Category Archives: Court Decisions & Legislation

OSHA’s VACCINE OR TEST RULE REMAINS IN LIMBO FOLLOWING ARGUMENTS BEFORE THE U.S. SUPREME COURT

By Sally A. Piefer

As you know, in early November, OSHA announced an emergency temporary standard (“ETS”) which affects employers with 100 or more employees. The ETS directs these covered employers to develop, implement, and enforce a written mandatory COVID-19 vaccination policy—or to adopt a written policy requiring employees to either choose to be vaccinated or to be tested regularly and wear a face covering at work.

The ETS was immediately challenged, and within a few days, the ETS was halted nation-wide by the 5th Circuit Court of Appeals. Additional lawsuits were filed across the country in an effort to gain an advantage over which federal Circuit Court would ultimately determine the ETS’ validity. The 6th Circuit Court of Appeals was selected in the lottery, and many believed the ETS might not survive the legal challenges, because the 6th Circuit was largely made up of Republican-appointees.

In mid-December, the 6th Circuit decided to lift the 5th Circuit’s Order preventing the ETS from taking effect. The Court’s decision resulted in an immediate appeal to the U.S. Supreme Court. OSHA pressed forward and adjusted its enforcement dates, saying that it would not issue citations for noncompliance with any documentation requirements before January 10, 2022 and would not issue citations for noncompliance with the testing requirements before February 9, 2022.

This morning, the U.S. Supreme Court heard oral argument on whether the ETS should be stayed pending resolution of the legality of the rule by the 6th Circuit. This morning’s hearing has not resulted in a decision, and ongoing questions loom on whether the ETS will take effect on Monday. A number of the Justices appeared to be in favor of a short stay until a decision could be made by the high court. Several historically conservative Justices appeared to be in favor of the ETS and appeared not likely to favor a long-term stay. The Justices gave no indication when they would issue a decision, but the decision will likely signal the high court’s view of the underlying merits of the case.

Our impression is that this will be a close call. We anticipate that Justices Thomas, Kagan, Breyer and Sotomayor will not be inclined to favor a stay, and these justices focused a number of their comments and questions on the widespread nature of the Omicron variant. Justices Roberts, Barret and Gorsuch appeared to question OSHA’s authority and seemed inclined to favor of a stay. It is unclear how Justices Cavanaugh and Alito will side, based on their comments and questions this morning.

We encourage employers to continue to prepare as if the ETS will become effective on Monday, January 10, 2022. This means you need to continue to take the following steps:

  • Create a policy on vaccination or testing with mask wearing
  • If you will offer employees the option of weekly testing, decide who will bear the cost for testing, and provide employees with paid time off to get vaccinated and to recover from the side effects of the vaccine
  • Ascertain the vaccination status of each employee and obtain acceptable written proof of vaccination
  • Maintain records of the vaccination status for each employee
  • Provide materials encouraging vaccination to your employees and provide information about the ETS
  • Ensure that all employees who are not fully vaccinated wear face coverings when indoors or when occupying a vehicle with another person for work purposes—and enforce this requirement
  • Require employees to immediately provide notice of a positive COVID-19 test or diagnosis and ensure that any employee with a positive test is removed from the workplace pursuant to CDC guidelines
  • Report work-related COVID-19 fatalities to OSHA within 8 hours and work-related in-patient hospitalizations within 24 hours
  • Employers must be prepared to provide documentation of its written policy and the aggregate number of employees vaccinated within 4 business hours of a request by OSHA, and all other records requested by OSHA must be produced by the end of the business day following the request.

If you have questions or need assistance with policy development, please contact the Lindner & Marsack attorney with whom you regularly work. We will continue proving updates as we learn more about new directives, rules, or guidance.

Update on OSHA’s Mandatory Vaccine Rule: What Should Employers Do?

By Sally A. Piefer

November 23, 2021

As we previously reported, on November 4th, OSHA released its emergency temporary standard (“ETS”) which requires employers with 100 or more employees to develop, implement, and enforce a written mandatory COVID-19 vaccination policy. Alternatively, covered employers may adopt a written policy requiring employees to either choose to be vaccinated or undergo regular testing and wear a face covering at work.

