Last week, Illinois Attorney General Lisa Madigan filed suit against Champaignbased Jimmy John’s in Cook County Circuit Court, Chancery Division seeking a declaration that Jimmy John’s employee noncompetition agreements are illegal and unenforceable under Illinois law. See People v. Jimmy John’s Enterprises, LLC, 2016 CH 07746 (Ill. Cir. Ct. Cook Cnty. June 8, 2016).
The complaint alleges that for several years, Jimmy John’s has required all of its employees – including assistant managers, delivery drivers and bikers, and “sandwich makers” with minimal access to trade secret information – to sign noncompete agreements to obtain employment. Employees must agree, during their employment and for two years thereafter, not to accept any employment with a business that earns over ten percent of its revenue from submarine or similar sandwiches when that business comes within three miles of any Jimmy John’s shop in the country. Although Jimmy John’s purportedly changed its internal policy regarding noncompetes in April 2015, the company subsequently told the Attorney General that the change had not been implemented at the sandwich shops, and noncompetition agreements already in place had not been eliminated.
Under Illinois law, noncompete agreements must be premised on a legitimate business interest and narrowly tailored as to duration, geographic area, and prohibited activity. See Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871. Attorney General Madigan’s complaint alleges that Jimmy John’s noncompete agreements are not supported by adequate consideration, lack any legitimate business interest, and are not narrowly tailored in any regard, rendering them unconscionable and unenforceable. According to Madigan, these noncompetes harm not only the lowwage workers that are effectively locked into their jobs, but also Illinois residents and businesses, who suffer the indirect effects of decreased employee mobility and a more limited pool of workers.
Traditionally, employees themselves bring suits to challenge noncompete agreements. Madigan’s suit signals the Attorney General’s willingness to step in and challenge such agreements on behalf of employees, particularly lowincome ones, for whom a suit challenging a noncompete agreement might be costprohibitive. Companies with broad noncompete agreements in place – especially noncompetes that restrict employment for lowincome workers with minimal access to confidential or proprietary information – should pay close attention to this development. Madigan’s office has advised that they are investigating other companies that have imposed similarly restrictive noncompete agreements on their employees.