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The Illinois Attorney General’s office is aggressively targeting non-compete agreements as anti-competitive and illegal. Today, Attorney General Lisa Madigan announced that the state is investigating Jimmy John’s sandwich-shop over what she contends are highly restrictive non-compete agreements on employees.  Madigan filed a lawsuit against Jimmy John’s two corporate entities – Jimmy John’s Enterprises LLC and Jimmy John’s Franchise LLC – over the non-compete agreements on employees, including sandwich shop employees and delivery drivers.  Jimmy John’s operates nearly 300 sandwich shops in Illinois.

This will be an interesting development to follow for companies doing business in Illinois. The question appears to be whether the Illinois Attorney General seeks to position Illinois as a non-compete agreement “free-zone,” similar to the situation in California, which does not recognize these agreements.

“Preventing employees from seeking employment with a competitor is unfair to Illinois workers and bad for Illinois businesses,” Madigan said. “By locking low-wage workers into their jobs and prohibiting them from seeking better paying jobs elsewhere, the companies have no reason to increase their wages or benefits.” The suit alleges that all employees are required to sign a non-compete agreement as a condition of employment. The agreement restricts employees during their employment and for two years after from working in any other business that earns more than 10 percent of its revenue from selling submarine, hero-type, deli-style, pita, or wrapped or rolled sandwiches. The restriction applies to any sandwich business within three miles of any Jimmy John’s Sandwich Shop in the country, according to the lawsuit.

The lawsuit seeks a declaratory judgment that the agreements are unenforceable, void and rescinded. Madigan’s office is also investigating other companies it believes have imposed restrictive non-compete agreements. Thus, entities conducting business in Illinois should review their non-compete agreements to ensure compliance with Illinois law and be prepared in the event they are investigated by the state.

Johnson & Bell, Ltd. has extensive experience in both drafting and litigating the validity of non-compete agreements. Please contact Joseph F. Spitzzeri via email at [email protected] with any questions.