Jimmy John's 'Oppressive' Noncompete Agreement Survives Court Challenge

04/10/2015 03:11 pm ET | Updated Apr 10, 2015

The use of restrictive noncompete agreements with low-wage workers may have made a laughingstock of Jimmy John's last year, but so far the sandwich chain is doing just fine defending those agreements in court.

This week a federal judge in Illinois declined to grant an injunction that would have prevented Jimmy John's franchisees from trying to enforce the noncompete agreements.

As The Huffington Post first reported in October, the agreement is quite shocking in its scope. An employee who signs it agrees not to work for a competitor -- defined as any business that derives at least 10 percent of its sales from sandwiches and that is located within three miles of any Jimmy John's outlet -- for a period of two years following the employee's departure from Jimmy John's.

If enforced, the restriction would severely limit the erstwhile employees' sandwich-making opportunities, effectively blacklisting them from whole cities for a period of time -- as this map demonstrates. It would also tend to depress the workers' earnings by preventing them from taking their labor to the highest bidder. Members of Congress have asked the Labor Department and the Federal Trade Commission to investigate Jimmy John's over the practice.

Last year, Emily Brunner, a Jimmy John's assistant store manager, and Caitlin Turowski, a former assistant store manager, filed a proposed class action lawsuit against Jimmy John's and a franchisee, claiming they were shorted on pay. As part of their complaint, Brunner and Turowski asked that the judge effectively bar Jimmy John's from maintaining the noncompete agreement with the class of workers covered by the lawsuit. They argued that the agreement is overly broad and "oppressive."

U.S. District Judge Charles Kocoras wasn't buying it. In an opinion issued Wednesday, Kocoras ruled that since the noncompete clause had never been enforced against Brunner and Turowski, the two had never been hurt by it and had no standing to seek an injunction against it.

"The lack of any prior enforcement diminishes the Plaintiffs’ argument that the wrongful conduct will occur again because no injury occurred to begin with," Kocoras wrote.

As part of the case, Jimmy John's franchisee JS Fort Group submitted affidavits pledging that it would not enforce the noncompete agreements against Brunner and Turowski going forward. Under Kocoras' reasoning, that move "satisfied their burden of establishing that the challenged conduct will not 'reappear in the future.'"

The judge essentially accepted the franchisee's argument that there was no controversy since the noncompete agreement was never enforced.

"There has to be a real dispute," said Matthew Disbrow, a lawyer for JS Fort Group. "The franchisee defendants said they had no intention of enforcing these agreements as to these plaintiffs. It never crossed their mind."

But Kathleen Chavez, the plaintiffs' lawyer, said she believes the ruling missed the mark. Even if it goes unenforced here, the Jimmy John's noncompete agreement still exists and can still have a "chilling effect" on workers wondering if it will be used against them if they jump to Quizno's, she said. Unlike Brunner and Turowski, Chavez added, most low-wage workers don't have the resources to hire a lawyer to fight back.

"This is really a setback for low-wage earners' rights," Chavez said. "This is something very injurious to a demographic that doesn't have good access to the courts. When you're making eight bucks an hour, going in and hiring an attorney and paying filing fees to find out whether you can work at Subway is just not practical."

Nowadays, many employers make prospective employees sign noncompete agreements, even in low-wage industries. As HuffPost reported in November, the doggy day care chain Camp Bow Wow requires pet sitters to agree they won't work at similar outfits after leaving the chain. Last month, The Verge reported that Amazon warehouse workers have been required to sign noncompete agreements dramatically limiting their future employment opportunities. The online retailer quickly said it would scrap the agreements.

Unlike, say, a software engineer who knows a company's trade secrets, most of these workers don't have meaningful proprietary information that they could take to a competitor. Since most states say that noncompete agreements have to be reasonable in scope, companies like Jimmy John's and Camp Bow Wow would likely have a hard time trying to enforce such restrictions against a low-wage worker. HuffPost knows of no instances at either company in which a former worker was barred from employment with a competitor.

Even if they're legally dubious, these agreements have probably proliferated because companies feel they have little to lose by asking workers to sign them. And under Kocoras' ruling, they have nothing to lose whatsoever.

This story has been updated with comment from a lawyer for the Jimmy John's franchisee.

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