Summary: Jimmy John’s, a popular sandwich shop, has added a broad non-competition clause to its employment contract that would severely restrict employment opportunities for former workers for a two-year period.
Jimmy John’s, a sandwich company known for its “freaky fast delivery,” may now be known for its “crazy oppressive employment contract.” The Huffington Post reports the popular restaurant includes in its employment agreement a very broad “non-competition” clause. Such clauses are usually reserved for higher-ups, such as managers or other employees who could easily exploit a business’ inside information and give the competition an advantage. The employees behind the counters who drizzle mayo on the sandwiches and the delivery guys and gals taking sandwiches on their bicycles to offices full of hungry workers would not expect to be forced to sign such an agreement.
Jimmy John’s has broken the mold, however, and now requires all employees, even the employees who have little (if any) access to a company’s trade secrets, to sign the non-competition clause.
What does this mean for employees? They cannot work at a Jimmy John’s competitor for two years after employment with Jimmy John’s. Though one may think this simply means an employee cannot leave Jimmy John’s and work at Subway, it appears that Jimmy John’s has expanded the definition of “competitor.” The clause defines competitors as businesses that are not only physically located near Jimmy John’s, but also derives 10 percent of revenue from sandwiches. So, if 90 percent of business is from selling t-shirts, if the business meets Jimmy John’s definition of a competitor, an employee is essentially forbidden from working there, even if the business is not primarily a sandwich shop.
The agreement states, “Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after…he or she will not have any direct or indirect interest in or perform services for…any business which 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 within three miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop.”
Jimmy John’s would not comment on the strict clause. However, a proposed class-action lawsuit was filed this summer against Jimmy John’s and one of its franchisees. Jimmy John’s employees have also filed two lawsuits that allege the company engaged in wage theft by forcing them to work off the clock.
In September, the worker plaintiffs in one of the lawsuits amended their federal complaint to add that the non-compete clause is both overly broad and “oppressive” to employees.
Kathleen Chavez, an attorney for the plaintiffs, stated that her clients were forced to sign the employment agreement as a condition of being hired. One of her clients is a former delivery driver and assistant store manager; the other is an assistant store manager. According to Chavez, if the clause is enforced, it would severely limit the places a former employee of Jimmy John’s could find a job. The “blackout” would cover 6,000 square miles in 44 states, plus Washington, D.C. Jimmy John’s has more than 2,000 restaurants nationwide—which, no doubt, would be pretty hard to avoid. “It is disturbing this document is being used and it is our position that it has broad impact on thousands of employees,” Chavez explained.
Chavez provided an example of how limiting the non-competition clause could be: a student works at an Illinois Jimmy John’s during high school. Should that student head for college at the University of Alabama, he’s prohibited from working anywhere in Tuscaloosa that makes a portion of its revenue from sandwiches—perhaps even the college cafeteria—because most such places of employment are located within three miles of a Jimmy John’s.
One franchisee, who spoke on condition of anonymity, said that the clause is part of a standard-issue hiring packet that the corporate office provides to franchisees. Ultimately, the franchisee makes the call as to whether the clause is included. Some restaurant owners have removed the language from their employment contracts.
Although it does not appear that Jimmy John’s has attempted to enforce the clause, it remains unlikely that the restaurant would win if it tried to do so. The enforceability of such clauses vary depending on state law. Should an employee fight a clause in a court case, the company will need to show that it is trying to protect itself, that the clause is reasonable, and that the clause would not put an undue burden on the employee.
However, many restaurants do seek to enforce these clauses. Last year, a former Subway manager accused Subway of attempting to prevent her from starting a new job at a different sandwich shop, pointing to a clause that was signed in 2009.
Jimmy John’s may have a difficult time proving that its non-competition protects the company. “A guy who’s putting a piece of roast beef between two pieces of rye bread—the challenge for the employer is to show what the hell this person knows that will hurt you,” an expert revealed. “Without making a judgment about Jimmy John’s, I would say the lower you go down the food chain of employees, the question becomes a little more pressing: What is your legitimate business reason here?”
However, there are other reasons a company may include these clauses in their employment contracts. Even if it was not enforced by a judge, the perceived decrease in employment opportunities may prevent employees from stirring things up at their restaurants, for example, such as those who are attempting to unionize Jimmy John’s.
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