restaurant wants waitresses to sign non-compete agreements

by Alison Green on March 20, 2013

A reader writes:

My granddaughter has just received a new contract of employment. She works part time as a waitress in a local pub/restaurant. I am concerned about a clause in it that reads: “You agree that in the event of termination of your employment, you will not have any involvement with any other licensed premises within a three-mile radius for a minimum of two years.”

Can this be enforced on her? She is looking to work part-time in another restaurant nearer to our home and only 2 miles from where she is now working.

Where on earth is your granddaughter working that a restaurant is using contracts with employees, let along bothering with a non-compete clause?

It’s very rare in the U.S. for employees to have contracts at all, and even rarer for waitresses.

In any case, the non-compete clause probably isn’t enforceable, because courts generally rule that the employer must show that the restriction is reasonable and necessary to protect them against unfair competition. That’s unlikely to apply to a waitress. Additionally, if she was already working there when she was asked to sign this contract — as opposed to the contract being presented as something she needed to sign before she can be hired — then most courts will invalidate the agreement because there was no “consideration” to her for signing it (meaning some payment or other benefit to her).

Your granddaughter should ask her manager why they’re asking this of her, and why they’d object to her waitressing somewhere else in the future. And if the manager holds firm, then she’ll need to decide whether she wants to take a stand, or just sign it with the intent of ignoring it and assuming it’s unenforceable.

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{ 74 comments }

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  1. Ann O'Nemity*

    If I had to guess, I would say that the restaurant has previously lost wait staff to nearby establishments for better pay, hours, working conditions, etc. And since the restaurant can’t compete on those, they think non-compete contracts are the solution. Or, the manager/owner is just bat shit crazy.

    1. Audrey L. Snyder*

      Alison is right, there’s no way this is going to be enforceable anywhere (in the U.S., at least!) I’m also with Ann O’Nemity — “bat shit crazy” sounds right.

    2. Meg*

      +1

      Especially in a small town when your entire business district is within a 3-mile radius… like where I used to live… and when a majority of the work in that town IS restaurant or retail… absurd.

    3. Jamie*

      Another vote for bat-shit crazy. I cannot imagine what it would cost them in legal fees to try and enforce this. What are they thinking?

      2. Elizabeth*

        My guess is that they are thinking that, even if it’s not legally enforceable, many employees won’t know that and so will not leave for the restaurant down the road.

    4. Kou*

      Did anyone else have a flashback to that episode of Tabitha’s Salon Takeover where the manager was COMPLETELY insane but no one could leave because they’d all been hired with non-compete agreements that kept them from going to any other top salon in the entire metro?

  2. Joey*

    This sounds like an inexperienced manager gone wild. I would be little scared to know what other crazy stuff is going on there.

    1. LCL*

      My best guess as to what other crazy stuff goes on there?
      1. Telling employees their shift is from ex. 6 to midnight, so they have to get their work done by midnight, and if it isn’t done they have to finish it, but not get paid.
      2. Employees are scheduled for split shifts-come in and work the lunch rush, take a couple hours off, then come back and work the dinner rush. Oh, and employees are forbidden from hanging around the place between shifts.
      3. Telling some employees schedule decisions are made by seniority, telling other employees schedule decisions are decided by quality of work. When in reality schedule decisions are decided by availability, and who is friends with the scheduler that week.
      4. Scheduling extra clean up chores after hours, but not paying any extra. (See #1)
      5. Cashiers have to make up any cash shortages at the tills, or lose their job.
      6. Enforcing employee meal rules to the letter, while ignoring the chosen ones’ afterwork drink.

      I could go on..
      Maybe Alison could do a column of crazy restaurant stories.

      1. Dan*

        Are split shifts considered evil? I worked as a waiter in a tourist-trap restaurant while I was in high school. On the weekends, we’d schedule some people on splits. We’d do a *huge* rush for weekend breakfasts, and make a killing. We’d come in for four hours in the morning, hit the rush, and then come back and do 5-9 at nine. Quite profitable — much more $ than working say 6-2 straight.

