Earlier this month, Jimmy John’s was in the news and not for their sandwiches, but for their questionable business practices. Namely, the non-compete agreements (NCA), employees sign prior to making their first Turkey Tom, is the basis of a proposed class-action lawsuit against the restaurant. It was revealed that Jimmy John’s NCAs contained language, that would make it difficult for a current employee to go work for another deli, regardless if it were a national chain or a local establishment. More specifically, the NCA 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.
It is understandable why Jimmy John’s and other businesses of all industries make NCAs a critical component of the hiring process. No business wants to expose an employee to the processes that makes their company a success and then upon departure that employee takes company intel to a competitor. However, not all NCAs are created equal and some are overreaching and too burdensome (see above) which will result in an employee being hindered from obtaining opportunity with another company - albeit a possible competitor.
It is mindful to keep in mind the some of the purposes of an NCA are to: protect your company and any internal, confidential processes that are not known to the general public, e.g. client lists, trade secrets, recipes, marketing strategies, etc. If the NCA exceeds this scope, it will likely be deemed unreasonable and not protecting legitimate business concerns, and not be enforced against the employee despite a signature.