Jimmy John’s Takes a Bite Out of Workers’ Rights: Crowley, Sánchez Call on FTC, Labor Department to Investigate Sandwich Chain’s Intimidating Hiring Practice for Low-Wage Workers

Oct 22, 2014 Issues: Economy and Jobs

Members Express Concern Over Jimmy John’s Required Non-Compete Agreements and Impact on Workers’ Rights, Free Competition 

 

(Washington, D.C.)  – Today, Rep. Joe Crowley (D-NY), Vice Chair of the Democratic Caucus, and Rep. Linda Sánchez (D-CA), co-founder and co-chair of the Labor and Working Families Caucus, called on the Federal Trade Commission (FTC) and the Department of Labor (DOL) to investigate the hiring practices of Jimmy John’s sandwich chain following media reports that the company requires low-wage workers to sign non-compete agreements that severely impact workers’ rights and stifle market competition. 

In a letter, signed by 35 of their colleagues, Crowley and Sánchez expressed concern that company-wide non-compete agreements, which are typically reserved for executives out of a need to protect propriety information, are inconsistent with trade and labor laws and intimidate low-wage workers.

“Non-competition agreements may sometimes make sense for well-compensated core company leadership, who are privy to company secrets and strategies. However, applying them to a company’s entire workforce looks more like bullying under color of law, as well as a violation of labor rights,” wrote the lawmakers in the letter.

Furthermore, the members are troubled by the excessive restrictions reportedly included in these agreements, such as banning employees from working for any establishment that serves sandwiches and operates within three miles of any Jimmy John’s 2,000-plus locations, both while employed by the company and up to two years after their employment has ended.

“Forcing rank-and-file, low-wage workers to sign non-compete agreements also stifles the ability of these workers to seek out new opportunities for their own betterment, and runs counter to the American ideal of open competition, which allows individuals the opportunity to seek employment at higher wages,” continued the letter.

The letter asks the FTC and DOL to investigate Jimmy John’s hiring practices, determine the impact these agreements have on both workers’ rights and free competition, and take action to deter or prevent such agreements from impacting employees.

Today’s letter follows a successful effort by Crowley and Sánchez to secure higher wages for concession workers in federal buildings. In February, the lawmakers led 50 House Democrats in a letter to President Obama urging him to include these workers in his executive order raising the minimum wage for federal contractors. In June, the Department of Labor announced the proposed rule to implement the President’s executive order would include concession workers in federal buildings.

The full text of the letter to Chairwoman Ramirez and Secretary Perez is below:

 

October 22, 2014

 

The Honorable Edith Ramirez  

Chairwoman

Federal Trade Commission

600 Pennsylvania Avenue NW

Washington, D.C. 20580

 

The Honorable Thomas Perez

Secretary

U.S. Department of Labor

200 Constitution Avenue NW

Washington, D.C. 20210                                                          

                                                                                

Dear Chairwoman Ramirez and Secretary Perez:

We would like to express our serious concerns regarding reports of the use of non-compete agreements by some employers in the food service business. This hiring practice is clearly anti-competitive and intimidating to workers. As it is also inconsistent with trade and labor laws, we ask your agencies to investigate these disturbing reports.

A series of recent articles revealed that Jimmy John’s, a popular sandwich restaurant franchise with more than 2,000 locations in 43 states, allegedly requires rank-and-file workers at its sandwich shops to sign non-competition covenants as a condition of their employment. The agreement reportedly restricts employees from working for any restaurant that serves sandwiches and operates a location within three miles of a Jimmy John’s restaurant, both while employed by the company and up to two years after their employment has ended.

There is no justifiable business interest in imposing such a restriction on restaurant employees that are not privy to any of the company’s proprietary information. Additionally, the excessive restrictions reportedly included in these agreements are simply not practical and go far beyond what could reasonably be considered a “competitor” to the original workplace location. For example, a recent article in The Huffington Post estimated that the restriction could effectively create a 6,000-square-mile blackout area.

Furthermore, we believe this practice can intimidate working individuals, many of whom are struggling to support themselves and their families while earning barely above the minimum wage. Forcing rank-and-file, low-wage workers to sign non-compete agreements also stifles the ability of these workers to seek out new opportunities for their own betterment, and runs counter to the American ideal of open competition, which allows individuals the opportunity to seek employment at higher wages.

Non-competition agreements may sometimes make sense for well-compensated core company leadership, who are privy to company secrets and strategies.  However, applying them to a company’s entire workforce looks more like bullying under color of law, as well as a violation of labor rights. Given the impact these agreements can have on the rights and freedoms of workers, as well as their potential to stifle market competition, we urge your agencies to investigate this practice, determine the impact these agreements have on both workers’ rights and free competition, and take any necessary action to deter or prevent such agreements from impacting employees.

We thank you for your attention to this important matter and look forward to your response.

Sincerely,

Joseph Crowley

Linda Sánchez

Bobby L. Rush

Eleanor Holmes Norton

Gwen Moore

Earl Blumenauer

Charles B. Rangel

Juan Vargas

Keith Ellison

Alcee L. Hastings

Alan Grayson

Mark Pocan

Yvette D. Clarke

Raúl M. Grijalva

Grace Meng

Judy Chu

Mark Takano

George Miller

Barbara Lee

Luis V. Gutiérrez

Janice D. Schakowsky

Sander M. Levin

Rosa L. DeLauro

Gene Green

Michael M. Honda

Elijah E. Cummings

Donald M. Payne, Jr.

Donna F. Edwards

Niki Tsongas

Marcy Kaptur

José E. Serrano

André Carson

Jerrold Nadler

Sheila Jackson Lee

Al Green

Tim Ryan

James P. McGovern

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