        1. Natalie*

          I imagine it depends how long the split is. If you have to be back in 2 hours, you don’t get a lot of time to do anything else or go anywhere. And for that matter, given how little waitresses can be paid in most states, your boss isn’t even saving all that much money.

  3. Flynn*

    Two typos: one, the title! “sign con-compete”
    And two, “contact” – “is using contacts with employees”

    Although I did wonder if a con-compete was some kind of “you MUST work with other places” thing.

    1. Ann O'Nemity*

      I saw “con-compete” and momentarily imagined some weird scenario involving a prison release work program.

    2. Ask a Manager* Post author

      Fixed, thank you. Apparently the more posts I do in a day, the more typos they will have.

      Although “con-compete” could indicate that the request is a con.

  4. Cimorene*

    Quick question–a few years ago my father was offered a better job at a competing company, after nearly 20 years at his former job, for a significant pay increase and an overall better life (he worked for the CEO’s brother, which basically meant he was doing his own job and his boss’s job, and they were underpaying him as it was). His employer caught wind of it before he officially got an offer, and started making noises about a noncompete contract he’d signed 16 years earlier. So, according to this post, because the contract was signed after he’d already been working there, it would likely be unenforceable? He thought it wouldn’t hold up in court anyway, for plenty of reasons, but his boss had a mean streak and my dad was worried that they’d take him to court even knowing that it would be a waste of time and money. The company had a lawyer, though, and my dad didn’t, and he was worried that if they took him to court, he’d have to hire a lawyer (and, thus, pay a lawyer). In which case my dad would have to spend a lot of money that he didn’t really have to fight something he knew he could win.

    In the end, his boss went with fiscal logic over pettiness (…for once–seriously, I could tell you some stories, but that’s what happens when the Big Bossman hires his Little Brother), so he’s fine. But if the restaurant decided to try to sue (not sure if that’s the right verb?) the waitress for getting a job at a different restaurant, wouldn’t she have to pay for a lawyer and so on, just to prove that it wasn’t enforceable? I don’t know how this stuff works, and after my dad’s stressful experience, I’m curious.

    1. ExceptionToTheRule*

      Disclaimer: I’m not an attorney and I don’t play one on TV, but I do have a contract with a non-compete clause and I work in an industry in which they’re very common.

      In your dad’s situation, I think it would have depended on the nature of the employment contract. In my situation, the non-compete comes into play if I leave during the contract period. If I work out the contract and don’t sign another one, then the non-compete is no longer valid because the employment situation has reverted to “at will” on both sides. If my employer terminates the contract (and me) during the period covered by the contract, then the non-compete isn’t in play because they terminated it.

      All of that is to say that after 16 years, I doubt the non-compete would have held up in court unless your dad was signing a new contract every couple of years.

      Clear as mud?

        1. ExceptionToTheRule*

          How does that work?

          Mine does contain the phrase “in the event this clause is found to be unenforceable…”

          1. Lisa*

            It all boils down to who hates you and wants to sue out of spite, not because they will win, but to force you to pay a lawyer and fight any suit.

    2. Jazzy Red*

      Most lawyers will offer an initial consultation at no charge. I’m sure the non-compete that the waitress is being pressured to sign would be laughed out of court, if it ever came to that.

      My chiropractor worked for another chiropractor, in his clinic. She left, and he pulled the non-compete, so she consulted a lawyer. That contract was unenforceable because it would have deprived her of a means to make her living.

      1. Kelly O*

        I’ve seen this happen too. Some companies get a little crazy about what constitutes “non-compete” and what would prevent someone from making a living.

        It just takes one person leaving to go work for “the competition” to get people all antsy and having everyone start signing new “non-compete” disclosures.

        Lived that one fairly recently.

  5. Lexy*

    This is insane. If I would her I’d sign it AND tell the manager

    “Here’s my non-compete, have you had a lawyer look at that? I’m betting it’s unenforceable” just as a heads up to be “nice” (not really nice)

    I would be tempted to say “I’m signing this only because you can’t actually enforce it” but that seems unnecesarily combative and would probably sour what you need to be an at least not hostile working relationship.

