Ebola has captured the news this week, but there was also a very interesting story for those that follow non-compete news. According to the article below, Jimmy John’s has a standard employment agreement that it uses for workers at its sandwich stores. The agreement is part of a standard employment packet prepared by Jimmy John’s corporate office. The employment agreement contains a non-compete which prohibits former employees from performing services for any business which derives 10% of its revenue from selling sandwiches. The restriction applies for two years after the end of employment. The geographic restriction of the non-compete covers any location within three miles of any Jimmy John’s sandwich shop.
The article includes an interesting hypothetical that demonstrates the reach of this non-compete (and thus its unreasonableness and absurdity). Suppose a high school senior slapped mayo on sandwiches at a Jimmy John’s for his summer job. The high school senior goes to college somewhere on the other side of the country at the end of the summer. The college freshman wants to get a job earning some beer money.
Jimmy John’s’ non-compete technically prohibits the student from working at a sandwich shop if the sandwich shop is within three miles of a Jimmy John’s. The non-compete would also prohibit the college student from waiting tables at a pizza restaurant if the pizza restaurant derives ten percent of its revenue from selling sandwiches and is within three miles of a Jimmy John’s. The non-compete would even prohibit the student from bartending at a bar which makes ten percent of its revenue selling grilled cheese and other sandwiches to college students late at night.
This might be the most overreaching use of non-competes I have ever seen. Interestingly, a class action lawsuit has been filed against Jimmy John’s.
Here is a link to the article: http://www.huffingtonpost.com/2014/10/13/jimmy-johns-non-compete_n_5978180.html.
Neal Weinrich knows noncompetes and trade secrets inside and out. A shareholder at Berman Fink Van Horn, Neal counsels clients in all industries on matters involving restrictive covenants, trade secrets and other competition-related issues.
