Recently a fast food company made the national news for having some of its employees, mostly hourly workers, sign non-compete agreements. Traditionally, most who sign non-compete agreements are executives who have knowledge of intellectual properties or people on the ground floor of a startup. Not in the case of this sandwich shop though. Should there be any question, an attorney would likely say it is legal to have any employee sign a non-compete agreement if certain criteria are met.
In this specific situation, the agreement requires workers to not take a job at a competing sandwich shop for two years. Here, competing is defined as a shop that earns more than 10% of its revenue from sandwiches, and is within three miles of one of their existing franchise locations.
What Determines if a Non-Compete Agreement Like This Is Legal?
Non-compete agreements are becoming more common in today’s workforce and they don’t require much to be enforceable. A non-compete agreement is legal if:
- It is in exchange for something. In the case of a fast-food restaurant worker, the individual received a job. If an employee is already hired and the store wants them to sign an agreement, they must be given something extra. This could be a raise, promotion, or some other benefit.
- There is a business purpose to the non-compete agreement; such as protecting trade secrets or other proprietary information.
- The restrictions of the non-compete agreement must be reasonable. The limitations to the area probably will be limited by your business or industry, and a time restriction of a few years is a usually reasonable.
What has upset some people who don’t like the fast food employees signing a non-compete is the idea that these minimum wage workers may have a hard time finding another job close to their homes because of the non-compete clause. This case could end up in the courts to find out if line workers from a fast food franchise pose a risk to the overall corporate business.