STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)


ROBERT J CONY, Employe

PRODUCTIVITY ROBOTICS, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 99608440WK


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, the employe is eligible for benefits, if otherwise qualified.

Dated and mailed April 19, 2000
conyro.usd : 105 : 6 MC 610.04

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner


MEMORANDUM OPINION

The commission has affirmed the appeal tribunal decision in this case, because it agrees with the appeal tribunal's conclusion of no misconduct. The commission appreciates the position the employer was put in, but the employe as well was in a delicate position regarding his prior employment. There were two agreements at issue, the 1999 separation agreement overall and a 1990 non-competition/confidentiality agreement incorporated into the latter agreement. First, the non-compete agreement is unforceable on its face. One of the conditions is that at no time will the employe be allowed ever to reveal any confidential information gained while working for the previous employer. Restrictive covenants are extremely disfavored in Wisconsin law, so much so that there is a statute governing them. Pursuant to Wis. Stat. § 103.465, a covenant not to compete within a specific time and a specific territory is lawful "only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any such restrictive covenant imposing an unreasonable restraint is illegal, void and unenforceable even as to so much of the covenant or performance as would be a reasonable restraint." The covenant must: (1) be necessary for the protection of the employer; (2) provide a reasonable time restriction; (3) provide a reasonable territorial limit; (4) be reasonable as to the employe; and (5) be reasonable as to the general public. Wausau Medical Center v. Asplund, 182 Wis. 2d 274, 282, 514 N.W.2d 34 (1994). Even a reasonable convenant not to disclose confidential information is subject to Wis. Stat. § 103.465, and a covenant protecting trade secrets which does not set limits regarding time or geographic areas, "is unreasonable and void." Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 218, 267 N.W.2d 242 (1978). It is clear from page 1 of Exhibit 5, that provision 2 goes too far in attempting to protect the former employer's confidential information. The entire covenant therefore is void as a matter of Wisconsin law. (1)

The 1999 agreement in its remainder appears to have been valid. The remainder of the agreement included a confidentiality provision, pursuant to which both the employer and employe would preserve the confidentiality of the agreement. Specifically, the employe agreed to "not discuss this Agreement or any of its terms with anyone other than his accountants or attorneys." This provision governs both the agreement itself and its terms, so the commission cannot conclude that the employe acted in intentional disregard of the employer's interests in failing to disclose the agreement. For these reasons, and those stated in the appeal tribunal decision, the commission has affirmed that decision.

 

Pamela I. Anderson, Commissioner, (Dissenting):

I am unable to agree with the result reached by the majority herein and I dissent. While I agree that by itself the 1990 restrictive covenant was unenforceable, I am not certain that it is unenforceable when combined with the 1999 separation agreement. The employe was willing to disclose the 1990 restrictive covenant but he was unwilling to give the employer the 1999 separation agreement which incorporated the restrictive covenant from 1990 but with consideration. When the employe was asked whether he received a monthly payment he said no even though he received the monthly payment as a lump sum that would be even more favorable to him than monthly payments. The employe was unwilling to disclose the 1999 agreement because it had a confidentiality clause so the employe may also have been unsure if the covenant was now enforceable because he received consideration.

Both agreements indicated that they would be construed in accordance with the Laws of Iowa rather than Wisconsin law. While the employe's attorney said it was unlikely that the Wisconsin courts would apply this provision because it would void the public policy provision behind Wisconsin law on restrictive covenants, that was before the employe received any consideration from the 1999 separation agreement. She did indicate that Iowa law was more willing to allow restrictive covenants than Wisconsin law.

I believe that the employe violated the restrictive covenant from the 1999 agreement when he went to work for the employer and there was a good chance that agreement would have been enforced by the courts. He misled the employer by not letting them know that he received any payments under the agreement. The lawsuit against the employer was dropped as soon as the employe was
discharged. The employer had allowed the employe time to straighten out the restrictive covenant problem and he was unable to do so. At that point the employer fired the employe for misconduct connected to his employment.

For these reasons, I would reverse and deny benefits.

______________________________________
Pamela I. Anderson, Commissioner

cc: SHINDELL LAW FIRM
ANNE B SHINDELL


[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]


Footnotes:

(1)( Back ) The dissent alludes to consideration the employe received for signing the 1999 separation agreement, and is not certain that the restrictive covenant is unenforceable when combined with the 1999 agreement. The unenforceability of the restrictive convenant had little to do with whether the employe had received consideration for the 1999 separation agreement, however. As indicated above, the unenforceability of the restrictive covenant was due to its overbreath. The dissent does not indicate how the incorporation of an agreement unenforceable due to overbreadth into a broader, otherwise-valid agreement can make the unenforceable covenant enforceable. This is because such incorporation cannot render it enforceable. The dissent also would penalize the employe for failing to disclose to the employer the existence of the 1999 separation agreement and certain provisions within it. As indicated above, though, the separation agreement had a separate confidentiality clause which the record indicates was valid. The dissent does not indicate any legal basis for the employe to ignore that confidentiality provision, which in essence the employe would have had to do.