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I’ve never eaten at Jimmy John’s, but they must have some incredible sandwiches, made with either top secret ingredients or through a confidential process (or both!). It turns out that this sandwich chain requires its hourly workers to sign non-compete agreements, prohibiting its employees from working for a competitor for two years(!) after leaving Jimmy John’s. I don’t know how I missed that, but it was apparently widely reported back in October, in Business Insider and the New York Times, among other publications.
According to the New York Times article, this isn’t really all that uncommon, as more and more employers are requiring low- and moderate-wage workers to sign these agreements. But, it seems to me very unlikely that these agreements would be enforceable in New York. Plus, given the expense of enforcement, it is doubtful that any employer would truly think it worth the cost of litigating these agreements. But, a low-wage under threat of litigation and unable to afford a lawyer to defend them in such an action may not know that, and feel trapped in their current job.
In New York, these agreements are more common among professionals, executives, and higher-paid salespersons with access to confidential business-related information. And, even in those situations enforcement is not a sure thing. Restrictive covenants in employment—also referred to as non-compete clauses—are generally not favored, and will be enforced by the courts only to the extent they are reasonable and necessary to protect legitimate business interests, such as the protection of an employer’s trade secrets or confidential customer lists, or protection from an employee whose services are unique or extraordinary. Courts have also held that employers have a legitimate interest in preventing former employees from exploiting the goodwill of a client or customer, which had been created and maintained at the employer’s expense, to the employer’s competitive detriment. What legitimate interest would a sandwich chain have to justify preventing one of its sandwich-makers from leaving and working for a competitor?
This may all be moot if Congress passes the Mobility and Opportunity for Vulnerable Employees (MOVE) Act (not to be confused with the Military and Overseas Voter Empowerment Act). According to the press release issued by one of the sponsors, the legislation:
will enable low-wage workers to seek higher-paying jobs without fearing legal action from their current employer. The MOVE Act will ban the use of non-compete agreements for employees making less than $15 an hour, $31,200 per year, or the minimum wage in the employee’s municipality, and will require employers to notify prospective employees that they may be asked to sign a non-compete agreement.
According to the press release, it is estimated that 8-15% of low-wage workers are asked to sign non-compete agreements in an effort to dissuade those workers from seeking better, higher-paying jobs within the same industry. Although such agreements in these contexts may ultimately prove to be unenforceable in many jurisdictions, passage of the MOVE Act would remove any doubt with respect to these employees.
For more information about restrictive covenants and some recent developments in New York law, I invite you to read the latest posting on our firm’s website: New York Employers Could Soon Have More Difficulty Enforcing Restrictive Covenants.
As Senate Debates ENDA, New York’s Sexual Orientation Non-Discrimination Act Celebrates its 10th Year
On the drive home this evening, NPR reported that the U.S. Senate had just voted to move forward with debate on the Employment Non-Discrimination Act, which would expand the protections afforded under Title VII of the Civil Rights Act of 1964 to prohibit discrimination based on sexual orientation or gender identity. Although the bill faces an uncertain future in the House (it was reported that the Speaker came out against consideration of the bill), many states already have laws prohibiting discrimination against LGBT people. But many do not.
New York is one of the states that enacted such protections. The New York Sexual Orientation Non-Discrimination Act (“SONDA”) was signed into law by Governor George Pataki on December 17, 2002, and the law became effective on January 16, 2003. An easy-reader summary of SONDA and its protections may be found in a brochure on the New York State Attorney General’s Website. Additional information may be found on the website for the New York State Division of Human Rights.
Although part of my practice involves representation of both employers and employees in discrimination cases, in the decade since the SONDA was enacted, I can count the number of cases I’ve handled involving an allegation of discrimination based on sexual orientation on one hand. By far, the vast majority of cases I’ve handled over the years have involved allegations of discrimination or harassment based on race, gender or disability. But, that doesn’t mean that statutes like SONDA are not needed, and in time, we may soon see a day when the protections of the ENDA are the law of the land.