Non-compete agreements have been around in the business world for many years. They started as a way for businesses to protect their trade secrets, customer information and skilled workers from competing businesses.
However, the rules surrounding non-compete agreements are somewhat vague and vary from state to state. For that reason, many businesses have attempted to enforce non-compete agreements only to have them thrown out by courts after being challenged by workers.
Currently, the national sandwich chain Jimmy John's is facing lawsuits filed by workers who say that the non-compete agreements they were required to sign should be invalidated for being overbroad and oppressive.
In the wake of the lawsuits, Jimmy John’s has faced ridicule for requiring its low-level, minimum wage workers to sign non-compete agreements, which have traditionally been asked of high-level executives or managers who truly pose a competition threat.
The Huffington Post reported that Jimmy John's employment agreement contains a non-compete clause that prohibits workers from taking another job at a competing sandwich shop within three miles of a Jimmy John’s restaurant for a period of two years after being employed at a Jimmy John’s.
The employment agreement defines a “competitor” as any business that makes 10 percent or more of its profits by selling sandwiches, which means dozens of other fast-food restaurant chains sandwiches qualify.
Ultimately, what small business owners in Colorado can take from this situation is that blanket non-compete agreements for all employees, regardless of their positions, might not be a good idea.
An experienced employment law attorney can counsel business owners on applicable state law governing non-compete agreements and help them decide which employees, if any, should be asked to sign a contract restricting their future employment in order to protect the business.