A recent article in the St. Louis Post-Dispatch focused on a lawsuit involving sandwich maker Jimmy John’s and a two-year, non-compete agreement barring a former assistant manager from working for a sandwich-making rival within three miles of a Jimmy John’s store.
The newspaper article raised the issue of whether non-compete agreements, typically reserved for executives, managers and those involved with sales, were being introduced to low-wage and “rank and file” workers, as described by the newspaper story.
Some states, such as California, Colorado, North Dakota and Oklahoma, either prohibit non-competes completely or restrict their use to very limited circumstances, such as the sale or dissolution of a business or partnership.
Under Missouri law, an employer may “fairly require” the protection of certain narrowly defined and well-recognized interests against possible appropriation by a former employee. These two protectable interests are limited to (1) trade secrets and (2) customer contacts, the latter being essentially the influence an employee acquires over his employer’s customers through personal contact.
Case law in Missouri states that “the quality, frequency and duration of an employee’s exposure to an employer’s customers is crucial in determining a non-compete’s reasonableness. Overall, the purpose of a non-compete agreement is to keep the covenanting employee out of a situation in which he might be able to make use of contacts with customers to his former employer’s disadvantage.”
Missouri courts have described such analysis as a “delicate balancing test.” While the former employee is free to compete, the former employer is entitled to utilize non-compete agreements to protect itself from unfair competition by misuse of its trade secrets or misuse of the employee’s customer contacts developed at the employer’s expense. Protection of the employer, not punishment of the employee, is the essence of the law.
It will now be up to the court to determine whether Jimmy John’s “freaky fast delivery” extends not just to its 8-inch sub sandwiches but to the legal balancing of the “reasonableness” of the non-compete agreement in terms of enforcement.