Recently, a number of stories have been published about everyday employees being forced to sign non-competes by their employers. For example, a number of stories have broken about Jimmy Johns forcing delivery drivers and behind-the-counter employees to sign non-competes. Many workers are concerned about the ramifications and enforceability of those agreements.
Non-compete agreements are enforced in limited circumstances in most states. In particular, most states recognize that employers are less likely to hire and train an employee if that employee can turn around and compete with the employer; especially after the employee develops a relationship with the employer’s customers. Therefore, in this context, non-compete agreements actually promote job growth. However, in states that allow non-compete agreements, the courts balance this against the clear restraint of trade created by the non-compete; an enforceable non-compete prevents a worker in the marketplace from utilizing her skills in the most valuable fashion. Accordingly, those states that allow non-compete agreements do so within a framework that accounts for all parties interests, although the high courts of the various states have balanced those interests different.
The test in Illinois is set forth in Reliable Fire Equipment v. Arredondo, which requires a non-compete agreement to 1) be no greater in scope than is required to protect a legitimate business interest of the employer; 2) no impose an undue burden on the employee; and 3) not be injurious to the public. There is extensive case law on all of those elements.
Nonetheless, it is clear that non-compete agreements have been upheld in cases similar to the Jimmy John’s example, such as in a case where a saddler was not allowed to work for a competing store, and where a sales person was not allowed to work for a competitor. However, the case of delivery drivers and behind the counter workers at a Jimmy John’s presents some special circumstances, in that such an employee has no way of significantly impacting the business of their former employer. It is also likely that this issue will make its way to the courts in the near future.