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Non-Compete Clauses

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It’s completely ridiculous that it took the New York attorney general’s office to force this to happen, but Jimmy John’s is finally ending its practice of making its employees sign non-compete clauses so they can’t take the valuable skills they learned and get a job at Subway.

The Illinois-based sandwich chain has agreed to stop including noncompete agreements in its hiring documents, a practice that was deemed “unlawful” by the New York attorney general’s office.

The announcement follows an investigation by that office into Jimmy John’s use of noncompete agreements with franchisees in New York, which began in December 2014. The agreements had barred departing employees from taking jobs with competitors of Jimmy John’s for two years after leaving the company and from working within two miles of a Jimmy John’s store that made more than 10 percent of its revenue from sandwiches.

“Noncompete agreements for low-wage workers are unconscionable,” Eric Schneiderman, New York’s attorney general, said in a statement. “They limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued. Companies should stop using these agreements for minimum wage employees.”

It seems that this agreement only covers its New York stores, although Illinois is going after it now, so maybe that will finally stop the practice entirely.

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  • Brett

    These almost certainly aren’t enforceable in court, but Jimmy Johns probably kept them on as pure intimidation. I’m glad NY has cracked down on these, although it’s not enough. Non-compete clauses need to be outlawed entirely, especially since we know from California’s example that making them unenforceable has no real downsides or economic harm (plus many positive outcomes).

    • Saskexpat

      This is spot on. I practiced in this area in California, and the intimidation aspect is a big part of why non-compete clauses are so commonplace. This is actually a really stupid thing to do in California, but in my experience many employers don’t realize the risks that come with having an employment contract that violates well-established California law, and want to be as controlling as they can be in setting policy.

      In terms of big-picture policy, employers do not think through the implications of non-compete clauses outside of their own policies. If they are routine, and enforceable, it makes hiring anyone with any meaningful experience very difficult. In addition to being immoral and oppressive to employees, non-compete clauses hurt the ability to hire talent, and can stifle business expansion.

      • Nobdy

        It’s 2016. Nobody cares at all about the overall health of the market. We’re way past greed is good all the way to “sociopathic self-centered behavior is morally mandatory.”

  • mutterc

    My proposal: require anyone covered by a non-compete to also have a golden parachute (they’re *that* important to the company, after all).

    • Brett

      I’d prefer to ban them outright, but I’d accept “you must pay them severance equal to their annual wage/salary plus health benefits” as a second best option (as long as there was still a time limit on these).

      • Bill Murray

        wouldn’t the time limit be the length of the non-compete clause, I guess with a proviso about pay from work replacing the no-compete job?

  • Jim in Baltimore

    Well, that tears it. Pretty soon all Jimmy John’s precious secrets will be diffused and everybody’s going to know how to make sandwiches.

    • KadeKo

      Their IP lawyers are looking at you, Jersey Mike!

      (Seriously, there’s a Jersey Mike sandwich chain shop near my office, and I’m two states over from New Jersey. I got nothing against NJ, but except for some of the shore specialties, what is their state’s culinary calling card that isn’t based on being next to Philadelphia or NYC?)

      • sharculese

        Jersey Mike’s is pretty much national. We have them in the south.

        • twbb

          We have them in Miami, too. I think “Jersey Mike” is meant to convey the impression of a working class Jersey guy, the kind of person who makes sandwiches exuberantly, piled high with meats and toppings. “Connecticut Mike” probably wouldn’t work as well.

          • hey so

            There is evidently a “Jersey-style” sub sandwich.

            I know this because we have a local chain in Michigan called “Jersey Giant” and truly I say unto you it is the food of the gods.

        • Jordan

          I first ate at a Jersey Mike’s in Houston. I have afterwards moved to actual New Jersey.

          Jersey Mike’s is not very good (better than Subway, I guess?)

          • wjts

            There’s one in the Philadelphia train station. I ate there once and it was OK, so far as chain restaurants in train stations go.

        • Crusty

          I live in New Jersey but have yet to happen upon a Jersey Mike’s.

        • erick

          They’re in Oregon too

      • wjts

        I got nothing against NJ, but except for some of the shore specialties, what is their state’s culinary calling card that isn’t based on being next to Philadelphia or NYC?

        Taylor ham.

