Jimmy John’s Abandons Non-Compete Agreements for Low-Paid Workers
(December 8, 2016) A settlement agreement with the Illinois Attorney General has torpedoed submarine sandwich maker Jimmy John’s non-compete agreements with low-paid workers and drivers.
Under the agreement, Jimmy John’s Enterprises LLC and Jimmy John’s Franchise LLC agreed to drop its requirement that all employees and drivers sign a non-compete. The non-compete had prohibited the low-wage employees from working for two years for another business earning more than 10 percent of its revenue from selling “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” located within two miles of any Jimmy John’s sandwich shop in the country.
As part of the settlement, Jimmy John’s agreed to:
- Notify all current and former employees that their non-compete agreements are unenforceable and confirm that Jimmy John’s does not intent to enforce them;
- Notify all franchisees in Illinois of the same and ask them to rescind any non-competes they used based on the model agreement provided by Jimmy John’s corporation;
- Implement a process to remove all non-competes from Jimmy John’s “new hire” packets; and
- Agree to use non-competes in compliance with Illinois law moving forward.
In addition, Jimmy John’s agreed to pay $100,000 to the Attorney General to use toward education and outreach to raise public awareness regarding the status of non-compete agreements. Jimmy John’s has about 300 locations in Illinois.
Starting January 1, 2017, Illinois employers are prohibited from imposing a non-compete agreement on “low-wage” employees. Under the Illinois Freedom to Work Act low-wage employees are those who earn the greater of (1) the hourly rate equal to the minimum wage required by law or (2) $13 an hour.
Jimmy John’s also agreed to eliminate non-compete agreements as part of a separate settlement with the New York attorney general.
Balough Law Offices, LLC, carefully crafts non-compete clauses that comply with both statutory and caselaw.