Fast Food Chain Implements Non-Compete Clause

[Zaune]

Huffington Post, who were kind enough to provide a link to a PDF of the new employee contracts.

If you're considering working at a Jimmy John's sandwich shop, you may want to read the fine print on your job application.

A Jimmy John's employment agreement provided to The Huffington Post includes a "non-competition" clause that's surprising in its breadth. Noncompete agreements are typically reserved for managers or employees who could clearly exploit a business's inside information by jumping to a competitor. But at Jimmy John's, the agreement apparently applies to low-wage sandwich makers and delivery drivers, too.

By signing the covenant, the worker agrees not to work at one of the sandwich chain's competitors for a period of two years following employment at Jimmy John's. But the company's definition of a "competitor" goes far beyond the Subways and Potbellys of the world. It encompasses any business that's near a Jimmy John's location and that derives a mere 10 percent of its revenue from sandwiches.

From the agreement:

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.

It isn't clear what sort of trade secrets a low-wage sandwich artist might be privy to that would warrant such a contract. A Jimmy John's spokeswoman said the company wouldn't comment.

The noncompete agreement is now part of a proposed class-action lawsuit filed this summer against Jimmy John's and one of its franchisees. As HuffPost reported in August, Jimmy John's workers recently brought two lawsuits accusing the company of engaging in wage theft by forcing employees to work off the clock.

Last month, the workers filing one of those suits amended their initial federal complaint to argue that the noncompete agreement is overly broad and "oppressive" to employees. (Another Jimmy John's franchisee included the same noncompete language in a hiring packet posted online, but that packet was apparently pulled from the web after this story was published.)

Kathleen Chavez, the lawyer handling the case, told HuffPost in an email that her two clients named in the complaint were required to sign the agreement as a condition of employment; one is an assistant store manager, the other a former delivery driver and assistant store manager. Chavez argued that, if enforced, the clause would dramatically limit the places a worker could earn a paycheck following a stint at Jimmy John's.

Chavez said the effective blackout area for a former Jimmy John's worker would cover 6,000 square miles in 44 states and the District of Columbia. Founded in 1983, the college-town staple now has more than 2,000 locations.

"It is disturbing this document is being used and it is our position that it has broad impact on thousands of employees," said Chavez, who is a lawyer with the Chicago firm Foote, Mielke, Chavez & O’Neil.

Chavez used the example of a student who works at a Jimmy John's in Illinois during high school. Once he leaves for college at the University of Alabama, he has been foreclosed from working just about anywhere in Tuscaloosa that serves a decent share of sandwiches -- including, in theory, the school cafeteria -- because most of those places fall within three miles of a Jimmy John's.

One Jimmy John's franchisee, who asked to remain anonymous to protect the relationship with the company, told HuffPost that the noncompete clause is part of a standard-issue hiring packet provided by corporate, and the decision to require workers to sign it is ultimately at the discretion of individual franchisees. The franchisee said that since this story was published, some shop owners have decided to pull the noncompete from the packet.

HuffPost knows of no instances in which Jimmy John's has actually enforced this covenant upon a worker, and the company wouldn't necessarily be successful if it tried.

But it's not unheard of for a sandwich chain to enforce a noncompete clause. Last year, a former Subway manager accused her old employer of trying to block her from starting a new job at another sandwich shop, citing a clause the manager signed in 2009.

The effectiveness of noncompetition agreements varies from state to state. If the worker fights the clause in court, the company generally needs to demonstrate that it's legitimately trying to protecting itself, and that the clause is reasonable and wouldn't put an undue burden on a worker.

"A guy who's putting a piece of roast beef between two pieces of rye bread -- the challenge for the employer is to show what the hell this person knows that will hurt you," said one expert on noncompete agreements, who asked not to be named since he isn't involved in the case.

"Without making a judgment about Jimmy John's, I would say the lower you go down the food chain of employees, the question becomes a little more pressing: What is your legitimate business reason here?"

A company in this position may feel there's little to lose by inserting such language into an agreement. Even if the clause failed to hold up in court, the very possibility of limited employment opportunities could dissuade certain workers from rocking the boat -- like, say, those who are trying to unionize their Jimmy John's sandwich shop.

What.

[GrandMasterTerwynn]

Some of us just see that as yet another reason why nobody in their right mind should give Jimmy John's their business. The ownership has fired employees for attempting to unionize, and the current owner backs right-wing nuts like Joe Arpaio, and likes to shoot endangered African wildlife for shits and giggles.

And, of course, there's also this ridiculous "non-compete" clause

[Grumman]

"Oh, whoops! Hahaha, how did that slavery clause get in there! We're so clumsy. Just... pretend you didn't see that!"

[TheHammer]

Clearly they don't want the trade secret that makes them "freaky fast" to fall in to the hands of Subway.

[General Zod]

So basically "If you work for us don't you dare leave. Or we'll make sure you never get another job in this industry again."