        • lunaticllama

          We make better Italian food and bagels better than NYC and Philadelphia. The deli down the street from me makes the best mozzarella around. It stopped entering the tri-state mozzarella cheese competitions (yes a thing for Italian delis around NYC) after winning so many years in a row. I just came back from Italy and this place does it better than in the homeland. It’s called Fiore’s in Hoboken and should always expect a line.

          • wjts

            That is not my experience at all, but I’ll concede that the traditionally German towns in Northern New Jersey are probably not the best places to look for good Italian food or bagels.

            • Crusty

              I’m not sure where in Northern NJ you’re referring to, but here in Bergen County, we’ve got world class bagels up there with the best of them, and I used to work in a bagel store in Queens.

              • wjts

                Matawan/Colts Neck area.

            • ninja3000

              Fortunately, one of those traditionally German towns still has the best German bakery around.

          • The density of apparently quite good restaurants in parts of New Jersey is indeed very remarkable. My Philly-raised mother would say it’s because all the best vegetables are grown there.

        • sharculese

          I roomed with a guy from New Jersey who insisted on making us Taylor ham one time. It was… okay.

    • D.N. Nation

      Here, I’ll give away JJ’s secret, even though I’ve never worked at one:

      1) They put a ton of mayo on their sandwiches.

      Ta da!

      • tsam

        SEE YOU IN COURT!

      • osceola

        Sometimes during daylong “professional development” workshops at the college where I work we’ll break for lunch and the college will have Jimmy John’s delivered.

        JJ’s has never impressed me. I could brown bag a better sandwich I made at home.

        • tsam

          As sandwiches go, yeah. Compared to the fast food chains, though, not even a competition.

        • We get it for work lunches sometimes too. They are frequently referred to as “mayonnaise sandwiches”. They’re satisfying enough if you’ve been in a meeting room for hours, but then again anything would be.

          • Ahuitzotl

            I tend to prefer the desk at that point

    • Joshua

      I think this non compete is ridiculous, so don’t take me for a defender of JJ’s. But I think the whole thing is that they make sandwiches super fast. Seriously, when I went there they would have my sandwich done right after I was done paying. I always thought that was what they were trying to protect…

  • ploeg

    Knowledge of what goes into the “special sauce” would completely kill business.

    • Murc

      “We need more special sauce. Put this mayonnaise in the sun!”

      • c u n d gulag

        But throw in some ketchup and cut-up some gherkins in small pieces. first!

      • Jordan

        Loomis: Yassssssssss

  • lizzie

    Yes! Another terrible thing I’ve seen that I hope somebody goes after: contracts requiring employees to reimburse the employer for “training” if the employee quits before a certain amount of time (like a year).

    I’ve seen case law upholding these arrangements when the training was some kind of formal thing that resulted in a portable credential. But a friend asked me about one that her daughter had signed that involved, as far as I could tell, just generic “training” on how to use the employer’s cash registers, etc. (her daughter was a hair stylist.) If she quit before a year, she was supposed to pay $2K, if memory serves. The contract also required the employee to cover the employer’s attorney’s fees if they had to go to court. She didn’t know what to do because they changed her schedule without notice and it conflicted with her two other jobs, and they were coming after her aggressively for the money. I was appalled.

    • scott_theotherone

      …and?! What happened?

      • Jordan

        no shit, no way thats legal. (as if that caveat really helps)

      • lizzie

        Sorry to leave you hanging! They negotiated a settlement; her mom paid. They didn’t have the $ to pay someone with actual expertise in this area, so they were stuck asking me for advice; and all I could tell them was that I don’t think it’s legal but you’d be putting yourself at real monetary risk by refusing to pay because of that fee-shifting provision.

        ETA: In case it’s not obvious, I am way to risk-averse to be a litigator.

        • Just_Dropping_By

          Well, I’d say that even a non-risk adverse litigator would recommend settling a claim for $2000 since you would almost certainly spend more than that defending the case and even with a fee shifting provision you would be at risk of the judge knocking down your fee award enough that you could still be out of pocket $2000 or more despite winning.

          • Captain Oblivious

            This is why you file complaints with the state AG and labor department and the NLRB etc, rather than hiring an attorney. Doesn’t always work, but it’s free except for your time.

    • Manny Kant

      I was recently looking at various tutoring jobs to replace my current shitty tutoring job, and Kaplan had an advertisement for LSAT tutors where they said that you get “free training!” as though this is a benefit, rather than what it actually is, which is “unpaid training!” Kind of ridiculous they think they can get away with that without anyone catching on.

