things, we often fear what we do not understand.  This article is designed to give you that basic understanding.  Understanding the deposition process, and taking the time to prepare in advance, will enhance the prospects of a successful conclusion to your case.  Our attorneys can ably assist you with this preparation.

For more information about our firm, please go to www.dempseylaw.com.

Posted in Business Lawyer, Divorce Lawyer, Employment Lawyer, Family Law Lawyer, Personal Injury Lawyer, Trial Lawyer, Workers Compensation Lawyer | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

Your Rights as a Landlord

Posted by dempseylawfirm on November 12, 2009

 In a University town such as Oshkosh, many property owners wish to make a return on their investment by renting out homes and apartments to college students. However, before making the leap and becoming a landlord, it is important to know not only what is expected of you, but what to expect from your tenants.

Prohibited Lease Provisions
 

While a landlord and tenant may personalize a rental agreement, there are certain provisions 
 

prohibited by Wisconsin law. A residential lease may not establish eviction procedures other than a judicial proceeding, require that the tenant pay the landlord’s legal fees, relieve the landlord from liability for the landlord’s negligent acts or omissions, impose liability on the tenant for events clearly arising outside of the tenant’s control, or waive statutory obligations of a of a landlord. Also, a residential lease may not accelerate a tenant’s rental payments if the tenant fails to timely pay rent, or breaches an obligation of the lease.
A residential lease may not provide that, if a tenant contacts law enforcement, health, or safety 

services, the landlord will have the right to refuse to renew the lease, increase rent, decrease services, or bring an action for possession of the premises. A lease is void if any of these provisions are present. Even a provision threatening such an action will void the entire lease.
As a result, you may wish to have one of our attorneys look over your proposed residential lease to avoid the inclusion of any of these provisions that could threaten your investment.
Responsibility to Maintain the Premises

A residential landlord is required by law to keep any area of the premises under the landlord’s control in a reasonable state of repair. If providing services to a tenant such as heat, a landlord must also repair all equipment that supplies such services. A residential landlord is also responsible for making all necessary structural repairs to the premises. However, the landlord is not responsible for repairs resulting from damage due to the tenant’s negligence or improper use of the premises. It is important for a landlord to perform all required repairs. If the landlord fails to fulfill this duty and the failure substantially affects the health or safety of the tenant, the tenant is justified in vacating the premises.

 

 

If this occurs, the tenant is no longer bound by the lease, and does not have to pay any rent for the time remaining on the lease. Therefore, it is important to ensure the premises you are renting are in good condition in order to get a full return on your investment.
 

Returning Security Deposits
 

A security deposit must be returned to a former tenant within 21 days after the tenant vacates the premises. The deposit may be delivered or mailed to the former tenant. A landlord may retain the security deposit to cover any unpaid rent, utility bills that the tenant is responsible for under the lease, or utility bills provided by a government-owned utility for which the landlord will become liable. In addition, if the tenant has damaged the premises, a landlord may retain an appropriate portion of the deposit to cover the repairs. However, such repairs do not encompass normal wear and tear of the premises, for example carpet cleaning.
 
For more information about our firm, please go to www.dempseylaw.com.
 

 

 

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Negotiating Strategies to Protect Your Interests

Posted by dempseylawfirm on November 12, 2009

 The person who thinks, plans and prepares is almost always going to come out ahead of the person who does not. Planning (coupled with a minimal amount of common sense) is the single best advantage in successfully concluding a negotiation.

Imagine this scenario: you recently sold three new and very expensive products to your best customer. You have just taken a long, angry call from the same customer. The products you sold are not meeting the performance specifications in the application. The customer has demanded the following:
1.    three new, larger size products as replacements (more expensive than the original units)
2.    the change-out costs for replacing the units; and

 

3.   a “project management fee” to cover the customer’s management time.
 

You agree to meet with the customer to resolve the problem. How should you prepare?
 

Get All the Facts
The first key to leverage in a negotiation is an understanding of all of the facts and what the other side really needs out of the situation. There may be facts that you do not know about. There may be facts about how the products were applied or how they were maintained. Prior to having the meeting with the customer, think about a “pre-meeting” the night before in a more informal context, such as over drinks or dinner. If you can have such a meeting, probe about the facts, about timing and deadlines, and about the personal and business situations surrounding the customer’s claim. Did they make an error when they ordered the products or is someone at the customer looking to possibly shift liability away from themselves? This is not the time to negotiate a resolution, but this is a good time to make sure you understand all of the facts.

Try to identify the individual decision maker at the customer that you need to convince and try to separate that individual and his or her personal interests from those of his employer. Do you have a long history together? Have you done favors for him or her in the past? Now is the time to also leverage the personal working relationship. You have been working over time on personal relationships with your customers, haven’t you?
 

Develop Going-in, Fall-back, and Walk-away Positions
 

Prior to the meeting, develop a plan, including a “going-in” position and a “fall-back” position. Consider all of the possible options, from doing nothing to meeting the other side’s full demands. Improve the most promising options. Decide on the most appropriate option if you determine that you cannot meet the other side’s full demands. Importantly, know your “walk-away” position. This is the pre-determined economic tipping point, beyond which you think it makes no sense to go. Given the value of a matter, and the prospect of litigation, this economic tipping point may not be exactly the point you may have initially considered.
 

