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Ill. sues Jimmy John's over common employment practice

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The attorney general of Illinois has sued the Jimmy John’s sandwich chain for requiring crew-level employees to sign non-compete agreements as a condition of employment.

The attorney general’s office said it is already investigating similar provisions in the employment agreements used by other companies, but did not specify whether or not other restaurant companies are among those potential targets.

Jimmy John’s stipulation prohibits someone hired to work for the franchisor from taking a job with any nearby restaurant company that derives at least 10% of sales from sandwiches like the ones sold by the chain. The non-compete provision extends for two years after an employee leaves the chain, and covers any sandwich-selling establishment within three miles of a Jimmy John’s restaurant.

The non-compete language locks employees into low-paying jobs and shields Jimmy John’s from competitive pressures to raise wages, Attorney General Lisa Madigan asserted in a statement announcing the lawsuits. They were technically filed against Jimmy John’s franchise arm, Jimmy John’s Franchise LLC, and the corporate entity that runs non-franchised restaurants, Jimmy John’s Enterprises LLC.

Jimmy John’s said in a statement issued to the media that it had promised the attorney general when she met with the chain last September about the agreements that the non-compete stipulations would no longer be enforced. It also noted that new employment agreements omit the provisions, but that older paperwork had erroneously still been used.

“When we learned that, through an administrative error, certain company stores were using outdated, pre-printed paperwork, we immediately corrected the error and voluntarily informed the attorney general,” Jimmy John’s said.

Although Illinois law does not prohibit non-compete agreements, it stipulates that the measures have to be based on a legitimate business concern and must be narrowly focused in defining competitors. The attorney general contends that Jimmy John’s version is broad and extends to workers like order-takers and delivery drivers, whose skills are not specialized.

The lawsuit seeks a declaratory judgment that the non-compete agreements are unenforceable and void and should be rescinded.

The attorney general's action is not the first legal challenge of Jimmy John's non-compete policy. Last April, a judge decided in a case brought by two former employees of the chain that there was no reason to nullify the provision, since the plaintiffs had not tried to work for a competitor and hence had not been damaged by the clause.

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