Thursday, June 9, 2016

The Skinny on Why the Jimmy John's Lawsuit Matters


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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