Illinois Attorney General Lisa Madigan filed an unfair labor practice lawsuit Wednesday against the two corporate entities of Jimmy John's, the sandwich shop chain.
The suit alleges that Jimmy John's Enterprises LLC and Jimmy John's Franchise LLC imposed "highly restrictive non-compete agreements on its employees, including low-wage sandwich shop employees and delivery drivers whose primary job tasks are to take food orders and make and deliver sandwiches." Jimmy John's operates some 300 restaurants in Illinois.
According to the lawsuit, Jimmy John's mandated that all employees sign a non-compete agreement in order to work for the sandwich chain. The agreement bars employees from working for any business that makes more than 10 percent of their revenue from selling "submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches." The agreement applies to any business located with three miles of any Jimmy John's location in the nation and is enforced during an employee's tenure with Jimmy John's and for two years after they leave the company. A new version of the agreement reduced the geographic distance of enforcement to two miles.
Madigan asserts that the non-compete agreement is "illegal and unenforceable under Illinois law."
Here's more from Madigan's office on the rules for non-compete agreements in Illinois and the Jimmy John's case:
Under Illinois law, non-compete agreements must be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place. Madigan's office has been investigating Jimmy John's use of non-compete agreements for low-wage sandwich shop employees. Jimmy John's two corporate entities initially stated they had ceased using non-competition agreements in April 2015, but later amended their response and revealed the change in corporate policy was not implemented or communicated to corporate-owned sandwich shops, employees or franchisees.
Madigan's office is pushing for a declaratory judgment that would void the agreements, making them unenforceable. Madigan is also looking into other companies that have employees working under similar non-compete agreements.
"Preventing employees from seeking employment with a competitor is unfair to Illinois workers and bad for Illinois businesses," Madigan said in a statement. "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."
UPDATED (10:51 p.m.): Jimmy John's provided the following comment to Progress Illinois in regards to the Illinois Attorney General's lawsuit:
We were disappointed to learn of the Illinois Attorney General's filing this afternoon. 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. 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.