Jimmy John’s Will Stop Making Low-Wage Employees Sign Non-Compete Agreements
June 30, 2016
As published in Fortune on June 22, 2016.
Fast-food franchisor Jimmy John’s will not enforce agreements signed by low-wage employees that barred them from working at other sandwich shops, the New York attorney general’s office said.
The office of Attorney General Eric Schneiderman, which launched an investigation into the Illinois-based company’s non-compete agreements in late 2014, said on Tuesday that Jimmy John’s also agreed to drop the agreements from employment contracts moving forward.
The non-compete agreement prohibited workers during their employment and for two years after from working at any other business that sells “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches” within two miles of any Jimmy John’s shop in the United States.
Schneiderman said in a statement that non-compete agreements for low-wage workers are unlawful.
“They limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued,” he said.
Jimmy John’s said in a statement it was pleased to resolve the matter. It was not clear if the company intended to take the same steps in other states.
The agreement comes two weeks after Illinois Attorney General Lisa Madigan filed a lawsuit claiming Jimmy John’s non-compete agreements served no legitimate business interest and should be struck down.
Jimmy John’s has about 2,400 franchises in 46 states, including about 20 in New York and 274 in Illinois, according to its website.