The ETS gave employers until December 5, 2021 to do the following:

  • Develop a written vaccination and/or testing policy.
  • Determine which employees are vaccinated and collect documentation from employees who are vaccinated.
  • Develop educational materials to provide to employees covering (i) requirements of the ETS and its workplace policies; (ii) a copy of the CDC’s Key Things to Know About COVID-19 Vaccines; (iii) information prohibiting retaliation and discrimination; and (iv) information discussing criminal penalties for intentionally providing false information or documentation.

The testing and masking requirements were set to be implemented on January 4, 2022.

Almost immediately, a number of lawsuits were filed by employer groups across the nation seeking to invalidate the ETS, and shortly thereafter a number of labor unions and employee groups began filing similar lawsuits in employee friendly jurisdictions. All of those petitions have been consolidated in and will be decided by the Sixth Circuit Court of Appeals. Before the Sixth Circuit assumed jurisdiction of the cases, the Fifth Circuit Court of Appeals, a notably employer-friendly jurisdiction (or court), granted a Motion to Stay Enforcement of the ETS, finding the ETS overbroad. Several days later, OSHA posted on its website that it was suspending enforcement of the ETS “pending further developments in the litigation.”

This morning, the Biden Administration filed an Emergency Motion asking the Sixth Circuit to Dissolve the Stay issued by the Fifth Circuit. While it is still too soon to speculate how the Sixth Circuit will rule in response to the current Motion, many clients are asking what they should do since the ETS appears to be in legal limbo.

What should employers do while the ETS is in limbo? Even though the ETS has presently been paused, employers are encouraged to continue with their efforts to implement the ETS in the event the Sixth Circuit lifts the Stay. In such event, it is presently unclear how quickly OSHA may try to enforce the December 5 deadline. In addition, it would be wise for employers to keep employees informed about the process so that if the ETS is enforced, an employer can quickly move to get into compliance.

Employers should also be aware that the current proceedings in the Sixth Circuit do not impact the Executive Order 14042 mandating vaccines for certain covered government contractors and subcontractors, the vaccine mandate from the Centers for Medicare & Medicaid Services (CMS) for healthcare employers, or any state or local vaccination mandate or testing requirements.

If you have questions about this new development or about your obligations under any vaccine mandate or testing requirements, please contact Attorney Sally Piefer or the Lindner & Marsack attorney with whom you regularly work. We will continue proving updates as we learn more about new developments and how they will impact your business.

 

 

 

WISCONSIN SUPREME COURT STRIKES DOWN STATEWIDE MASK MANDATE

By: Samantha J. Wood and Sally A. Piefer

On Wednesday, the Wisconsin Supreme Court struck down Wisconsin’s statewide mask mandate, holding that Governor Evers exceeded his legal authority by issuing multiple emergency orders under Wis. Stat. § 323.10.   The court emphasized that the question was “not whether the Governor acted wisely; it [was] whether he acted lawfully.”  Section 323.10 specifies that no state of emergency may last longer than 60 days unless “the state of emergency is extended by joint resolution of the legislature.”  Absent legislative approval, the Governor is precluded from proclaiming repeated states of emergency.  Because Governor Evers extended the orders declaring a state of emergency on several occasions without legislative approval, his extensions were and are invalid.

Although Wisconsin’s statewide mask mandate has been struck down by virtue of the Supreme Court’s decision, employers must keep several other laws in mind in determining their next steps:

  1. Several municipalities have issued their own mask mandates, including Dane County, Milwaukee County, the City of Milwaukee, Wauwatosa and various other townships and villages. These mandates are enforceable if enacted by the municipality’s governing body. Employers should check with their local municipality and county before eliminating a mask requirement.
  1. Employers still maintain responsibilities under OSHA’s “General Duty” clause. OSHA’s General Duty clause requires an employer to furnish to its employees employment and a place of employment free from recognized hazards that are causing or are likely to cause death or serious physical harm.  Employers can be cited for a violation of the General Duty clause if a recognized hazard exists in the workplace and the employer does not take reasonable steps to prevent or abate the hazard. OSHA prepared guidance in March 2021 that encourages employers to require face coverings. That guidance can be found here.
  1. Employees may be eligible to receive worker’s compensation benefits as a result of contracting COVID-19 in the workplace if the employee can establish that the employee contracted the virus while performing services growing out of and incidental to that employment.