    • bender

      I think that (having to reimburse the company for in house training) is pretty common for new hires in companies like Ameritrade.

      I know someone who got stuck that way. He wanted to change careers, got hired by one of those outfits, couldn’t handle the long hours, and couldn’t live off the commissions because he didn’t know enough rich people he could sign up as clients. He quit after he found another job that paid a salary and they tried to make him pay for the training.

      I suspect that the entire company, which is large and well advertised, is a scam that makes more money by hiring hopeful white collar people and sticking them with bills for worthless job training than from the cookie cutter investment services it provides.

  • AMK

    If there was even that much benefit to the company, Jimmy Johns wouldn’t be the only fast food joint doing this (unless others do?)

    • phalamir

      I find it amusing that the implicit assumption is that JJ’s workers are going to jump ship to Subway the first chance they get. “We cannot provide any reason whatsoever for our workers to not abandon us unless we chattelize them.”

  • c u n d gulag

    I understand that at certain jobs, there might be a need of this – but in a sandwich shop?

    “You mean that at Jimmy John’s, you put mayo in your tuna salad, and on sandwiches, if people asked for it?
    Why oh why didn’t we think of that?”

    • postmodulator

      In the tech sector, the backdoor deals between firms are probably more insidious than anything they put in an employment contract. Like the Silicon Valley collusion where none of the big firms would hire each others’ people by “gentleman’s agreement,” or that egregious bullshit with IBM and Motorola about a decade ago.

      • Captain Oblivious

        This was purely about salary suppression, not “non-compete”.

        There’s a legitimate case for these companies to require trade secret and non-compete clauses, at least for “key” employees, but that wasn’t what the “gentleman’s agreement” was about. It was about stopping an escalating salary war, so Steve Jobs and Larry Ellison could carry on to see who could spend more on his private yachts.

    • twbb

      I have to be honest, as an occasional chain sub store customer, Jimmy Johns does seem to have created the best in-store supply chain system. They make those things faster than any other chain or non-chain sub shop I’ve been at. However, considering any former employees who move to Subway or Jersey Mike’s are going to do anything to those chains’ corporate-mandated workflow, I don’t see much point in non-competes.

      • JustRuss

        Yes, they are incredibly fast, but the whole process takes place right in front of the customer. Not exactly top-secret.

        • BigHank53

          “You mean you cut up the food ahead of time? It’s a world-changing innovation!”

  • Hayden Arse

    I wonder if the non-compete clauses resulted from the “Big Mike’s” (now “Milio’s), “Jimmy John’s” lawsuit between the Liautaud cousins. I find non-compete clauses abhorrent, but… there was litigation that could have prompted the ill-advised agreements.

  • postmodulator

    The Illinois-based sandwich chain has agreed to stop including noncompete agreements in its hiring documents, a practice that was deemed “unlawful” by the New York attorney general’s office.

    Yeah, and I “agreed” not to set the Westboro Baptist people on fire when they show up for their protest here tomorrow. I hate that this is the language everyone uses now, as though the corporation and the state are equals and they hashed it out.

    • lizzie

      Meh. It’s no worse than what Jimmy John’s did to its employees, supposedly getting them to “agree” to sign the noncompetes. And unlike its employees, Jimmy John’s could realistically litigate this issue if they wanted to; they just decided not to. Special sauce for the goose, special sauce for the gander.

  • efc

    As other people have said, these provisions are likely unenforceable as to Jimmy John’s sandwich makers. In my state a non-compete for an individual with no knowledge of proprietary or secret company policies, practices, or knowledge (like the sandwich maker who makes the damn sandwich right in front of you) is almost certainly unenforceable.

    I’m happy to see the NY AG going after this practice. Unfortunately we don’t all live in states like NY. I wonder if a stop gap measure would be some sort of educational campaign informing people that the non-compete they signed is likely non enforceable so don’t worry about it. The clause is only meant for intimidation and there is no way Jimmy John’s or any similar employer is going to spend tens of thousands of dollars to sue a judgement proof hourly employee.

    A social media based campaign might be a relatively cost effective way to spread the word. This is exactly the type of issue hash tag activism was made for. Just “raising awareness” is enough. There is no action (other than maybe pressuring elected representatives) required on the part of any individual so there isn’t the problem commonly attributed to hashtag campaigns that it allows people to think they have done something when they really haven’t done anything to help the cause. Maybe #Unenforceable? #NonCompeteNoProblem?