    1. Forrest*

      Unnecesarily combative as opposed to saying “Here’s my non-compete, have you had a lawyer look at that? I’m betting it’s unenforceable”?

      1. Lexy*

        In my head, you say the first one in a friendly way and the second in a snotty way that totally makes the difference. But yeah, you’re right.

  6. Sascha*

    This is pretty weird, and sounds like the manager read about these magical things called “non compete agreements” somewhere on the interwebz, and thought s/he could use it to rule the employees with an iron fist.

    Even if it’s not enforceable, I wouldn’t sign anything I didn’t agree with it. This may harm the granddaughter’s relationship with her employer, but really…I’d get another job as soon as I possibly could.

  7. majigail*

    Also, is the granddaughter a minor? If so, I’m assuming the parents have to sign in now, but would it be in effect after she turned 18?

  8. UK HR Bod*

    I’m obviously coming from a different legal jurisdiction, but here non-competes have to be legitimate and proportionate to protect business interests. Trying to restrict a waitress working elsewhere would fail, and a company trying to enforce it would be laughed out of court. There are often contract restrictions on taking other employment – people would generally be expected or contractually obliged to ask first. Most employers wouldn’t say no, but in cases where there would be a clear conflict of interest, or where it would mean someone was breaching the working time regs (which would be the employers fault!) they might.
    I can understand that a restaurant might want to have some form of control over other employment, they might not want someone working so many hours for someone else that they showed up knackered and n0t performing, but it doesn’t sound like this clause would sort that. Even if by some odd chance this clause happened to be enforceable, it wouldn’t prevent her taking this other job as it’s about working after termination, not during employment!

  9. Mary*

    I agree that the non-compete is probably unenforceable, but that doesn’t mean she’d avoid paying legal fees when the restaurant sued her. There could be consequences for a person breaking such an agreement, even if a judge eventually declined to enforce it.

    1. Ash*

      And in that case her lawyer to sue to recoup all legal costs associated with the suit. Or the judge could award her all the costs because it could be considered a nuisance lawsuit.

      1. Hannah*

        Even if it not labeled a nuisance lawsuit, usually the prevailing party is awarded costs, even in a dismissal of charges. That’s not saying that her attorney fees would be reimbursed, however.

      2. fposte*

        That’s a lot less likely in the US, where “loser pays” is the law of the land. However, a plaintiff has to be willing to actually bring a lawsuit and a court be willing to hear it, and I’m skeptical that that’s the case here.

        1. fposte*

          Argh. “Loser pays” is *not* the law of the land. Small words make a big difference.

          As Hannah notes, court costs and attorney fees are two very different things, too.

      3. Natalie*

        It’s a lot easier to be awarded a judgment than it is to collect a judgment. I work for a national company with an in-house legal team and the money to hire independent counsel, and we have difficulty collecting on judgments.

  10. DA*

    If something as common as a bar/restaurant has you sign a non-compete, then that is a huge red flag. They likely have a huge employee turnover rate and are using that to try and keep people there as a result.

    However, I doubt that they will enforce it due to the legal costs of doing so. If they are really going to spend thousands of dollars trying to enforce a non-compete, then why wouldn’t they spend that money on higher wages in an effort to attract better employees?

    1. Ann O'Nemity*

      “I doubt that they will enforce it due to the legal costs of doing so.”

      I agree. Although they have demonstrated some crazy thinking thus far…

      1. DA*

        I’d say call their bluff. Let them sue if they wish. Think word wouldn’t get around town as a result? Not only wouldn’t they be able to get staff, none of the locals would support the place as well (even tourist traps need locals in the offseason).

        1. Natalie*

          I don’t know if a bad rep would keep them from getting staff. There are plenty of companies with terrible reputations, up to and including significant legal violations, and there are still usually enough desperate people to fill the payroll.

  11. Anonymous*

    Why not just say “I’ll need to have an attorney look this over before I sign it”? If that doesn’t make them back down , then surely there are other waitress-ing jobs to be had elsewhere.

    1. JT*

      Is she really going to have an attorney look at it? Don’t suggest things you’re not going to do – they may call your bluff.

