An Illinois federal judge has declined to grant an injunction to prevent Jimmy John’s franchisees from enforcing their non-compete agreements. This past year, the sandwich franchise giant drew a great deal of public criticism for these agreements, which have been described as shockingly over-restrictive.
Last year, two Jimmy John’s employees filed a class action lawsuit against the company, alleging that they were shorted on pay. As part of that lawsuit, the plaintiffs asked the court to bar Jimmy John’s from maintaining their employee non-competes, arguing that they are overly broad and oppressive.
The issue is that these contracts require low-paid, relatively unskilled workers to agree not to work for a competitor – defined as any business within three miles of any Jimmy John’s franchise that derives 10 percent or more of it’s revenue from the sale of sandwiches – for a period of two years following their departure.
When the lawsuit became publicized, the controversy that ensued was great enough to draw the attention of federal legislators. In June, democratic senators Chris Murphy and Al Franken introduced the Mobility and Opportunity for Vulnerable Employees Act, which would prohibit the use of non-compete agreements for employees earning less than $15 per hour, $31,000 a year, or the minimum wage in the employer’s municipality.
The senators firmly believe that these types of covenants are “anti-competitive and intimidating to workers”. In a letter to the Federal Trade Commision, they argued that if enforced, the agreements would effectively blacklist former employees from entire cities and depress workers earnings by preventing them from taking their labor to the highest bidder.
U.S. District Judge Charles Kocoras ruled against the plaintiffs in the class action suit, stating that because their non-competes had not been enforced by Jimmy John’s, they lacked standing.
In a statement to the press, attorney for the plaintiffs Kathleen Chavez said, “This is really a setback for low-wage earners’ right…this is something very injurious to a demographic that doesn’t have good access to the courts.”