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Labor & Employment

Illinois attorney general sues Jimmy John's over noncompete clauses for low-wage workers

Illinois Attorney General Lisa Madigan claims in a lawsuit that Jimmy John’s sandwich restaurants are violating state law by requiring low-wage workers to sign restrictive noncompete agreements.

The suit filed on Wednesday in Cook County says it is intended to prevent the sandwich chain from continuing to require the noncompete agreements and to ensure the employees know they are unenforceable. The News-Gazette and WLS have stories, while a press release links to the suit (PDF).

The Jimmy John’s agreement barred employees from working during their employment and for two years afterward at nearby businesses that get more than 10 percent of their revenue from sales of from “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches.” One version of the agreement bars employment at such restaurants within three miles of any Jimmy John’s, while the other has a geographic limit of two miles.

The company initially said it had discontinued the noncompete agreements in April 2015, but later amended its response to say the change was never implemented, according to the lawsuit.

Illinois law requires noncompete agreements to be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place, according to a press release. The suit seeks a declaratory judgment that the agreements are unenforceable and void.

Jimmy John’s corporate office sent a statement to the News-Gazette and WLS expressing disappointment in the lawsuit,

“The Attorney General’s office approached us in September 2015 to discuss concerns that it had about the use of non-compete agreements in Jimmy John’s stores, and we were nothing but cooperative and transparent throughout the process,” the statement said. “Though the attorney general never indicated to us that any worker had ever reported a concern about the agreements, we made clear to the attorney general that we would never enforce a non-compete agreement against any hourly employee that might have signed one. We offered to have our CEO sign a declaration to that effect, and pointed the attorney general to an April 2015 ruling dismissing a federal claim against Jimmy John’s over the use of non-compete agreements, on the grounds that those agreements were not at risk of being enforced.

“We also told the attorney general that the agreements had been removed from new-hire paperwork and taken out of use long before their inquiry began. When we learned that, through an administrative error, certain company stores were using outdated, pre-printed paperwork, we immediately corrected the error and voluntarily informed the attorney general. We remain committed to resuming productive discussions with the attorney general.”