Illinois AG Targets Non-Compete Agreements for Sandwich Makers

Sandwich with prosciuttoNon-competition agreements are common — and commonly litigated — throughout several fields, such as sales, technology, and medicine.  Protection of trade secrets and the maintenance of long-term customer relationships are commonly cited as justifications for such agreements.  In a lawsuit filed on June 8, 2016 in Illinois state court, Illinois AG Lisa Madigan alleged that, by signing non-competition agreements with sandwich makers and delivery persons, the popular sandwich shop Jimmy John’s was “locking low-wage workers into their jobs and prohibiting them from seeking better paying jobs elsewhere.”

The lawsuit was brought pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 I.L.C.S. 505.  The AG alleges, among other things, that “the use of non-competition agreements for at-will, low-wage workers limits the ability of employees to find new employment, limits the ability of employees to move to a new state and find employment where Jimmy John’s locations exist,” and that “[t]his suppression of wages and hindrance on mobility impacts trade or commerce throughout Illinois.”  The AG acknowledged that non-compete agreements, if supported by a legitimate business interest and narrowly tailored, are legal in Illinois, but argued that the agreements used by Jimmy John’s were neither.  For example, the AG cited the fact that the agreements applied regardless of how long an employee was employed, and prevented former employees from working not only at sandwich shops but at any sort of business that derived more than ten percent of revenue from the sale of “submarine,” “hero-type,” “deli-style,” “pita,” and/or “wrapped” or “rolled sandwiches.”  Such businesses might include, the AG alleges, “any business — a gas station, coffee shop, a sports arena — that happens to sell sandwiches and meets the revenue threshold.”

Notably, the lawsuit targeted both Jimmy John’s Enterprises, which owns and operates Jimmy John’s locations directly, as well as Jimmy John’s Franchise, which licenses the Jimmy John’s brand to franchisees.  The complaint alleges that materials supplied by Jimmy John’s Franchise to franchisees contained non-competition agreements for all employees, and that franchisees adopted the agreements as part of their standard hiring practices.

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