Sandwich chain Jimmy John’s is being challenged in an ongoing class action suit targeting an allegedly unfair non-compete clause in their employee agreements. According to Kathleen Chavez, a lawyer for the class-action plaintiffs, Jimmy John’s used a “one-size-fits-all” approach for its non-compete clause that was not tailored to reflect the individual employee’s knowledge and responsibility level. The restrictions were allegedly far too broad, limiting future employment for a span of 2 years in any facility “that derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John's location in question] or any such other Jimmy John's Sandwich Shop.” According to Ms. Chavez, these sweeping criteria effectively create an off-limits area of approximately 6,000 square miles in 44 states and the District of Columbia and includes facilities such as school cafeterias and other businesses that sell sandwiches as part of their menu.
Although the criteria for non-compete agreements vary from state to state, in order to survive judicial scrutiny employers need to consider drafting non-compete agreements that are reasonable in time and geography. Further, the agreements should not be overly burdensome to the employee, not create public harm and be necessary to protect an employer's legitimate business interests. If non-compete agreements do not adhere to these criteria, courts can find the agreements unenforceable.
Traditionally, non-compete agreements are usually targeted to higher-level employees who have industry-specific knowledge that would pose a threat to the employer if they were to begin to work for a competitor. Without question, Jimmy John's use of non-compete clauses for lower-paid hourly workers is unusual and perhaps unprecedented. It will be up to the courts to determine whether Jimmy John’s may have overreached in its attempt to protect its business interests.
Although the criteria for non-compete agreements vary from state to state, in order to survive judicial scrutiny employers need to consider drafting non-compete agreements that are reasonable in time and geography. Further, the agreements should not be overly burdensome to the employee, not create public harm and be necessary to protect an employer's legitimate business interests. If non-compete agreements do not adhere to these criteria, courts can find the agreements unenforceable.
Traditionally, non-compete agreements are usually targeted to higher-level employees who have industry-specific knowledge that would pose a threat to the employer if they were to begin to work for a competitor. Without question, Jimmy John's use of non-compete clauses for lower-paid hourly workers is unusual and perhaps unprecedented. It will be up to the courts to determine whether Jimmy John’s may have overreached in its attempt to protect its business interests.
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