Jimmy John's noncompete: Low-wage workers can't work at other sandwich shops for two years.

Jimmy John’s Makes Its Employees Sign a Ridiculous Noncompete Agreement

Jimmy John’s Makes Its Employees Sign a Ridiculous Noncompete Agreement

Moneybox
A blog about business and economics.
Oct. 15 2014 8:56 AM

Jimmy John’s Makes Its Employees Sign a Ridiculous Noncompete Agreement

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Don't even think about Subway.

Photo by Wystan via Flickr

Jimmy John's must think it knows an awful lot about the art of the sandwich, because it's doing its utmost to keep employees from taking their sandwich-making skills elsewhere. According to a noncompete clause the Huffington Post dug up, Jimmy John's makes low-wage employees such as sandwich-makers and delivery drivers agree not to work for competing establishments for two years after leaving the company. Noncompetes tend to be used with managers or high-ranking employees with inside information about the business, but it's not even the strangest part of this situation. The strangest part would be Jimmy John's definition of a competitor.

According to the noncompete clause, employees must agree that for two years after leaving Jimmy John's, they 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 within three (3) miles of either [their current place of employment] or any such other Jimmy John's Sandwich Shop." The clause, which has come up because of a lawsuit filed against Jimmy John's this summer, has drawn criticism from employees for being broad and "oppressive." Kathleen Chavez, the lawyer representing employees in the case, told HuffPo that the terms of the noncompete would prevent a former Jimmy John's employee from working in 6,000 square miles in 44 states and Washington, D.C.

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Rules on noncompete agreements vary by state, but generally such clauses are considered enforceable only when they are appropriately narrow and designed to protect a legitimate business interest. California, which is particularly in favor of competition and the employee's right to change jobs, has a blanket rule that noncompetes are unenforceable. Since Jimmy John's clause is so broad and seems to have little or no vital business justification behind it (what state secrets do those sandwiches contain?), it's likely to be considered unenforceable pretty much anywhere. That said, an unenforceable clause is still problematic if it's scaring employees who don't know any better into thinking they can't work at another sandwich shop—or another restaurant of any sort with a trade in sandwiches—for the next two years.

Alison Griswold is a Slate staff writer covering business and economics.