A non-compete clause is typically used by an employer to protect valuable employees from being attracted to another employer. This anticompetitive device is generally permitted by courts as necessary in some cases to protect the training and knowledge that an employer may provide to an employee.
They prevent an employee from being ‘poached’ by a competitor after they have gained training and experience in a given line of work. They are often used with high-level executives and others with specialized knowledge of the business, such as research scientists.
These non-compete clauses should protect a legitimate business interest and are limited in most states. And they can be rendered unenforceable if they are too oppressive and attempt to stifle all competition.
And sometimes they are just baffling. A report discussing a non-compete agreement that Jimmy John’s had its employees sign is remarkable in that it appears to have been written in ignorance of most state’s non-compete laws.
Jimmy John’s sells submarine sandwiches. Their non-compete was required of sandwich makers and drivers and it prohibited former employees from working for any “competitor” for two years. As the Slate story points out, a competitor was very broadly defined to include any employer that generated 10 percent of its revenue from selling submarine-like sandwiches within 3 miles of any Jimmy John’s location.
This would stop a former employee from being able to work in virtually any entity that sells food. Even a gas station that sells microwavable sandwiches could be off limits.
In Illinois, it is likely such an agreement would be unenforceable, as the agreement probably lacks adequate consideration and would likely be found to be overbroad.
While senior managers may have some proprietary knowledge of the business that could be of some value for competitors, it is likely that the “training” a sandwich maker receives could be contained on a double-sided sheet of paper using pictures, which makes the non-compete look even more absurd.
Slate.com, “Jimmy John’s Makes Its Employees Sign a Ridiculous Non-Compete Agreement,” Alison Griswold, October 15, 2014