The Illinois Attorney General has sued Jimmy John's because
of its no-compete clauses that bar employees from working for other sandwich
makers in the area for two years. Here’s why this matters.
1.
No-competes deter people from accepting offers
for higher wages from competitors. Jimmy John's is using its muscle to keep its
wages as low as possible.
2.
No-competes used to be limited to highly skilled
professions and crafts—e.g., physicians, lawyers, high-level consultants, etc.
Now, many employers use this as a way to keep a lid on rival employers hiring
their talent—e.g., Google, Apple, and related recently were exchanging emails of
all things!) promising not to hire each other’s talent.
3.
The law severely frowns on no-competes. Here is
the history, as recounted in KGB v. Giannaoulis: “This hostility first
judicially appears in the reign of Henry V in 1415, when a guild sought to
restrain a dyer from working in a town for half a year, enraging the judge, who
“in bad French...cursed the deal void: 'By God, if the plaintiff were here he
should go to prison until he paid a fine to the king.”' Id. at p. 691.) Since
then the courts have become more temperate, and will sometimes enforce such
covenants at least in states not having statutes like section 16600, if such
enforcement is reasonable; but even in those states, reasonableness is not
lightly decreed, and always, the burden rests on the person seeking such a
restraint to justify it.
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