(Adds Jimmy John's comments)
By Daniel Wiessner
Dec 7 Fast-food franchise Jimmy John's has
agreed not to enforce a prohibition on workers at its sandwich
shops from taking jobs with competitors in order to settle a
lawsuit claiming the agreements were illegal, the attorney
general of Illinois said on Wednesday.
The Illinois-based company, which operates nearly 300 stores
in the state and 2,000 in the United States, also will provide
$100,000 for programs to raise public awareness regarding
so-called non-compete agreements, Attorney General Lisa
Madigan's office said.
"This settlement helps ensure Illinois' workers have freedom
to change jobs in order to seek better wages, further their
careers and improve their lives," Madigan said in a statement.
Jimmy John's in a statement said it took steps to rescind
non-compete agreements even before Madigan's office first
contacted the company last year. The attorney general had no
evidence that Jimmy John's ever enforced a non-compete agreement
against an hourly worker, the company said.
Madigan, who sued the company in June, said Jimmy John's
would notify current and former employees in Illinois that the
agreements they signed were not enforceable and would ask
franchisees to rescind the agreements.
The settlement comes after Jimmy John's entered into a
similar agreement with New York Attorney General Eric
Schneiderman in June.
Requiring white-collar workers to sign non-compete
agreements is common and frequent legal battles over the
validity of such agreements focus on the length of time they are
in effect and their geographical limits. But the pacts are
almost unheard of in fast-food and other service industries.
The Obama administration in October called on U.S. states to
ban most non-compete agreements, saying it would lead to a more
competitive labor market and faster wage growth.
The Jimmy John's agreement prohibited employees during their
employment and for two years afterward from working at any other
business that sells "submarine, hero-type, deli-style, pita,
and/or wrapped or rolled sandwiches" within 2 miles of any Jimmy
John's shop in the United States, according to Madigan's
lawsuit. An agreement in effect from 2007 to 2012 extended that
to 3 miles.
In the lawsuit filed in Cook County Circuit Court in
Chicago, Madigan's office said non-compete agreements lock
low-wage workers into their jobs, giving companies little reason
to increase wages or benefits.
The attorney general said Jimmy John's had "no legitimate
business interest" to warrant the non-compete agreements on shop
employees and assistant managers.
The case is the People v. Jimmy John's Franchise LLC,
Circuit Court of Cook County, Illinois, No. 2016-CH-07746.
(Reporting by Daniel Wiessner in Albany, New York; Editing by
Alexia Garamfalvi and Bill Trott)