At Jimmy John's, Sandwich Makers Have to Sign a Noncompete Agreement Noncompete agreements are often reserved for executives. Why, then, does this sandwich chain ban entry-level workers from working for competitors for two years?

By Kate Taylor

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Noncompetition agreements are to be expected for the CEO of a large business or an analyst at a hedge fund. But what about the employee making sandwiches for less than $10 per hour?

A Jimmy John's employment agreement has surfaced via The Huffington Post that includes a noncompetition clause worthy of an exec who knows the hidden secrets of sandwich making.

The agreement requires employees to refrain from working for any competing business for two years after leaving Jimmy John's. It defines its competition as any company that makes more than 10 percent of its revenue from selling sandwiches and located within three miles of any of Jimmy John's 2,000-plus stores. It doesn't matter whether employees quit or are fired – if they want to take on a second job or work at a different restaurant in a new state, they have to wait two years.

The agreement doesn't make much sense for an employer. It is unlikely sandwich makers or delivery men learn information at their entry-level jobs that could puncture Jimmy John's corporate structure.

Related: California Governor Vetoes Bill That Would Expand Franchisee Rights

It is also unclear if this clause is widely included in Jimmy John's employment agreements, or if it has ever even been enforced. It's common for fast-food employees to work at several restaurants at once, with union organizer estimating that one-third to one-half of fast-food workers hold more than one job. Additionally, the turnover rate in the restaurant industry is extremely high, with as much as 50 percent of the staff at any fast-food restaurant turning over every year. Enforcing a noncompete under these conditions is unfair to workers and essentially unfeasible for the company.

Even if it hasn't been enforced, The Huffington Post reports the noncompete agreement is now a part of a class-action lawsuit against the chain and one of its franchisees. The lawsuit, filed in August by one current and one former employee, accuses Jimmy John's and a franchisee of systematic wage theft.

The inclusion of Jimmy John's corporate office in the case is further damaging in light of recent legal battles on the role of a franchisor as an employer. If Jimmy John's requires a noncompete for franchisees' employees across all stores, the chain is crossing the line into meddling with employment issues, which are traditionally strictly the business of franchisees.

Jimmy John's did not immediately respond to Entrepreneur.com's request for comment.

Noncompete agreements make a lot of sense if you're worried about an employee revealing trade secrets after they leave the company. However, fast-food restaurants requiring minimum wage workers to sign a noncompete clause isn't just unfair for employees in an industry with a high turnover rate. It is bad business, as Jimmy John's is finding out now.

Related: Franchise Industry Strikes Back at NLRB's 'Joint Employer' Decision

Kate Taylor

Reporter

Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor. 

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