In determining whether to lift an employment mask requirement or policy, employers should consider the above-referenced legal considerations, as well as analyze the risks in their workplace, other sanitization or safety procedures in place, and whether, if a mask requirement will remain in place, the employer will consistently enforce a mask policy and issue corrective action to employees who violate the policy.

COURT ISSUES TEMPORARY RESTRAINING ORDER PREVENTING WISCONSIN GOVERNOR FROM RELEASING NAMES OF BUSINESSES EXPERIENCING COVID CASES

By Sally Piefer

Yesterday we reported that, despite repeated requests from the Wisconsin Manufacturers & Commerce (WMC), Wisconsin’s Governor Evers was set to release to the public the names of Wisconsin businesses who have had at least 2 employees test positive for COVID. The release of business names was scheduled for Friday, October 2, 2020.

Yesterday, the WMC, along with two other local Chambers of Commerce, filed a lawsuit in Waukesha County Court on the issue. The WMC and the Chambers also sought a temporary restraining order (TRO), asking the Court to immediately prevent the Governor’s office from taking the proposed action.

The Waukesha County judge granted the TRO request late on Thursday afternoon. The Order reads:

Upon the motion of Plaintiffs Wisconsin Manufacturers and Commerce, Muskego Area Chamber of Commerce, and New Berlin Chamber of Commerce and Visitors Bureau, pursuant to Wis. Stat. § 813.025 and for good cause shown;

It is hereby Ordered that Defendants Tony Evers, Andrea Palm, and Joel Brennan, and their officers, agents, and employees (collectively referred to as “Defendants”), are temporarily restrained from releasing any information relating to businesses whose employees have tested positive for COVID-19 or who contract tracing has shown close connections.

This Order shall remain in effect for 5 days unless extended after notice and hearing.

The Court will likely be scheduling a hearing on the request for a preliminary injunction either next week or the week after. Typically, TRO’s can be in effect for up to 5 days, unless extended by agreement of the parties. We will continue to keep you abreast of further developments on this issue. Should you have any questions, please feel free to contact Sally Piefer or your normal contact at Lindner & Marsack.

SEVENTH CIRCUIT ISSUES ADA REASSIGNMENT GUIDANCE

By: Kristofor L. Hanson & Christopher J. Saugstad

November 25, 2019

The Seventh Circuit Court of Appeals recently clarified its position concerning reassignment as an accommodation under the Americans with Disabilities Act (the “ADA”). Under the ADA, employers have an affirmative duty to reasonably accommodate an employee’s disability. While engaging in the interactive process to find a reasonable accommodation, in situations where an employee is unable to perform the essential functions of his or her job even with reasonable accommodations, employers are required to evaluate reassignment to a vacant position as an accommodation. Previously, in EEOC v. United Airlines, Inc., 693 F.3d 760, 764 (7th Cir. 2012), the Seventh Circuit explained that the ADA requires employers to appoint disabled employees to vacant positions for which the employee is minimally qualified, unless the reassignment would pose an undue hardship to the employer or there is a bona fide seniority system in place. Pursuant to this decision, employers cannot force the disabled employee to go through a competitive process to be placed into a vacant position as a reasonable accommodation.

On November 15, 2019, the Seventh Circuit revisited the issue of reassignment under the ADA in Ford v. Marion Cty. Sheriff’s Office, No. 18-3217, 2019 U.S. App. LEXIS 34072, (7th Cir. Nov. 15, 2019). Ford worked as a deputy at the county sheriff’s office until her hand was seriously injured in a car accident while on duty. Ford was reassigned to light duty for about a year until she accepted a position as a jail visitation clerk; Ford was given the option to accept the visitation position, resign, or be fired. After Ford’s reassignment, she alleged she suffered disability-based harassment by co-workers, refusals to accommodate her scheduling needs, and several discriminatory promotion denials. Ford brought an action against Marion County for violations under the ADA.