  12. Kara*

    I have a different question regarding crazy restaurant policies. A friend of mine is working for an international house of pancakes that I won’t specifically name (cough), and I am wondering if they’re policies for employee payment are legal. I’m under the impression that minimum wage for wait staff is $2.13 (in Texas at least), but this restaurant is charging employees $0.33/hr to eat at the restaurant, whether they want to or not. They are also letting her work the absolute minimum with customers, preferring instead to put her on tasks such as rolling silverware and housekeeping duties. I understand that is part of being a waitress, but the reason the minimum wage for this industry is so low is because of the expectation of tips – which she cannot earn if they aren’t allowing her to wait on customers. So basically they are paying her $1.80/hr to work there. Is this a regular practice in restaurants? Is it even legal? I’m less concerned about the latter issue, and more concerned about them implementing a mandatory fee for food that the employees may not want to eat and further reducing their paycheck. Any thoughts?

    2. Ann O'Nemity*

      A mandatory $0.33/hr charge for (possible) eating doesn’t seem fair. I don’t know the law on this and I’ve never heard of the practice. Most of my food service jobs offered free or reduced cost meals during work hours, but there was no requirement to pay if you didn’t eat.

      The DoL defines a tipped employee as someone who earns at least $30/month in tips. They also have a guideline that specifies that at least 80% of tipped employees’ hours should be spent on tippable work.

      Straight from the DoL:
      A tipped employee engages in an occupation in which he or she customarily and regularly receives more than $30 per month in tips. An employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference.

    3. HR Guy*

      All legal aspects aside, this made me fall out of my chair laughing.

      Kara: “A friend of mine is working for an international house of pancakes that I won’t specifically name (cough)…”

    4. Lindsay*

      They have to at least make up the difference between whatever they are making and the true minimum wage ($7.25) if tips alone are not making up that difference. I’m not sure how the extra fee works into that though because I’ve never heard of that before.

    5. TheSnarkyB*

      WOW I know this is unusual, but I’ve never made less than $6 working at a restaurant… jesus. I mean, I get that tips should make up for it but Come On, people! I once worked in a position that made over $30/month in tips and because the restaurant is awesome they paid us just above minimum wage anyway…
      Hmph. Texas….

    6. KellyK*

      Wow. That’s freaking crazy. And, yes, if a tipped employee doesn’t end up making minimum wage, the company is obligated to make up the difference. Not that informing them of that is likely to do her any good, since people tend to get branded as trouble-makers if they want to actually get paid for their work.

      If I were her, I would start keeping very detailed track of what she earns and her tips, look for a better job, and contact the state department of labor *after* she leaves. Doing it then and there is an option if she’s feeling particularly brave (and if so, good for her!) or if she doesn’t need the money (e.g., spouse has a good job, or she’s a college kid living with her parents and is mainly working for experience and beer money).

    7. Anon*

      And this is why my friends wonder why I hate tipping in Seattle. Minimum wage in Washington is in addition to tips. So the servers are all getting $9.19 an hour PLUS tips. No I don’t want to tip you $5 for the meal it took me 20 minutes to eat :| No, I don’t think your awful service entitles you to make more than double what I do.

      And here you have people getting $2 an hour – yea – Seattle=spoiled.

      And your friend deserves way more! Just think of Seattle servers making $20 an hour after tips.

      1. Melissa*

        With all due respect, that just makes you sound stingy. First of all, regardless of what they already make, servers are providing you with a service. If you don’t want your food brought to you, only eat at places that don’t have table service. Second of all, servers need to eat, too. $9.19 an hour for 40 hours per week is only $1467 a month before taxes. There are few places I know where someone can live on that much per month even if they are alone, much less if they have children to care for. Teenagers working the standard 15-20 hours a week are only making $550-800 a month before taxes. If they are pulling down $20 an hour, good for them. Maybe they have a chance of paying all their bills after taxes now instead of choosing whether to get the lights or heat cut off this month.

        I think it’s a sign of how far off the deep end we’ve gone in the US when $20 an hour (just about $38,000 a year) is considered “spoiled”.

