Illinois Attorney General Files Suit Against Jimmy John’s

| Jun 10, 2016 | Employment Contracts, Partnership Agreements, & Non-Competes, Wages & Overtime |

In a civil complaint filed June 8, 2016, the State of Illinois alleges that the sandwich chain Jimmy John’s violated the state’s Consumer Fraud and Deceptive Practices Act, 815 ILCS 50511, et seq., by requiring its store employees to sign aggressive non-compete agreements.

American employers often ask professional and executive employees to sign non-compete agreements, ostensibly to protect trade secrets and customer relationships. Jimmy John’s made news in recent years by imposing such agreements on all of its store employees, including sandwich makers, servers, drivers, and assistant store managers (ASMs). These agreements would prevent the employees at Jimmy John’s stores and franchises from working for other delis and sandwich shops for up to two years.

Despite that Jimmy John’s announced in 2015 that it was abandoning this policy, and would not seek to enforce the agreements, the complaint alleges that “many new Store Employees who were hired after April 2, 2015 continued to sign non-competition agreements” and Jimmy John’s “never attempted to modify or formally rescind the non-competition agreements.”

Illinois Attorney General Lisa Madigan filed a lawsuit on behalf of the state in Illinois Circuit Court, challenging the legality of these agreements. Jimmy John’s lacks any “legitimate business interest to warrant the imposition of … non-competition agreements on shop employees and assistant managers,” according to the complaint. The agreements are alleged to be “substantively unconscionable and constitute an impermissible restraint on trade” under the state’s consumer protection law. The suit seeks an order declaring the agreements unenforceable.

The inclusion of ASMs in the complaint is notable because, despite the “manager” title, the state alleges that their function is closer to other hourly store employees:

“On information and belief, assistant managers perform all of these same job duties as in-store employees but also have some responsibility for store inventory and oversight of the cash register. Thus, assistant managers also greet customers, take orders, slice bread and meat, make sandwiches, operate the cash register, and clean the restaurant and kitchen area. On information and belief, assistant managers do not select the vendor of inventory, negotiate the pricing on inventory, or decide the type of inventory that will be stocked.”

O&G is co-counsel in a case against Jimmy John’s LLC that alleges underpayment of ASMs throughout the United States (In re Jimmy John’s Overtime Litigation, No. 1:14-cv-05509, in the U.S. District Court for the NorThern District of Illinois). The company requires ASMs to perform forod preparation and provide customer service as their primary duty, but classifies them as “executives” exempt and deprives them of overtime pay, the lawsuit alleges. Further information may be found here and here.

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