Does Your Sandwich Guy Have a Non-Compete?

The New York Times and the Huffington Post both reported on a recent employment law trend: non-compete clauses for low-level workers.

For example, some locations of the Jimmy John’s sandwich shop chain require their workers to sign an employment agreement that includes the following clause:

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 with three (3) miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop.

The company has apparently been using this form since at least 2007.

Jimmy John’s workers have sued the company for alleged wage theft for forcing them to work off the clock. They point to the non-compete agreement as overly broad and oppressive.

Employees allegedly required to sign the non-compete as a condition of employment included an assistant store manager and a former delivery driver.

Since Jimmy John’s has more than 2,000 locations, former company employees could in theory be barred from working in parts of 44 states and the District of Columbia.

An anonymous Jimmy John’s franchisee said that the non-compete was part of the standard hiring packet provided by the parent company, but that it was up to the individual franchiser whether to require employees to sign it.

The Huffington Post said that it knew of no instances in which Jimmy John’s tried to enforce the clause, let alone a case in which it was successful.

However, the HuffPost did report on a case in which a former Subway employee in Michigan got a letter from the company reminding her of the non-compete she signed, after she started work with another local sandwich shop. Subway also contacted her new employer.

In the Subway case, the former employee was prohibited from working for a competing business within 100 miles. She said that she didn’t even remember signing the agreement almost five years earlier.

The former Subway employee was fired from her new job as a result of Subway’s actions.

Why Non-Competes?

A non-compete clause (also called a covenant not to compete) is part of many employment agreements that employees routinely sign without reading or understanding.

In theory, a non-compete is supposed to protect the trade secrets and confidential information of the employer. This confidential information can include things like recipes, business processes, customer lists, marketing plans, and information about products under development.

More commonly, non-competes are enforced for high-level management employees, those in senior sales positions, and engineers and others working in research and development.

It’s much less common for non-competes to be applied to minimum-wage workers, who wouldn’t be expected to have access to sensitive company information.

Litigation Over Non-Competes On the Rise

The Wall Street Journal reports that non-compete lawsuits by former employers against former employees have increased more than 60% over the past ten years.

Critics say that these suits are bad for employee morale and also hurt the economy by discouraging people from starting their own businesses and making it harder for them to hire skilled employees.

What If You’re Asked to Sign a Non-Compete?

If you’re asked to sign an employment agreement by a prospective employer, read it carefully to see if it contains a non-compete clause or any other problematic language.

Just because the non-compete is in there, it doesn’t necessarily mean you’re stuck with it. You can ask whether you can strike it out, with both sides initialing the change before signing. You can also check on whether such a clause is even enforceable in your state.

If you need advice about a non-compete clause or any other employment law issue, it’s a good idea to consult a lawyer who specializes in the field.