Illinois Attorney General Sues Sandwich Chain Over Non-Compete Agreements

non-compete agreements, Naperville business law attorneyWhen you own a company or a franchise, you have the right to protect your investment. Hiring and retaining staff costs a great deal of time and money, and it is important to get a strong return on what you have spent. During the training process, your employees will likely learn a great deal about your company’s business practices and strategies, none of which you would really be interested in sharing with your competitors. For these reasons, among others, many businesses require at least some of their employees to sign non-compete agreements, limiting the workers’ freedom to seek new employment for a period of time after leaving their current job.

As a business law attorney, I realize that non-compete agreements can and do serve a very valuable purpose in certain situations. Sometimes, however, a non-compete agreement may be too restrictive, and when such is the case, courts and lawmakers may step in on behalf of the worker. This is exactly the scenario playing out in several states across the country, as a popular sandwich chain faces lawsuits regarding non-compete agreements for its employees.

Illinois Joins the Fight

Earlier this month, Illinois Attorney General Lisa Madigan announced that a lawsuit had been filed by her office against Jimmy John’s, a made-to-order sandwich franchise. Madigan claims that franchise owners have been requiring employees to sign non-compete agreements that would prevent workers from seeking employment anywhere within two or three miles from a Jimmy John’s location that makes more than 10 percent of its revenue from sandwiches similar to Jimmy John’s. The agreements were to remain in force for two years after terminating employment with the chain.

Jimmy John’s also faced pressure for the same reason in New York, but the chain has reportedly agreed to stop including the agreements in new-hire packets. New York Attorney General Eric Schneiderman said this week that the practice is slowly being brought to a halt, but that the franchisor had stopped providing its franchisees with non-compete agreements about two years ago. In response to action in both states, Jimmy John’s has said that its corporate offices would not support enforcement of the agreements for in-store workers.

Non-Compete Agreements and Low-Wage Workers

When you are considering a non-compete agreement for members of your staff, it is crucial that your agreements are reasonable and fair. They must also protect a viable business interest. Limiting where a working who makes about minimum wage can find employment is, at best, questionable as the Jimmy John’s examples demonstrate. If, however, you have entrusted proprietary processes and information to well-compensated worker, a non-compete agreement is more understandable. An employee taking that information to a competitor could directly affect your company in a negative way.

If you would like to know more about non-compete agreements and how to use them properly to protect your business, contact an experienced Naperville business attorney. For more than 30 years, The Gierach Law Firm has been helping business owners develop strategies for growth and stability while remaining in full compliance with the law. Call 630-756-1160 for a consultation today.

 

Sources:

Chicago Tribune

WGN-TV

Jacksonville Journal Courier

CNBC