Wednesday, October 15, 2014

Two all-beef patties, special sauce … and a noncompete?


While the law of noncompete agreements is state-specific, generally you need three things to enforce such an agreement: reasonableness as to the duration of the agreement, reasonableness as to its geographical scope, and reasonableness as to the interest the employer is attempting to protect. So, what’s so special about a fast-food worker that merits the protection of a non-competition agreement? That’s the question an Illinois federal court is going to answer in Brunner v. Jimmy John’s Enterprises, Inc.
According to The Huffington Post, a Jimmy John’s franchise in Niles, Illinois, requires all of its employees to sign a Confidentiality and Non-Competition Agreement as a condition of employment. The agreement prohibits the employee, for two years following employment at Jimmy John’s, from working at any business within three miles of any Jimmy John’s that derives at least 10% of its revenue from sandwiches
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’s one thing to bind your managers and other high-level employees to a noncompetition agreement. It’s another to require the same of your low-level sandwich makers and cash-register operators. The lower down the food chain you move, the harder it becomes to enforce these agreements. If these employees received specialized training, or if the employer was protecting customer goodwill, the employer would have a better chance in enforcement. But we’re talking about sandwiches. What’s the legitimate business interest this employer is trying to protect?
Employers, use some discretion and common sense. Narrowly tailor your noncompete agreements to the specific interests you are trying to protect. And, if you don’t have such an interest, forego the agreement altogether for that employee or group of employees. Otherwise, you will spend gaggles of money attempting to enforce an unenforceable agreement.

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