This summer, a collective and class action suit was filed against Jimmy John’s alleging violations of the Fair Labor Standards Act (“FLSA”) and state law corollaries for minimum wage and overtime violations stemming from its alleged non-payment for off-the-clock work. Recently, that complaint has been amended to add a challenge to Jimmy John’s non-compete agreement as being overly burdensome and oppressive.
According to published reports, the non-compete provisions state that for two years after an employee ends his or her employment with Jimmy John’s, that employee cannot work for any business that derives more than 10% of its revenue making sandwiches and is located within three miles of any Jimmy John’s location. The complaint alleges that individual franchisees have been asking even low-level employees to sign these non-competes- hence the argument re oppresssion.
To be enforceable, a restrictive covenant should be narrowly tailored to protect a legitimate business interest. The Jimmy John’s lawsuit is a perfect example of why employment lawyers often plead for restraint when their clients want to roll out non-competes and other restrictive covenants. If you have a tough agreement and you ask all employees (from high-level execs to your minimum wage worker-bees) to sign, the document probably is worthless. As with all things legal—think before you leap. A good lawyer can help you strategize about what you truly need to protect, and how to effectively obtain that protection.