    • Joe Bob the III

      The employees aren’t the real target, other employers are. If you break a non-compete you can be sued for violating the agreement and your new employer is vulnerable to a claim of tortious interference for abetting your breach of contract.

      You the sandwich artist may not have deep pockets but a new employer certainly might. Therefore, those employers are not going to put themselves at risk by hiring anyone subject to a non-compete. The employee doesn’t even have to disclose it. Other employers are likely aware that JJ’s has non-competes and just won’t hire someone who puts JJ’s on their job application.

  • Warren Terra

    Now that the eldritch secrets will undoubtedly leak out, what’s to stop someone else from opening a chain of stores selling sandwiches? Sure, we’re all celebrating now, but we’ll be sorry once there are multiple nationwide chains of sandwich shops blighting the landscape!

  • tsam

    SELL ALL YOUR STOCKS IN JOHNNY JIMS I PREDICT A MAJOR SAMMICH MARKET SHAKEUP

    • N__B

      Mmmmm. Sammich shakes….

      • tsam

        Fishwich milkshake, please.

    • brad

      Now I have a nostalgic need to see photoshopped pics of Trump with sammich.

      I miss the old S,N!

      • MyNameIsZweig

        Yeah, those were the days.

      • tsam

        God yes. They had some photoshops that were unbeatable.

  • MacK

    I wonder is their a broad argument for damages – that employees suffered injury through depressed wages, loss of mobility, higher rent as a result of the non-competes and Jimmy Johns should have to pay $$$ as well.

    • Just_Dropping_By

      What would be the claim though? The existence of an unenforceable provision in a contract normally doesn’t give you an affirmative right of action against the other contracting party; it gives you a defense against the enforcement of that provision (or potentially enforcement of any part of the contract if the unenforceable provision can be deemed to void the entire contract).

  • MacK

    A good friend of mine is a chef – and for a while they ran a very up-market takeout that at lunch did a sandwich trade with construction workers.

    Out of curiosity she took some Subway subs from DC apart and weighed the contents of the subs – and priced it wholesale, then even applied a discount. Her conclusion – no way can that be meat, nothing conceivable can be offered at that price.

    Funnily enough, someone I know in Ireland (a butcher) used to say the same thing about Kebab (gyro type) meat (ground) – which he said was priced lower than the meat on the hoof – much cheaper. Put me right off Abrakebabara (the chain that no one used to remember eating in sober.)

    • yet_another_lawyer

      I wonder about this. If you’re buying meat at the quantities Subway does, surely you can buy significantly below even wholesale. Of course, I’m sure that “meat destined for Subway sandwiches” is among the lowest quality/least desirable part. How much of a notional discount did she give them?

      • MacK

        She said it did not work at a lot more than 50% off (I think she went even further – it was a few years ago) – and that was after the wholesale costs that a sandwich shop would pay in bulk for salamis, roast beef, turkey etc, but not allowing for labour and rent.

        She also said that it was an common point of discussion among professional chefs that Subway’s economics was hard to understand – how they could break even. The only conclusion they could reach was the discount had to be unreal – and the meat.

        Her own view – “I would not sell that sh!t whatever it is, and I would not eat it either….”

        I did once see an industrial meat recovery patent – yeeech

        • Of course they are buying for hundreds of sandwich shops, not just one. No reason the meat vendor has to be making a profit either. Those things have to be accounted for.

        • rea

          Subway’s economics was hard to understand

          They are all money laundering operations for various Mexican cartels

    • osceola

      Subway’s rolls used to contain ingredients that are also used for yoga mats.

      • There are a number of food products that contain calcium chloride.

      • Oh god, Vani “Food Babe” Hari. She’s absolutely full of pseudoscientific claptrap.

        • wjts

          I haven’t dared get on an airplane since she explained that the airlines pump TOXIC NITROGEN into the cabins.

      • DrS

        The chemicals used in the production of table salt are phenomenally deadly.

      • That meme was promoted by the Food Babe, an anti-vaxxer and general maniac. It’s true, but only in the unremarkable sense that a lot of substances are used in both food and manufacturing, e.g. water, salt, cellulose, iron.

        • tsam

          Was she the one spreading that super crazy shit about margerine being “one molecule” away from being plastic? That was an epic eye-roller.

