Illinois attorney general Lisa Madigan sued Jimmy John’s Enterprises LLC on Wednesday, citing the sandwich chain’s use of non-compete clauses in contracts that restrict where its workers can get jobs after they leave the company.
The agreements prevent Jimmy John’s workers from getting a job from any employer that gets at least 10 percent of its revenue from sandwiches and are located within two miles of any Jimmy John’s location in the U.S.
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“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.”
In a statement, Jimmy John’s said it is disappointed with the lawsuit and that it no longer uses the agreement.
“We were disappointed to learn of the Illinois Attorney General’s filing yesterday,” the company said in an emailed statement. “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.”
The claim the statement references was in a lawsuit filed in federal court by a pair of current and former Jimmy John’s workers. A federal judge in that case refused to grant an injunction preventing the chain from enforcing the non-compete in part because two workers who filed the suit were not prevented from getting any jobs because of the agreement. In addition, the company and the franchisee in the case said they would not enforce the non-compete.
Jimmy John’s is one of the largest sandwich chains in the country, with 2,400 locations, all but 51 of which are operated by franchisees.
Non-compete agreements in the employment world have come under fire from various groups who say the agreements are too restrictive and can hurt workers’ job prospects.
But critics contend that Jimmy John’s non-compete agreements are particularly restrictive. Democratic members of Congress have asked the government to investigate Jimmy John’s over its non-compete agreements.
Yet there are no indications that Jimmy John’s actually enforces the non-compete agreement, or that people haven’t been able to get jobs as a result.
According to complaint filed against Jimmy John’s in an Illinois state court, the company initially said it had stopped enforcing the non-competes. But the lawsuit says the change in policy was not communicated to workers who are thus still bound by the agreements.
The lawsuit also says that Jimmy John’s removed the agreement from an electronic version of the operations manual it gives to franchisees. But the company did not tell operators the agreement had been removed. And the lawsuit says many franchisees continue to require new employees to sign the agreement.
In its statement, however, the company said that the agreements were removed from new-hire paperwork and “taken out of use long before their inquiry began.” The company also said that an “administrative error” led some company stores to use outdated paperwork.
“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,” the company said. “We remain committed to resuming productive discussions with the Attorney General.”
The lawsuit seeks an injunction declaring the non-compete agreements to be unenforceable and void.
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