The Seventh Circuit found the district court properly granted summary judgment on Ford’s claim regarding reassignment to the visitation clerk position and explained a “demotion can be a reasonable accommodation when the employer cannot accommodate the disabled employee in her current or prior jobs or an equivalent position.” The Court pointed out EEOC guidance regarding reassignment and demotion states: “An employer may reassign an individual to a lower graded position if … there are no vacant equivalent positions for which the individual is qualified with or without reasonable accommodation.”

The Court noted that if there had been a vacant position that more closely matched Ford’s previous position, under the ADA, Marion County would have been obligated to reassign her to that position.

Significantly, the Seventh Circuit suggested that Marion County, as the employer, had an obligation to “to canvass available positions and, if a vacant job existed that Ford was qualified to perform with or without reasonable accommodations, to offer it to her.” Employers should review their current process regarding reassignment as a potential reasonable accommodation. Once reassignment becomes a potential accommodation, employers should actively canvas their current vacancies in relation to the disabled employee’s qualifications. If there is a match, the employee should be offered the job. Merely inviting employees, without any employer assistance, to apply for any vacant positions for which they think they may be qualified is insufficient.

Lindner & Marsack, S.C. represents employers in all areas of labor and employment law. If you have any questions about the ADA, reasonable accommodation and the possibility of reassignment, or any other labor or employment issue involving your business, please contact us at any time.

SUPREME COURT LIMITS USE OF CLASS ACTION ARBITRATIONS

By:  Alan M. Levy

On April 24, 2019 the United States Supreme Court held that an employee cannot expand an individual claim to a class action arbitration unless both parties have explicitly agreed to that process.  Arbitration is created by contract; the parties must agree to waive their statutory right to have a court determine whether their employment contract or other relationship terms were breached.

In recent years the courts have held that an employee who is not subject to a union contract can be required to arbitrate a personal dispute pursuant to an employment contract, acceptance of a company rule, or other form of agreement instead of taking their claim to a court or to an agency such as the EEOC.  At the same time, some employee claims have been presented on a class-wide basis, the complainant arguing that a significant number of fellow employees all had the same issue, such as the method for calculating overtime or obtaining a promotion.  These complainants often argued that individual arbitrations were not economically viable for employees, and that the same remedy should apply to all similarly situated employees.  What had been described as a speedy, inexpensive dispute-resolution process through arbitration for individuals could become a full-scale class action lawsuit if the single employee could expand the potential remedy this way.

In Lamps Plus, Inc. v. Varela, the United States Supreme Court held 5-4 that claims by individual employees could not be expanded into class arbitrations unless the arbitration agreement (typically in the person’s employment contract) specifically provided that the larger process was permissible.  The Court found that the shift from individual to class arbitration was such a “fundamental change” that it “sacrifices the principal advantage of arbitration” and “greatly increases risks to defendants.”

The employee had argued that the parties’ agreement to arbitrate was ambiguous and any choice of process possible under that ambiguity should be interpreted against its author – the party that had drafted the (employment) agreement requiring arbitration to the exclusion of court or agency actions.  Chief Justice Roberts stated for the majority that “Arbitration is strictly a matter of consent,” and an affirmative agreement to both the subject-matter and the procedure for arbitration is necessary to require use of that process.  A class arbitration is fundamentally different from the individualized form envisioned in the Federal Arbitration Act; class arbitration “sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.”  Use of this process requires an affirmative “contractual basis for concluding that the party agreed to do so,” and silence or ambiguity in the language of the underlying agreement to arbitrate cannot be taken as that affirmative consent to this expanded process.

This decision reiterates the contractual basis and limits of arbitration.  Waiving the right to court or agency decision-making and accepting the determination of a private arbitrator require the affirmative consent of a clear contract to do so.

Should you have any questions about the elements of a binding arbitration agreement, its implementation, and its scope, please contact one of the attorneys here at Lindner & Marsack, S.C.

EMPLOYEE NOT ENTITLED TO FURTHER WORKER’S COMPENSATION BENEFITS BECAUSE HER DISABILITY-CAUSING SURGERY WAS NOT RELATED TO A COMPENSABLE WORK INJURY

By:      Daniel M. Pedriana and Claudia R. Harke

On August 28, 2018, District I of the Wisconsin Court of Appeals held that the Plaintiff was not entitled to further worker’s compensation benefits because her disability-causing surgery was not related to a compensable work injury.

