Jimmy John’s Enterprises LLC has agreed to pay $100,000 and remove non-compete clauses from its new-hire agreements, under a deal the Illinois attorney general announced this week.
By agreeing to the deal, Jimmy John’s essentially ends a controversial practice that restricted where its employees could work once they left a job with the Champaign, Ill.-based sandwich chain.
“The settlement helps ensure Illinois workers have freedom to change jobs in order to seek better wages, further their careers and improve their lives,” Illinois attorney general Lisa Madigan said in a statement. “Workers in Jimmy John’s sandwich shops should know they are not subject to these unfair and unenforceable agreements.”
The deal requires Jimmy John’s notify workers that the agreements are unenforceable and that the company will not enforce them.
The company also agreed to notify its Illinois franchisees to do the same. Jimmy John’s will also start to remove non-competes from packets for new hires, and ensure that any such deals comply with state law in the future.
Jimmy John’s agreed to pay $100,000 to the attorney general’s office to use toward education to raise public awareness on the legal standards for enforcing such agreements.
The agreement comes Roark Capital Group acquired a majority stake in Jimmy John’s in September.
Madigan sued the 2,400-location sandwich chain, saying the agreement Jimmy John’s used was unfair. The company had argued that it had stopped using those agreements, and that nobody reported a concern about them.
In 2015, a federal court judge dismissed a claim against Jimmy John’s over the use of the non-compete agreements, because the agreements were not at risk of being enforced. The company also said that it removed the agreements from its new-hire paperwork before the lawsuit had been filed.
Jimmy John’s is one of the largest sandwich chains in the country, and franchisees operate all but 51 of its locations.