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Are Non-Compete Agreements Enforceable Against Low-Wage Workers?

It was big news earlier this month when the Huffington Post broke the story that Jimmy John’s required low-wage sandwich makers and delivery drivers to sign non-compete agreements as a condition of their employment.   As reported by HuffPo: “By signing the covenant, the worker[s] agree not to work at one of the sandwich chain’s competitors for a period of two years following employment at Jimmy John’s. But the company’s definition of a ‘competitor’ goes far beyond the Subways and Potbellys of the world. It encompasses any business that’s near a Jimmy John’s location and that derives a mere 10 percent of its revenue from sandwiches.” For employment lawyers, the practical consequence of this news item breaking was that they had to spend a fair amount of time fielding this question from friends, family members, random people on Facebook, etc.: “Can they do that?”

Well, yes, they can. And apparently, they did. But can they enforce it? At least in Georgia, the answer is probably not. As has been written about extensively, well, just about everywhere, Georgia enacted a new non-compete statute that became effective on May 11, 2011. (Just Google “new Georgia non-compete law” and you’ll see what I mean.) The new law represents something of a trade-off. It makes Georgia more “non-compete friendly” than it had been in the past, but it also restricts the class of persons against whom non-competes can be enforced.

Code Section 13-8-52limits application ofthe statute to certain classes of people, including “employees.” The statute defines “employee” to include executives, R&D personnel, and “other persons” who are “in possession of selective or specialized skills, learning, or abilities or customer contacts, customer information, or confidential information” or who have “obtained such skills, learning, abilities, contacts, or information by reason of having worked for an employer.” O.C.G.A. § 13-8-51(5). Specifically excluded from the definition of “employee” are persons who “lack selective or specialized skills, learning or abilities or customer contacts, customer information, or confidential information.”Id.

While I’m no expert on sandwich making or delivery driving, unless there’s a lot more to it than it would appear, it seems highly unlikely that such a low-wage worker would qualify as an “employee” under Georgia’s new non-compete statute.

Joseph A. White is a trial lawyer who represents individuals and small businesses in commercial, employment and personal injury litigation.

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