Practical Tips:
When looking at options, and when presented with demands by the other side, the best response is never to simply say “No.” Instead, try to draw the other side into a creative partnership with you. Never close a door; keep opening new ones. Be creative. suggest that the matter be approached on a more constructive level. If you choose to react openly to the other side’s anger, say that you find it unproductive, and suggest focusing on a specific, non-emotional issue. Understand the Logic of the Other Side’s Proposal
 Sometimes there is great leverage in understanding the logic behind the other side’s proposal. Instead of focusing on the demands, focus on the logic underlying the demands.  

 

Practical Tips:

Assert your needs. Concentrate on problem solving that seeks to satisfy both parties. Commit to a solution only after it is certain to work for both sides. Try using hypotheticals. In other words, try some “what ifs.” “What if we did A and B, but not C, but did D, too? Would that work for you?”
 

 

Invite Criticism
 

Ask the other side to critique your proposals. What do they like and what don’t they like? If you ask for an explanation of what is wrong with your proposal and they cannot adequately explain their position, you will get a little more leverage. A related tactic is to ask the other side for “advice,” such as “What would you do if you were in our shoes?”
 

Practical Tips:
When under attack, listen. The best response is to keep the other side talking because new information can increase the room for movement and the number of variables.

Listening without defending helps to defuse any anger. And, if you are listening, you are not making concessions. Invite the customer to help shape the proposal.
Remember, no two fact circumstances or negotiations are exactly alike. In addition, whenever you throw in the “human” factor, i.e., personalities, the personal dynamics are often what drives the success or failure of the discussion. Our lawyers can ably assist you in considering the possibilities, determining the most appropriate options, developing reasonable positions, and sitting at the table with you to represent your interests.
 

 

 

 

 

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Employing Your Children

Posted by dempseylawfirm on September 3, 2009

If you own a business, you may want to employ your children. Not only will this provide them with valuable work experience, but it presents a way for you to offset some of your own income. But the IRS may closely scrutinize these payments. So what can you do to avoid the IRS finding a deficiency during an audit which may result in additional tax, penalities and interest?

In general, if you wouldn’t compensate a non-child employee in the way you plan on compensating your child, you need to take a look at a number of factors. You should attempt to treat your child, to as great an extent as possible, like any other employee. For instance, failure to actually give your child the money, and put it in their own bank account, or making payments at opportune times, such as holidays, birthdays, and dates when tuition is due, can be very damaging. If you fail to provide a detailed arrangement or formula for compensation, the IRS may also disapprove. Not keeping adequate, contemporaneous records of the child’s hours worked and the tasks competed can potentially destroy the arrangement in and of itself. Failing to pay employment taxes and file returns on behalft of your child is also viewed negatively. And remember, wages must be “age appropriate.”

If you would like to discuss this tax matter or any others, our tax specialists would be more than happy to assist you so that you can, to the greatest extent possible, avoid potentially expensive tax bills in the future.

For more information about our firm, please go to www.dempseylaw.com.

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Keys for Successful Non-Compete Clauses:

Posted by dempseylawfirm on September 3, 2009

1. Have a legitimate business need;

2. Be reasonable in terms of time, customers and geography;

3. Be as specific as possible;

4. Provide reasonable cash or benefits to the employee in return for the non-compete.

For more information about our firm, please go to www.dempseylaw.com.

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New Standard for Non-Compete Clauses

Posted by dempseylawfirm on September 3, 2009

 The Wisconsin Supreme Court adopted new standards that tend to save contracts designed to prevent ex-employees from competing with their former employers. In Star Direct v. Dal Pra, the Court determined that portions of a restrictive covenant may be enforced even after another section is deemed unenforceable, so long as the surviving provisions remain understandable and capable of independent enforcement. Although restrictive covenants are generally disfavored, non-compete agreements are lawful if the restriction is “reasonably necessary for the protection 

of the employer.” The employer must show a legitimate protectable interest.
In

 Dal Pra, the employer had restrictions covering ex-employees competing with its business (“business clause”), contacting its customers (“customer clause”), and protecting proprietary information (“confidentiality clause”). The Court found that Star Direct had a protectable interest in the special knowledge of its business practices and customers accessed by its salespeople. Although two clauses were held to be overbroad because they prevented an ex-employee from competing in a business “substantially similar to” Star Direct, the confidentiality clause was held to be reasonable.

 

The question for the Court, based on precedent, was whether all three clauses should fail because at least one clause had failed. The answer was a new standard: “Whether, if the unreasonable portion is stricken, the other provision or provisions may be understood and independently enforced.” The answer in
What does this mean for employers? The Supreme Court has now given employers in Wisconsin an even better chance of successfully enforcing a non-compete clause with a former employee.
Our experienced lawyers can assist you with planning, drafting and implementing non-compete provisions if you believe that they are necessary to protect your business.

For more details, or if you have any questions, please feel free to contact any of our lawyers to see if you can gain through our experience.

For more information about our firm, please go to www.dempseylaw.com.

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