In Theresa Payton-Myrick v. LIRC, Theresa Payton-Myrick was diagnosed with arthritic changes and degenerative disc disease in her spine. Payton-Myrick was employed as an administrative assistant at the University of Wisconsin-Milwaukee. On July 21, 2009, she fell out of her desk chair and sustained several muscle strains. She subsequently received opinions from several doctors, one of whom recommended a spinal fusion surgery.

Despite conflicting medical opinions, Payton-Myrick underwent surgery, which resulted in multiple procedures and left her “arguably disabled.” Payton-Myrick applied for worker’s compensation benefits. The UW System denied her benefits, which caused Payton-Myrick to file a worker’s compensation claim.

An administrative law judge concluded that Payton-Myrick had “suffered a work-related injury that aggravated Payton-Myrick’s back condition beyond its normal progression” and that “the treatment, including surgery, was necessary and reasonable.”

The Labor and Industry Review Commission (“LIRC”) reversed the ALJ and found that Payton-Myrick’s muscle strains were from a compensable work injury, however, the work injury had healed and did not aggravate her pre-existing condition enough to necessitate surgery. LIRC also made several factual findings including that Payton-Myrick’s disability causing surgeries treated her pre-existing condition, not her compensable work injury.

The Court of Appeals upheld LIRC’s denial of further benefits based on a holding from the Wisconsin Supreme Court in Flug v. LIRC. In Flug, the Supreme Court ruled that Wis. Stat. § 102.42(1m), which states that if an employee who has sustained a compensable injury undertakes treatment in good faith that is medically acceptable, but unnecessary, the employer shall pay for all disability incurred as a result, only applies if the unnecessary, but acceptable surgery is to address the workplace injury.

Since LIRC made a factual finding that Payton-Myrick’s two spinal surgeries were focused on her pre-existing disc problems, not the workplace injury, the Court of Appeals upheld LIRC’s denial of further benefits.

This Decision does not drastically change the law surrounding whether an employee is entitled to further worker’s compensation benefits, however, it reinforces that Wis. Stat. § 102.42(1m) only applies if the unnecessary-but-acceptable surgery was done to address the workplace injury. However, it will be important to have treating and independent doctors specifically note the reason for an employee undergoing an unnecessary-but-acceptable surgery, as that will determine whether they are owed additional benefits.

The time to appeal this decision has passed and the decision remains unpublished.

If you have questions about this decision, please contact Daniel M. Pedriana by email at dpedriana@lindner-marsack.com or Claudia R. Harke by email at charke@lindner-marsack.com or any other attorney with whom you have been working with at Lindner & Marsack, S.C.

SUPREME COURT UPHOLDS USE OF CLASS ACTION WAIVERS

By:  Jenna K. Leslie

Yesterday, the Supreme Court of the United States issued a significant victory for employers when ruling that class and collective action waivers in employment arbitration agreements are fully enforceable under the Federal Arbitration Act (FAA) and do not violate an employee’s rights under the National Labor Relations Act (NLRA).

In Epic Systems Corp. v. Lewis (a companion case to National Labor Relations Board v. Murphy Oil USA and Ernst & Young LLP v. Morris), the high court issued a 5-4 decision upholding the validity of class action waivers in arbitration agreements.  Justice Neil Gorsuch, writing the majority opinion, explained that the FAA unequivocally requires federal courts to enforce arbitration agreements according to their terms, and nothing in the NLRA, which was enacted after the FAA, was intended to negate that requirement.  The opinion specifically found that Section 7 of the NLRA focuses on an employee’s right to organize and bargain collectively, but it does not create a right to pursue class or collective action lawsuits.

Writing for the dissent, Justice Ruth Bader Ginsburg called the majority opinion “egregiously wrong” and argued that the NLRA was intended to equalize the power imbalance in most employment relationships by allowing employees to band together through collective action to improve the terms and conditions of their employment.  The majority opinion rejected this notion, concluding that there is nothing in the NLRA that suggests a clear intention to displace the provisions of the FAA.

In recent years, employees have effectively used class and collective action procedures to bring massive wage and hour claims in both state and federal court.  This decision will curb those lawsuits and allow employers to rely on the enforceability of class and collective action waivers and arbitration provisions within their employment agreements.  Class and collective action waivers are useful tools used to preserve confidentiality, resolve claims more quickly, and limit potential exposure to collective action lawsuits.