        1. Jamie*

          I’m with you. I’ve never waited tables, but I’ve been waited on and it looks like a brutal job. And it doesn’t look like an easy job to do correctly and pleasantly (remembering stuff on the fly, being on my feet all day, and having to be nice to the public…I cannot think of a job for which I have less of a skill set.)

          My parents instilled in us that if you don’t have the money to tip properly you don’t have the money to eat out – it’s part of the cost and not optional.

  13. Marmite*

    I’m wondering if this is in the UK? The OP says “pub/restaurant”, and contracts are common for all types of employment here. I’ve never had a job, including my part-time high school retail jobs, that didn’t require me to sign some form of contract.

    One summer job included a non-compete clause (it was a more specialized role than waitress, but nothing that warranted non-compete) and a model release in the contract. I doubt the non-compete part would have been enforceable, but they hire enough summer employees that even if it was I can’t see the company keeping track of them all for long enough to know if it’s broken.

    1. Carlotta*

      This. Non-compete clauses are almost standard in the UK now but not necessarily enforceable.

      1. Carrie in Scotland*

        The only job I have NOT had a contract with was.my very first job, which was cash in hand and didnt have my correct National Insurance number (the same as the US Social Security?) on my payslips (poss tax thing by the owner?)

        1. Marmite*

          NI numbers are not really the same as SS numbers, but if it was a cash in hand job you were probably getting away without paying any tax or NI. It’s also possible your employer was taking tax from you but not passing it on to HMRC.

      2. Marmite*

        I’m not sure how standard non-compete clauses are, I’ve only had it in that one contract, but contracts themselves are definitely normal in all types of job.

  14. JW*

    I worked at a restaurant (in the theater district in NYC, no less) where I remember signing a non-compete when hired as a member of the host staff. I’m fairly certain it was just one way the management tried to combat the high turnover, as it was certainly never enforced during my time there.

  15. FiveNine*

    Are we sure the grandparent is clear on what kind of work the granddaughter is performing? Because in the United States there are certain types of clubs that are ostensibly bars or restaurants where women do sign a lot of paperwork and work on contract, but it’s not really the waitressing they’re contracted to do.

    1. Forrest*

      Usually those types of women don’t sign non-compete clauses either since they’re basically contactors.

      1. TheSnarkyB*

        Excuse me that is not a “type of woman,” it is a category of employment and an indicator of nothing more

        2. Forrest*

          Yes, I know. My comment is a play on FiveNine’s vague comment (“certain types of clubs.”)

          1. Kathryn T.*

            In the future, I’d use language like “types of employees” and not “types of women,” since the latter can very easily be misinterpreted as a slur — which it sounds like you didn’t intend.

            1. Forrest*

              Except the original commenter was talking about women soley. (“certain types of clubs … where women do sign a lot of paperwork and work on contract.”)

              But I’ve noticed that no one is addressing that.

              It seems a lot of people misunderstod the point of my comment but it also seems that people didn’t read the comment I was addressing either.

              1. Min*

                The employees of “certain types of clubs” aren’t likely to appreciate being referred to as “those types of women”. It implies a moral judgement about her as a person based on her occupation.

    2. Kelly L.*

      I had to sign a non-compete for a sandwich shop once. And no, it was not a nude sandwich shop! :D These things happen.

  16. Mary*

    I’m on contract right now. Any ad/news within County within 3 months of leaving. No problem.

  17. Mike C.*

    OP, I understand the following may seem a bit much, but hear me out and see if your granddaughter is comfortable with the idea. She may or may not, and it’s fine either way.

    This contract is an extreme and most likely unenforceable use of the non-compete clause. Especially in a job and industry where restaurants start up and go out of business fairly quickly, where hours are all over the place and turn over is incredibly high. The mere threat is a great way to harm people who don’t know any better or aren’t willing to roll the dice.

    Suggest to your grand daughter that she obtain a copy of her contract, and have her anonymously give a copy to the local paper or news station. If she really needs the job now, and doesn’t feel comfortable I totally understand, but this is the kind of practice that needs to die and public shaming is a great way to do it. And in any case, you should have a copy of any contract you sign, right? Maybe she’ll want to do it later or not, who knows?

