While the fast food industry is known for high worker turnover and employees who go from one competitor to the next, the folks at Jimmy John’s apparently thought that the skills they provided to their workers were so special that employees had to sign strict noncompete clauses preventing them from taking their sandwich-craft elsewhere, even if they were fired. Now, as part of a settlement with the New York attorney general, JJ has agreed to stop using these restrictive employment agreements.
Jimmy John’s announced on Tuesday that it would stop including noncompete agreements in its hiring packets and advise franchisees that it would not support the enforcement of the clause, the Wall Street Journal reports.
Ditching the clauses — which bar departing employees from getting jobs with competitors for a certain period of time — is one stipulation of a soon-to-be announced agreement between the sandwich chain and the New York Attorney General, which has recently cracked down on companies using noncompete agreements in employment contracts.
The AG’s office “concluded that the non-competition agreements place a restraint on employees that is greater than the legitimate interests of the employer and imposes undue hardship on the employee,” the WSJ reports.
New York Attorney General Eric Schneiderman tells the WSJ that such agreements “limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued.”
The clause previously used by Jimmy John’s stated:
“Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after … he or she will not have any direct or indirect interest in or perform services for … any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John’s location in question] or any such other Jimmy John’s Sandwich Shop.”
While the WSJ reports that Jimmy John’s had stopped providing sample noncompete clauses to franchisees in late 2014, many of those operators continued using the agreements because they thought they were required.
A rep for Jimmy John’s tells the WSJ that the company will work to ensure operators are no longer using the clauses and will advise franchisees that the agreements are “disfavored” by New York law and should be voided.
Sandwich Chain Jimmy John’s to Drop Noncompete Clauses From Hiring Packets [The Wall Street Journal]
by Ashlee Kieler via Consumerist
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