    • JustRuss

      I rarely eat at Subway, but in my experience their sandwiches consist of lots of lettuce with a meat veneer. I can’t see the ingredients being very costly.

      • Manny Kant

        Right. My local hoagie shop sells sandwiches of about the same length, but with much more stuff in them, and the meat and cheese and bread is all of far, far higher quality. Their sandwiches are about $10. Subway’s footlong sandwiches are no less than $5, and that cheap only at particular times of year. It doesn’t seem like a particular stretch that shittier ingredients, less meat, and bigger wholesale discounts would allow them to charge that little.

        • If you actually listen to people ordering Subway they frequently get paid extras like extra cheese, extra meat, chips, cookies, pop, etc. I’m sure that’s where a lot of the margin is.

      • Bill Murray

        I rarely eat at Subway, but in my experience their sandwiches consist of lots of lettuce with a meat veneer.

        My sandwiches at Subway have no lettuce whatsoever, because you specifically have to request the toppings you want, and I do not like the Iceberg lettuce they use.

        Also, to get twice the meat on your sandwich costs $0.75 per six inches.

    • Just_Dropping_By

      Her conclusion – no way can that be meat, nothing conceivable can be offered at that price.

      Let me guess: your friend also knows that oil companies have secret filing cabinets filled with patents for car engines that get 200 MPG, 100% efficient solar panels, etc.?

    • Captain Oblivious

      Most of the profit at fast-food places, and even a lot of sit-down restaurants, is from beverage sales.

      If you want to stick it to these joints, order take-out without drinks.

      • Bill Murray

        This certainly used to be true and very likely still is. One of my friends in college managed a Pizza Hut and a pitcher of pop cost under a quarter (perhaps even under a dime, this was 30 years ago) but sold for like $2.50. When they messed up an order, he usually offered a free pitcher of pop to soothe customer’s feelings.

    • Joe Bob the III

      This isn’t actually that mysterious. Processed meats like what Subway uses contain some real meat, a lot of water, and cheap fillers like starch, gelatin, or vegetable oil. I have no idea what Subway uses but their “meat” is probably something like 55% meat, 30% water, and 15% fillers.

      • BiloSagdiyev

        Mmmmm…. 15% fillers…

        Back in the 80’s I started ranting and raving when some canned beverage came out and they were promoting the fact that it was 10% juice! on the labelling. All I coudl think was, “There’s some industrial process in a giant facility involving orange rinds they don’t know what to do with, and this was a place to get rid of it?”

        Well, I have now seen a beverage whose label brags that it’s got 1% juice.

        At some point we’ve got to blame the customers…

        • Well, I have now seen a beverage whose label brags that it’s got 1% juice.

          Pre-mixed gin and juice, I hope.

      • Malaclypse

        If memory serves, Murphy’s Oil Soap is made of 97% ingredients “found in nature.”

        The other 3% are presumably found in eldrich horror.

        • Hogan

          Lagunitas beer is made 100% from “ingredients found in breweries.”

          It’s pretty alarming.

        • If memory serves, Murphy’s Oil Soap is made of 97% ingredients “found in nature.”

          Three-in-One Oil, by contrast, is entirely supernatural.

  • Quite Likely

    Step in the right direction. Now we just have to ban these in all other states and situations as well.

  • efgoldman

    We have neither Jimmy John’s nor Jersey Mike’s in my immediate area, and we don’t miss them. Our local Subway is freshness-challenged. But we have a ton of local pizza/sub shops.

    You’ll, notice, of course, That Schneiderman, the NY AG, is a Democrat, but there’s no difference between the parties.

    • But we have a ton of local pizza/sub shops.

      Alas for you, the Mezza Luna pizzeria in Woonsocket near the North Smithfield line closed a few years ago. Wonderful clam pizza. (Google refers me to a recent Woonsocket Call article warning me that there’s a new place, “The Mezz”, at or near the old location, but with no connection whatsoever.)

      • efgoldman

        I don’t miss them, either. I love seafood – except clams. Nor do I think that swimmy things go on pizza. Porks. Porks in various forms go on pizza.

        • rea

          Clam [shudder] pizza?? Oh, the humanity! Oh, the bivalvity!!

          • wjts

            Haven’t had it, but given that clam sauce is delicious, I see no reason why clam pizza shouldn’t be as well.

        • wjts

          Anchovies totally go on pizza.

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