Non-compete agreements were initially intended to keep trade secrets safe. They originated in the tech industry where certain employees have the potential to take highly sensitive information with them when they leave the company. This could be disastrous to the company if employees decide to leave to work for a competitor and take all the confidential information they’ve been working with.
In order to prevent this from happening, companies had employees sign noncompete agreements (often as part of their employment agreement) stating they would not work for a direct competitor within a certain radius of the employer and a certain time frame (usually six months to a year).
Despite these sensible beginnings, employers of all industries have incorporated noncompete agreements into the employment contracts of just about all their workers. Even minimum wage employees on the bottom of the corporate ladder have been forbidden from working for a competitor.
Some of the companies that have been called out for having ridiculous noncompete agreements and have backed off. But not Jimmy John’s except after being sued.
According to a recent class action lawsuit, the sandwich company forbids its sandwich makers from going to work for another company that makes at least 10% of its sales from sandwiches and is located within three miles of any Jimmy John’s location.
Because of the prevalence of Jimmy John’s locations, this essentially forbids all Jimmy John’s employees from working for any other fast food chain, restaurant, or deli. Despite having faced public ridicule for this agreement, Jimmy John’s refuses to get rid of it and has won the approval of a federal judge in Illinois who refused to grant an injunction against the noncompete agreement based on the argument that Jimmy John’s has never enforced the agreement and has no intent to do so.
Two former Jimmy John’s employees, Emily Brunner and Caitlin Turowski, filed the lawsuit and asked the court to grant an injunction against any of Jimmy John’s franchisees from enforcing the noncompete agreement.
Jimmy John’s argued that an injunction would be improper because the noncompete agreement has never been enforced. Since Brunner and Turowski were never harmed by enforcement of the noncompete agreement, Jimmy John’s argued the two ex-employees had never been hurt by it and so they had no cause to seek an injunction.
U.S. District Judge Charles Korcoras sided with Jimmy John’s, stating that, “The lack of any prior enforcement diminishes the Plaintiffs’ argument that the wrongful conduct will occur again because no injury occurred to begin with.”
Jimmy John’s franchisee JS Fort Group pledged not to enforce the noncompete agreements against Brunner and Turowski, and that was enough to satisfy Judge Korcoras.
Most states allow employers to include noncompete agreements, although they require the agreements to be reasonable and only enforce such restrictions as would protect a legitimate business interest of the company. It’s hard to see what legitimate business interests are protected by preventing sandwich makers from working for competitors. Instead, it leaves low-income workers wondering if they’ll get sued by taking a better job somewhere else.
Kathleen Chavez, the attorney for the plaintiffs, pointed out that whether or not the noncompete agreement has been enforced isn’t the issue. The mere existence of the agreement can keep employees trapped in low-income jobs because they’re afraid to look for positions with other companies that might pay better. This argument would have had more power to it if the lawyers had pointed out real world examples of actual Jimmy John’s employees who hadn’t looked for or taken new jobs due to this provision. However, under the circumstances, many Jimmy John’s employees will simply ignore the agreement and get a new job. Also now, If they read Jimmy John’s position that it has never enforced the agreement or hear about it then the provision will not deter them from looking for a new job. Also given that Jimmy John’s certainly has no real secrets or special know to protect as to hourly sandwich makers would be very unlikely to prevail on a lawsuit enforcing the agreement in Illinois where generally two years of employment and proving protectable business interest which the employee has access to and uses is required. Where no damages can be proven as the Judge found here then continuing a lawsuit over an uneforceable agreement which has never been enforced isn’t a claim that the Courts need to resolve.
Our Chicago non-compete and non-solicitation agreement lawyers have defended high level executives in covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.
Lubin Austermuehle a firm of Chicago business dispute lawyers handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Naperville, Oak Brook and Chicago have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results.
DiTommas-Lubin a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Based in Oakbrook Terrace and downtown Chicago, our Wheaton noncompete clause lawyers take cases from Wheaton and Joliet and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at 630-333-0333 today.