    I’m not talking about crazy activism or anything like that, I’m just talking about setting up a burner email account, feeling out a few reporters and seeing if one would be willing to take a copy of the contract and keep the confidence of your grand daughter.

    It’s a risk to be sure and one that has to be carefully considered given her individual circumstances, but give it a thought and see how you feel about it.

    1. Another Emily*

      I’m not a journalist, and I don’t play one on TV, but I don’t think journalists are generally keen on interviewing people anonymously. I think it would make their news story seem like it’s not very credible.

  18. Jo*

    I was surprised about the US and employment contracts, actually. I’m Australian and contracts are pretty standard here, to my knowledge.
    They’re in place to protect the workers from being ripped off, and settlement of disputes. The employers really has to cover their arse here since FairWork (government department for employment and worker’s rights) keep a close eye on everything.
    I just dug up my copy of my casual contract, and it consisted of this: http://www.fairwork.gov.au/FWISdocs/Fair-Work-Information-Statement.pdf
    Plus a booklet of my company’s policies and procedures, and my wage rates. Then I had to sign to say I had read, understood, and agreed all of this and to confirm my subsequent employment.
    Not a hugely complex contract, but one nonetheless. This was just for a summer job, and I hear that waitresses here have a pretty standardised one.

    I don’t have anything to add on the issue at hand, I just hoped I could shine some light on employment contract if the OP is from overseas. That clause does sound really extreme though.

  19. Scott Woode*

    Hi. Former waiter and manager with 10 years of experience in the restaurant hospitality industry here. The reason this is happening is more than likely because they had some turn-over with some wait/barstaff that had been there for a number of years and developed a regular client base. These people left, telling their regulars that they had developed and fostered over their tenure at the pub/restaurant “Hey, I’m leaving X Pub and moving over to Y Restaurant. It would be lovely if you came in to visit me, too!” (Please note: this action of notifying regulars of an upcoming move is exceptionally common in the industry; you spend months/years developing a following and you don’t want to lose the business so you let them know where you’re headed.)

    Management more than likely either overheard this interchange, or a guest/regular spoke to management, mentioning their dissatisfaction that so-and-so was leaving, and so they decided to implement this crazy contract, hoping it would scare ignorant service workers into not leaving for a period of time.

    OP, tell your granddaughter that this is not the place for her to work. There are a lot of really poorly run restaurants out there and this kind of action on behalf of the management there sends my red flags a-waving. There are plenty of other restaurants out there where she can pull in a great deal of cash while also working with people who treat her respectfully and will have her best interests at heart. How do you find those places? Your best bet is to Google search “[your city] + restaurant industry + job openings” and see what comes up. Most urban locations have a privately run website (not craigslist) where they list they’re job openings and you can search it by position, or generally by Front of House (FOH) or Back of House (BOH). Best of luck to you and your granddaughter!

  20. Cruella DaBoss*

    I bet your granddaughter works for the “Owl” restaurant.

    Many, many, moons ago, when I was in college, I was an “owl” girl. At the time, we had a”contract” of sorts that kept us from leaving for restaurants with similar business plans, because our likenesses were used in local business promotions, billboards, advertisements, etc…and those in the community would associate our likenesses with the business. Of course, at that time we were also the only one in our city. Now the “owl” restaurants seem to be on every corner. Not sure if they still do that, but it would not surprise me.

    1. Kou*

      Heeey, you may be right. They have a lot of weird contractual stuff there, and a whole lot of bizarre rules. I remember looking into it for about five minutes before the “always have fresh lip gloss, lipstick is not ok” type policies put me right off.

      So apparently that’s where I draw the line.

  21. Grace*

    I don’t know about which state your granddaughter is working in, but in my state (California) the California Supreme Court has emphatically declared a couple of years ago (Edwards v. Anderson case) that non-compete agreements are be illegal (they’ve been here since the 1800s) except for some limited circumstances (like selling your business to somebody else and not opening a competing business for a certain time/radius). Check your state’s Chamber of Commerce website, as many of them have very good human resources blogs on current laws. Also check for labor attorneys in your state and their articles on non-compete agreements. Best wishes.

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