June 2015

When news of the Jimmy John’s non-compete came out last October my concern was the impact it would have on businesses with legitimate non-competes.  There is always a populist theme that is anti-non-compete.  Employees should be able to come and go as they please and a non-compete agreement prevents that.  “Bad” non-competes undermine “good” non-competes.  There are situations where non-competes make sense and there is an interest worthy of protection.  But when bad non-competes are in play and receive attention, the discussion of why we have non-competes in the first place follows.

As I said then, I doubt anyone from Jimmy John’s ever contemplated enforcing a non-compete against the guy or gal behind the sandwich counter but nevertheless they included the non-compete language.   Now Congress has gotten involved with the Mobility and Opportunity for Vulnerable Employees Act – the “Move Act”.  The Move Act prohibits non-competes for employees that make less than $15 an hour and is sponsored by Minnesota Senator Al Franken.  There is a good discussion by lawyer Robert Milligan about prospects for success of the legislation here.

There always seems to be a battle to pass non-compete legislation.  The employee usually doesn’t have lobbyists at work while businesses do.  Regardless, there are some heavy hitters behind the bill and there has been a significant amount of press about the Jimmy John’s Non-Compete and the Move Act.  We’ll continue to monitor progress of the legislation.  The takeaway is businesses that use non-competes to deter employee migration, without any intent to enforce the agreement, ultimately undermine post-employment covenants accross the board.