Sounds very organized crime like.

[Borgholio]

I'd like to see them try to enforce that. What's the damage clause if the contract were to be violated by the ex-employee?

[Elheru Aran]

It's a legal contract, so if you violate its terms, probably the damage clause is something like "if I get hired by another sandwich store I agree to let Jimmy John's sue my ass into the poorhouse, unto seven generations of my lineage" or some such.

[Zaune]

It's a legal contract, so if you violate its terms, probably the damage clause is something like "if I get hired by another sandwich store I agree to let Jimmy John's sue my ass into the poorhouse, unto seven generations of my lineage" or some such.

If the contract complies with state law; I'm pretty sure California outright bans these kinds of clauses, and probably some other states as well.

[Elheru Aran]

It's a legal contract, so if you violate its terms, probably the damage clause is something like "if I get hired by another sandwich store I agree to let Jimmy John's sue my ass into the poorhouse, unto seven generations of my lineage" or some such.

If the contract complies with state law; I'm pretty sure California outright bans these kinds of clauses, and probably some other states as well.

Yeah, that's the catch there and that's why it's starting to cause a fuss now. For good reason. Honestly, WTF JJ's? I like their sammiches fine but come the fuck on.

[Welf]

If the contract complies with state law; I'm pretty sure California outright bans these kinds of clauses, and probably some other states as well.

They don't have to be enforced. Everyone this clause would apply to is likely too poor to be able to pay for an attorney. So they will try to get another job, or will accept any crap from their employer.

[Gaidin]

JJ has everyone sign the non compete but you can't really have it effect anybody until higher management because it's general practice in how to run a restaurant until then. I mean, what is the lower worker going to do, show subway how to make a sandwich? Subway has its methods and doesn't want JJ's. And could get JJ's by going in and watching anyway.

[Elheru Aran]

JJ has everyone sign the non compete but you can't really have it effect anybody until higher management because it's general practice in how to run a restaurant until then. I mean, what is the lower worker going to do, show subway how to make a sandwich? Subway has its methods and doesn't want JJ's. And could get JJ's by going in and watching anyway.

Which makes the non-competition clause even more pointless. I can understand it with upper management-- there are likely some sides of any business that they like to keep to themselves, such as how their finances are, where they get their supplies, etc. It's reasonable enough to make a polite request that if you leave a food company, don't immediately go to work for a competitor. Putting it into the contract is a bit extreme, but I suppose if there are precedents it's understandable. But with the peons working the sandwich line? No. Their attachment to the company begins and ends at the paycheck and an agreement to follow company rules and regulations. A non-competition clause is pointless for them and could injure severely their future prospects if they decide to leave the store and work somewhere else for whatever reason.

[Gaidin]

Which makes the non-competition clause even more pointless. I can understand it with upper management-- there are likely some sides of any business that they like to keep to themselves, such as how their finances are, where they get their supplies, etc. It's reasonable enough to make a polite request that if you leave a food company, don't immediately go to work for a competitor. Putting it into the contract is a bit extreme, but I suppose if there are precedents it's understandable. But with the peons working the sandwich line? No. Their attachment to the company begins and ends at the paycheck and an agreement to follow company rules and regulations. A non-competition clause is pointless for them and could injure severely their future prospects if they decide to leave the store and work somewhere else for whatever reason.

Well I think from there it's that there's the paperwork they hand everyone that works in a specific restaurant from a peon to a shift manager to a store manager who may not have the intimate knowledge requiring such paperwork, but if a few positions do they throw it out, and only pay attention at the relevant ones that they know a court wouldn't laugh. Or so I would presume. Of course, then you have a trail of stories that start with a manager messing with the wage books which eventually leads to this when a reporter digs deeper, which means it might have been better for them to pay closer attention to their paperwork depending on the positions.

[Elheru Aran]

Regardless, the necessity of such a clause is highly questionable at a lower level of employment. As the article points out, a high schooler who works at a JJ's in Illinois and then goes to U of Alabama theoretically couldn't pick up a job at a sandwich store in the area because there are other JJ's within the three-mile radius. Does he know anything important? No, he just slapped some meat in a piece of bread. But he's still prohibited from taking a sandwich-artist job anywhere else. It's pointless and the only thing it really does is harass employees and serve corporate interests. Including, it would do well to note, intimidating employees who might be considering unionizing in order to resist such corporate interests...

[Guardsman Bass]

The non-compete contract itself is probably unenforceable. Some states just don't allow them to be enforced at all, while in the rest a non-compete can be thrown out if it's not being used to protect vital insider information (and is a huge burden on the employee).

This is pure intimidation on Jimmy John's part, since they presumably know that the non-compete is unenforceable but are using it anyways to intimidate the kids and low-income folks working there from jumping ship as easily if there's higher pay elsewhere. Fits with what GrandMasterTerwynn said up thread about them.

