Most competent employment lawyers with experience pursuing and/or rebuffing enforcement of noncompetition agreements know that enforcement against low level workers is highly unlikely. If recent news reports are true, Jimmy John’s apparently never got that memo.
According to reports in The New York Times, The Oregonian and the Huffington Post, the restaurant franchise is requiring all workers, including sandwich makers, to sign broad noncompetition agreements that restrict their employment opportunities for two years after leaving their cushy, highly technical jobs at Jimmy John’s.
Let’s start with the understanding that courts don’t like noncompetition restrictions, which limit a worker’s ability to pursue his career as he sees fit. Courts use a variety of tools to limit the enforcement of those clauses. Although courts use different terms to describe it, almost every decision analyzing enforcement of a noncompetition agreement talks about whether the former employer has a “protectible interest.” In layman terms that means, is there something legitimate that the former employer actually needs to protect by restricting the post-termination employment opportunities of its former employees? Customer relationships, knowledge of the company’s confidential or trade secret information, or specialized training provided by the former employer are often found to be sufficient “protectible interests” to justify enforcement of a contract clause which limits the worker’s future employment opportunities. If there is no “protectible interest,” a court won’t enforce the agreement.
So what protectible interest does Jimmy John’s have in restricting the employment of its sandwich makers? Does it teach them a special way to spread mayo that gives Jimmy John’s an advantage over the Subway next door? Do workers learn the secret recipe for the store-made bread? Are they told about advance marketing plans, such as product launches that, if known by a competitor, would hurt Jimmy John’s? Maybe. It is possible that those reasons – or others – could support enforcement of the noncompetition restriction. But it is unlikely. Instead, the “one-size-fits-all” approach – the requirement that all employees sign a noncompete without regard to whether they actually possess confidential information or special skills or hold important customer relationships in their hands – is likely to make a court mad at the employer.
Lawyers used to use Latin a lot. They don’t much anymore. One phrase hangs on: The In Terrorem Effect. Because I’m a lawyer, I’m going to cite you Black’s Law Dictionary’s definition of an in terrorem clause: “A provision in a document such as a lease or will designed to frighten a beneficiary or lessee into doing or not doing something; e.g. clause in a will providing for revocation of a bequest or devise if the legatee or devisee contests the will.” An unscrupulous employer might include noncompete clauses in all of its employment agreements, knowing that even though enforcement is unlikely, the very presence of the clause will deter a good number of employees who don’t know any better from going to work for a competitor. Courts refer to that as “overreaching,” and they don’t like it.
What should employers do?
If your company is one of those that includes a noncompete in every single employment agreement, rethink that policy. The custodians, the receptionists, the mail room workers, the messengers and a host of other low-level workers should probably not be required to sign a contract that restricts their future employment. And worse yet, your inclusion of them may jeopardize enforcement of the noncompete against those workers who have access to information you really do care about protecting.
A note about state law: The Jimmy John’s clause would never be enforceable under Oregon law. Noncompetes are subject to a number of restrictions and the Jimmy John’s sandwich makers would not meet the exempt status and salary requirements. State law on noncompete enforcement varies. Check yours.