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.