Illinois AG Lisa Madigan Files Suit Against Jimmy John's Over Non-Compete Clause

Workers at Jimmy John’s sandwich shops in Illinois would be free to pursue better-paying sandwich shop opportunities anywhere they please if Attorney General Lisa Madigan wins a lawsuit filed Wednesday.

Currently, employees at Jimmy John’s locations in Illinois must sign non-compete agreements that they will not work for any sandwich shop located within two miles of a Jimmy John’s during or within two years after their employment at Jimmy John’s, according to the attorney general’s complaint.

Specifically, they can’t work for any business that derives 10 percent or more of its income from “submarine, hero-type, deli-style, pita, and/or wrapped or rolled sandwiches.”

“Under Illinois law, non-compete agreements must be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place,” Madigan’s office said. The office also is investigating other companies that may be improperly imposing non-compete requirements on their employees.

“Defendants have no legitimate business interest to warrant the imposition of any non-competition agreements on shop employees and assistant managers. Defendants’ only apparent concern has been to chill any effort by employees to consider leaving for another employer,” the lawsuit states.

The suit says the non-compete clause seeks to restrict employees’ employment options not just at competing sandwich shops but at many other businesses as well.

“The agreements do not restrict positions based on activities, but rather, they preclude employment merely because the prospective employer licenses or franchises businesses that derive more than ten percent of revenue from the sale of certain products,” the complaint says. “Because the particular product at issue is sandwiches, this restriction extends well beyond the bounds of the fast food industry and may apply to any business - a gas station, coffee shop, a sports arena - that happens to sell sandwiches and meets the revenue threshold.”

The suit seeks a penalty of $50,000 per violation.

Jimmy John’s, which is headquartered in Champaign, responded to the suit in an emailed statement:

We were disappointed to learn of the Illinois Attorney General’s filing this afternoon. The Attorney General’s Office approached us in September 2015 to discuss concerns that it had about the use of non-compete agreements in Jimmy John’s stores, and we were nothing but cooperative and transparent throughout the process. Though the Attorney General never indicated to us that any worker had ever reported a concern about the agreements, we made clear to the Attorney General that we would never enforce a non-compete agreement against any hourly employee that might have signed one. We offered to have our CEO sign a declaration to that effect, and pointed the Attorney General to an April 2015 ruling dismissing a federal claim against Jimmy John’s over the use of non-compete agreements, on the grounds that those agreements were not at risk of being enforced. We also told the Attorney General that the agreements had been removed from new-hire paperwork and taken out of use long before their inquiry began. 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. We remain committed to resuming productive discussions with the Attorney General.

You can read the full lawsuit here.

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