When you think of businesses with noncompete agreements, what do you think about?
Chances are excellent that you think about software engineers, rocket scientists, and designers at Apple. Those are all areas where noncompete agreements make business sense.
When you’re hiring people primarily for their ideas, you obviously don’t want them to run off with all your secrets.
But when you’re hiring someone to make sandwiches, or deliver those sandwiches, does a noncompete agreement really seem necessary? Apparently, it does if you’re Jimmy John’s.
This isn’t even about JJ’s top-secret bread recipes. It’s much more far-reaching than that.
[pullquote]”3. Non-competition covenant. Employee covenants and agrees that, during his or her employment with Employer and for a period of two (2) years after the effective date of termination of his or her employment for any reason, whether voluntary or involuntary and whether by Employer or Employee, or the date on which Employee begins to comply with this paragraph, whichever is later, he or she will not have any direct or indirect interest in or perform services for (whether as an owner, partner, investor, director, officer, representative, manager, employee, principal, agent, advisor, or consultant) 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 within three (3) miles of either (1) [insert address of employment] or (2) any such other JIMMY JOHN’S Sandwich Shop operated by JJF, one of its authorized franchisees, or any of JJF’s affiliates.”[/pullquote]
In summary, if you sign this agreement with JJ’s, you can’t work anywhere that makes more than 10% of its income from sandwiches for two entire years after you stop working at JJ’s—and especially not if that place is within three miles of any JJ’s location.
The chain isn’t quite as everywhere as Starbucks, but JJ’s has over 2,000 locations, according to HuffPo.
HuffPo spoke to lawyer Kathleen Chavez, who is handling a lawsuit involving this non-compete agreement. Chavez told HuffPo that any former Jimmy John’s worker couldn’t work in an area comprising “6,000 miles in 44 states and the District of Columbia.”
And the second paragraph of that non-compete clause is the cherry on top of this ridiculous and unpalatable noncompete sundae:
Not only can former employees not work for any other place that derives even 10% of its income from sandwich-slinging for two years, but you also can’t work for any other Jimmy John’s location for one year after you leave.
This is pure speculation on our part, but that second paragraph looks like it makes no business sense whatsoever. From a business perspective, if you spent time and money to train an employee to make sandwiches or do deliveries the JJ’s way, why would you want to discourage that already-trained employee from working at a different JJ’s location? That’s less money (and time) out of your pocket for training.
Similarly, if that experienced employee is somehow in a financial position to become a partner in a JJ’s franchise, wouldn’t you want someone experienced with the franchise to bring that expertise to a managerial level?
The only way that second paragraph makes sense to us is if JJ’s is worried that an employee at one JJ’s location—upon realizing the full scope of signing this non-compete agreement—might warn other new employees away from signing it.
One more thing to note: HuffPo goes on to say that it doesn’t know of any instances in which JJ’s has tried to enforce this agreement, but does point out that other sandwich chains like Subway have tried to use such clauses to block former employees from post-Subway employment.
The New York Times notes, “What’s most startling about [Jimmy John’s noncompete clause] is that it really isn’t that uncommon…Employers are now insisting that workers in a surprising variety of relatively low- and moderate-paid jobs sign noncompete agreements.”