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This Jimmy John's labor practice is drawing fire

For many who work at Jimmy John's sandwich shops around the country, a piece of paper they signed when they started stands between them and getting another similar job. The noncompete contract says if you leave, you agree to not work at a competitor for two years.

And that doesn't sit well with New York Attorney General Eric T. Schneiderman, who is sending the chain a request for information about those agreements in an effort to stop their use. A spokeswoman for the AG's office said the letters, which were to sent to CBS MoneyWatch, make plain the office's concerns.

The "highly restrictive" contract raises "serious concerns regarding the legality" of the agreement, according to the letters, which are being sent to both franchisees and corporate headquarters.

A major issue is what's considered a competitor is so broad that it would largely block just about any employee from going just about any other place that makes sandwiches. Jimmy John's considers any establishment that earns at least 10 percent of its revenue from sandwiches and is within a two mile radius of a Jimmy John's as a competitor. The contract also prevents a worker from going to another Jimmy John's franchise for at least a year.

Members of Congress have asked for a federal investigation over the restrictions. Pressure has come down on Jimmy John's, which is based in Illinois, for how it's treating workers who are on the lower end of the pay spectrum by keeping them in their jobs by forbidden them from testing the open market.

New York's investigation is already underway, with the AG's office having sent the letters requesting copies of the noncompete contracts as well as a list of the jobs of those who have signed them.

Huffington Post, which first obtained copies of the letters, noted that such agreements are traditionally used to restrict employees from sharing information that could hurt a company regarding its competition. And that's clearly not the case with someone making sandwiches.

"Most of the employees subject to Jimmy John's Non-Competition Agreement are highly unlikely to be privy to trade secrets or confidential customer lists or to provide unique services," according to the letter from Terri Gerstein, who heads the attorney general's Labor Bureau. "Further, the geographic breadth of the Non-Competition Agreement is staggering; it prevents employees from working for almost any sandwich shop within two miles of any Jimmy John's Sandwich Shop nationwide. As you no doubt are aware, Jimmy John's has multiple locations in nearly every state."

Some franchisees reportedly have stopped requiring lower-level employees from signing the noncompete contracts.

More details on: cbsnews.com


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