State targeting sandwich shops’ non-compete rule

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Attorney General Lisa Madigan is going after the Jimmy John’s sandwich-shop franchise over what she contends are highly restrictive non-compete agreements on employees.

Madigan filed a lawsuit today against Jimmy John’s two corporate entities – Jimmy John’s Enterprises LLC and Jimmy John’s Franchise LLC – over the non-compete agreements on employees, including sandwich shop employees and delivery drivers.

Jimmy John’s operates nearly 300 sandwich shops in Illinois, including one in Jacksonville.

“Preventing employees from seeking employment with a competitor is unfair to Illinois workers and bad for Illinois businesses,” Madigan said. “By locking low-wage workers into their jobs and prohibiting them from seeking better paying jobs elsewhere, the companies have no reason to increase their wages or benefits.”

Jimmy John’s has yet to respond to the allegations.

Madigan’s contends all employees are required to sign a non-compete agreement as a condition of employment. The agreement restricts employees during their employment and for two years after from working in any other business that earns more than 10 percent of its revenue from selling “submarine, hero-type, deli-style, pita, or wrapped or rolled sandwiches.” The restriction applies to any sandwich business within three miles of any Jimmy John’s Sandwich Shop in the country, according to the lawsuit.

The state argues the agreement is illegal and unenforceable under Illinois law. Non-compete agreements in Illinois must be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place, Madigan said.

Jimmy John’s corporate entities reported they had ceased using non-competition agreements in April 2015, but later amended their response and indicated the change in corporate policy was not implemented or communicated to sandwich shops, employees or franchisees.

The lawsuit seeks a declaratory judgment that the agreements are unenforceable, void and rescinded. Madigan’s office is also investigating other companies it believes have imposed restrictive non-compete agreements.