This decision is said to affect at least 25 million existing employment agreements.  Employers should review their employment arbitration agreements carefully to determine which agreements are affected by this decision.  Employers should also consider whether it makes sense to implement such agreements prospectively, as the decision paves the way for employers to include class and collective action waivers in future employment agreements.

If you have questions about this material, please contact Jenna K. Leslie or  any other attorney you have been working with at Lindner & Marsack, S.C.

We look forward to seeing many of you tomorrow at our 2018 Annual Compliance/Best Practices seminar held at the Sheraton Hotel in Brookfield, Wisconsin.

Employers Who Utilize Temporary Or Loaned Employees Are Now Potentially Liable For Third Party Claims Brought By An Injured Employee

By:  Daniel Pedriana, Joseph Birdsall and Claudia Harke

On January 9, 2018, District III of the Wisconsin Court of Appeals decided that Wis. Stat. § 102.29(6)(b)1 allows an injured temporary employee to choose between filing a worker’s compensation claim and suing the temporary employer for tort damages.

In Rivera v. West Bend Mutual, Carlos Rivera and two other individuals died in a single-vehicle accident. Rivera was survived by five children, two of whom were minors at the time of his death. At the time of the accident, Rivera was a passenger in a vehicle owned by Alpine and insured by West Bend. Rivera was employed by Alex Drywall, which, in turn, had provided him to perform work for Alpine. Alpine paid Alex Drywall for Rivera’s services and Alex Drywall paid Rivera for his work.

In February 2016, Rivera’s two minor children and the special administrator of Rivera’s estate commenced a wrongful death lawsuit against Alpine and West Bend. The Estate had not filed a claim for worker’s compensation under the Act. A Milwaukee County Circuit court judge granted summary judgment for Alpine and West Bend, concluding that because Rivera was an employee of a temporary help agency (Alex Drywall), the Estate was prohibited from bringing a tort action against Alpine.

On appeal, the Wisconsin Court of Appeals reversed the circuit court, ruling that the exclusive remedy provision of the Worker’s Compensation Act does not bar a temporary employee from bringing tort claims against a third party.  The Court found that Alex Drywall was Rivera’s employer, and therefore, the exclusive remedy provision prohibited the Estate from bringing a tort claim against Alex Drywall, but it did not prohibit the Estate from pursuing tort claims against Alpine and West Bend, which the Court found to be third parties in this case.

The Court concluded that Wis. Stat. § 102.29(6)(b)1 only bars tort claims from temporary employees who make claims for worker’s compensation. In this case, it was undisputed that the Estate had not made a worker’s compensation claim. As a result, the Estate was not barred from pursuing tort claims against Alpine and West Bend—the temporary employer and its insurer.  The Estate was still barred from suing Rivera’s primary employer, Alex Drywall, which the Court treated as a temporary help agency in this case.

The Rivera decision is significant because it exposes certain Wisconsin employers to tort liability that they were previously sheltered from. Under the Decision, if a temporary employee is injured, the temporary employee may pursue tort claims against the employer that they are placed with or they may file a worker’s compensation claim against their primary employer—the temporary employment agency.

Employers who compensate temporary employment agencies for the services of employees primarily employed by the temporary help agencies should be concerned about tort liability in the event of an injury. Even if other employers do not advertise themselves as temporary help agencies, they may fit the definition of temporary help agency under the statute like Alex Drywall did in the Rivera decision. Furthermore, the Rivera decision indicates that loaned employees under Wis. Stat. §102.29(7) produce the same tort liability as temporary employees who are primarily employed by a temporary help agency.

This decision is currently unpublished, but was recommended for publication by the Third District of the Wisconsin Court of Appeals. The parties have 30 days to file a petition for review to the Wisconsin Supreme Court. This 30 day period will expire on February 8, 2018. As of January 24, 2018, no petition has been filed.

If you have questions about this material, please contact Daniel M. Pedriana (dpedriana@lindner-marsack.com), Claudia R. Harke (charke@lindner-marsack.com), or Joseph D. Birdsall (jbirdsall@lindner-marsack.com) or any other Lindner & Marsack, S.C. attorney.

