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


KAREN R LYND, Employe

ELITE SERVICES INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 00400319GB


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, except that it makes the following modification:

In the footnote on page four of the appeal tribunal decision, the date "December 6" is deleted and the date "January 6" is substituted therefor.

DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the employe is eligible for benefits beginning in week 2 of 2000, if otherwise qualified.

Dated and mailed April 19, 2000
lyndka.usd : 164 : 6  VL 1005 VL 1080.05 

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner


MEMORANDUM OPINION

In the petition for commission review the employer argues that because the employe had access to its customer list and rate structure and had an opportunity to build trust and rapport with its customers, it would be easy for her to start her own cleaning business and take away the employer's customers. The employer contends that it, therefore, does not consider it unreasonable to ask the employe to sign a non-compete agreement. The commission has considered this argument, but finds it unpersuasive. As the appeal tribunal explained in its decision, the agreement which the employe was asked to sign was overly broad and restrictive and went well beyond what would be needed to effectuate the employer's stated purpose of preventing the employe from expropriating its customer list. Thus, the agreement was both unreasonable and legally unenforceable. The employer's requirement that the employe sign such an agreement as a condition of her continued employment provided her with good cause to quit. (1)

In the petition the employer also takes issue with the appeal tribunal's findings with respect to the 30-mile limitation contained in the non-compete agreement. The employer maintains that it would not be difficult for the employe to find another job earning the same wages within the 30-mile radius. This argument fails. The non-compete agreement prohibited the employe from performing any residential cleaning work within a 30-mile radius of Green Bay. The employer failed to demonstrate that this condition was reasonably necessary to protect its legitimate interests. Further, such a condition would have been unduly oppressive to the employe, who does not own a car and would need to travel in excess of 30 miles in order to perform the work for which she was trained and in which she had experience.

Finally, the employer maintains that the date in footnote one of the appeal tribunal decision should read January 6, 2000, rather than December 6, 1999. The commission agrees and has modified the appeal tribunal decision accordingly. That minor modification notwithstanding, the commission agrees with and affirms the appeal tribunal decision.

 

Pamela I. Anderson, Commissioner (Concurring):

I write separately because I disagree that some portions of the covenant are overly restrictive. I do agree that the agreement was drafted in a manner likely to confuse many people. The beginning part of the agreement does set forth the purpose to protect customer lists and confidential information. I do not find the 30 mile radius from the City of Green Bay overly restrictive but the section which includes agent, stockholder, joint venturer or investor are overly broad for an employe who is working in cleaning services. I do not believe the fact that the employe no longer had a car is relevant to how large an area should be restricted in the future. I believe the area really relates to what is a reasonable area that might interfere with the employer's business. I also believe that the two year requirement is probably too long. Based on the testimony at the hearing, I believe that the employe would have signed a simple non-compete agreement with the employer if she were able to understand it.

I have difficulty with this kind of case because I think the employe owes the employer the duty not to compete with the employer while they are working for the employer. I have sympathy with the employer for wanting to protect its customer list.

I believe that the employe quit so it is her burden to show that she had good cause attributable to the employer to quit. This case is close because the employer testified that her signature on the covenant was required if she wanted to continue to work for the employer. At the same time, the employer had allowed her to continue to work for about a month without signing it. If the employer had fired her she would have been eligible for benefits because the employer was changing a condition of her employment and she can decide not to sign the agreement and that is not misconduct. Signing an unenforceable contract would not be binding on the employe. If the employe had consulted with an attorney, they might have been able to work this out so that the employer had a non-compete agreement but one that was narrowly tailored or the attorney could have assured her she could sign it and not be bound by it.

In the end I would allow the employe benefits in this case because the employer changed her conditions of employment by requiring the restrictive covenant.


_____________________________________
Pamela I. Anderson, Commissioner

cc: ELITE SERVICES INC
C/O JACK J REIN


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Footnotes:

(1)( Back ) The majority rejects the concurring commissioner's suggestion that the employe, a residential house cleaner earning $7.25 an hour, could have been expected to hire an attorney to redraft a confusing and overly broad agreement which was solely for the employer's benefit and contrary to her own interests.