[Eulogy]

This is pure intimidation on Jimmy John's part, since they presumably know that the non-compete is unenforceable but are using it anyways to intimidate the kids and low-income folks working there from jumping ship as easily if there's higher pay elsewhere. Fits with what GrandMasterTerwynn said up thread about them.

Or they really are stupid enough to believe their own bullshit and think that the long lost art of sandwich making will ruin them if it ever got revealed to anybody not a JJ employee.

No matter. In this day of the internet and public terminals it only takes a few moments of research for Joe Sixpack to find out that the clause isn't enforceable and they have no reason to fear lawsuits from JJ. That is, if someone else doesn't tell him first.

[Simon_Jester]

The main problem with clauses like this is that they create the possibility that a single court decision could radically alter the legal regime for many people with little or no warning.

That's a larger issue; for example, think of all the states that have abortion bans already on the books, just waiting for a reversal of Roe v. Wade. But it's also a problem with 'unenforceable' EULAs and employment contracts- all it really takes is one judicial ruling and suddenly we're living in a state of corporate-dominated tyranny in which the very definition of what it means to be an owner or a worker is altered drastically.

[Guardsman Bass]

Non-compete regulations are set at the state level. That's why they vary from state to state in terms of enforcement - they can be enforced in Massachusetts and Texas, but not in California. It would only come up for Supreme Court analysis if they were held to raise a constitutional issue, or if they were in conflict with a national-level law on non-compete contracts (which does not exist IIRC).

Generally speaking, the narrower the circumstances in which they can be required and enforced, the better. California has benefited a lot from non-compete contracts being essentially unenforceable there (although it did lead to a really bad wage-fixing scheme by a number of large tech and film companies, started by George Lucas and Steve Jobs).

[Eternal_Freedom]

Thing is, I don't see how thi would protect any vital "trade secrets." What's to stop a JJs employee walking over to Subway and having a quiet word with the manager? This non-compete stuff is bollocks, plain and simple.

[Irbis]

The main problem with clauses like this is that they create the possibility that a single court decision could radically alter the legal regime for many people with little or no warning.

Yeah. Just see idiotic MPAA/RIAA offensive to make every single mp3 file illegal and how quickly law enforcement jumped into their bed and started dancing to their tune. That scare hit even EU with its laws prohibiting banning making copies for personal use (such as backups) until backlash from consumer protection organizations pushed it back a bit.

When a lot of governments still listens to fundamentalist proponents of blind deregulation and "elastic" work laws (despite them being only totally discredited over last 6 years) being afraid of laws getting worse is pretty natural...

Thing is, I don't see how thi would protect any vital "trade secrets." What's to stop a JJs employee walking over to Subway and having a quiet word with the manager? This non-compete stuff is bollocks, plain and simple.

The laws for non-competing are for the rich and powerful. You'd be surprised what whims they have can wander pretty quickly into law books.

[Rogue 9]

The practical effect is to keep their competitors from easily getting trained employees on their dime rather than actually fearing having their trade secrets stolen, I suspect.

[Borgholio]

The practical effect is to keep their competitors from easily getting trained employees on their dime rather than actually fearing having their trade secrets stolen, I suspect.

How hard is it to train someone to slather mayo on bread?

[Rogue 9]

The practical effect is to keep their competitors from easily getting trained employees on their dime rather than actually fearing having their trade secrets stolen, I suspect.

How hard is it to train someone to slather mayo on bread?

Having worked at Subway lo these many years ago, you'd be surprised.

[RogueIce]

The practical effect is to keep their competitors from easily getting trained employees on their dime rather than actually fearing having their trade secrets stolen, I suspect.

How hard is it to train someone to slather mayo on bread?

Having worked at Subway lo these many years ago, you'd be surprised.

I've had good sandwich artists, and I've had bad sandwich artists. And yes, it does make a difference to the customer. I can't say that it's worth a non-compete clause over but I could sort of see the corporate reasoning behind it.

[Elheru Aran]

The thing is, though, each chain is going to have different techniques, so they aren't necessarily going to translate.

Some lay the meat flat, some fold the meat, some roll it up... others do the condiments in squirt bottles but some use a spoon/knife... etc. Sure, past experience in food service does carry over to some degree-- ultimately it's all about following a list and modifying it to the desires of the customer. If you can get that mindset down and remember what steps things go in (cut the bread, meat, lettuce, and so forth), you can do something like 80% of fast-food production jobs. But there are going to be points exclusive to individual chains that you won't really find at others. So it doesn't make a whole lot of sense to go from company A to chain B and expect that the "secrets" will be worth much of anything, when it is literally a matter of simply doing some things a little differently.

One thing that does come to mind is operational procedures. Some chains may have optimized their layouts and storage for higher efficiency, and that would be something they may want to keep behind their backs. Not really something your average worker would notice, but if they learn to work in such a setting and then move to another, less efficient setting, they might well point out the possible upgrades that could be made.