 

Wisconsin Supreme Court Declares that Non-Solicitation of Employee Provisions are Governed by the Same Wisconsin Statute that Addresses Non-Compete Provisions

By Oyvind Wistrom

The Wisconsin Supreme Court issued a landmark decision on Friday in the case of The Manitowoc Company, Inc. v. John Lanning, 2018 WI 6.  The case represented the Court’s first opportunity to determine whether a Non-Solicitation of Employee (NSE) provision in a contract between an employer and an employee is governed by the same statute, Wis. Stat. § 103.465, that governs the enforceability of non-compete restrictive covenants.  The majority of the Court concluded that NSE provisions are indeed governed by Wis. Stat. § 103.465, and then proceeded to find the NSE at issue overbroad and unenforceable because it restricted Lanning’s ability to engage in ordinary competition attendant to the free market.

The case involved the interpretation of a NSE provision signed by Lanning while he was previously employed by The Manitowoc Company, which prohibited him, for a period of two years following the termination of his employment, from soliciting, inducing or encouraging any employee of The Manitowoc Company to terminate his/her employment with The Manitowoc Company or to accept employment with a competitor, supplier or customer of The Manitowoc Company.  After separating from The Manitowoc Company, Lanning accepted employment with SANY, a competitor of The Manitowoc Company’s crane division.  It was alleged that he subsequently engaged in recruitment efforts in which he encouraged employees of The Manitowoc Company to accept employment with SANY.

The Circuit Court initially ruled in favor of The Manitowoc Company and awarded damages related to the alleged breach.  The Wisconsin Court of Appeals reversed and ruled in favor of Lanning, finding the NSE provision unenforceable under Wis. Stat. § 103.465 because it was broader than reasonably necessary to protect a legitimate business interest of The Manitowoc Company.  Specifically, the NSE was overbroad because it restricted Lanning from encouraging as many as 13,000 employees of The Manitowoc Company, many of whom worked in a different division of the company and with whom Lanning had no contact, to terminate their employment with The Manitowoc Company.

The majority of the Justices on the Wisconsin Supreme Court agreed and affirmed the decision of the Court of Appeals.  In so doing, the Court first concluded that Wis. Stat. § 103.465 governed the enforceability of NSE provisions.  The Court thus clarified that in order for a NSE provision to be enforceable under Wisconsin law, it must be (1) reasonably necessary for the protection of the employer; (2) provide a reasonable time period; (3) provide a reasonable territorial limit; (4) not be harsh or oppressive as to the employee; and (5) not be contrary to public policy.  The lead opinion of the Court concluded that the NSE at issue was not reasonably necessary to protect a legitimate interest of The Manitowoc Company.  In particular, as the restriction was worded, it prevented Lanning from encouraging any Manitowoc Company employee, no matter the employee’s job or location, to terminate his or her employment with Manitowoc for any reason, or soliciting any Manitowoc Company employee to take any position with any competitor, supplier or customer of The Manitowoc Company.  Without a specified territory or class of employees, the provision restricted Lanning’s conduct with respect to all employees of The Manitowoc Company everywhere.  The restriction was simply too broad for the Court to enforce.

The primary lesson to be learned from this case is that in order for a Non-Solicitation of Employee provision to be enforceable under Wisconsin law, the provision must be narrowly tailored to protect a legitimate business interest.  An employer does not have a protectable interest in restricting competition of the type that an ordinary stranger can provide.  For instance, while The Manitowoc Company’s NSE was extremely broad, a NSE that, for example, only prevents the recruitment or poaching of key employees with whom a former employee had contact for a specified period of time, may still be enforceable under Wisconsin law.  Even such a restriction must still be drafted in such a way as to ensure it satisfies all five statutory requirements outlined above.  Employers who utilize NSE provisions should review these provisions carefully with legal counsel to ensure they are compliant and enforceable under Wisconsin law.

For further information, or assistance in drafting or reviewing your restrictive covenants, please contact Attorney Oyvind Wistrom at (414) 273-3910 or via email at owistrom@lindner-marsack.com.  Mr. Wistrom was lead counsel in The Manitowoc Company case and successfully argued the case before the Wisconsin Supreme Court.