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January 7, 2019

ATTORNEY GENERAL MADIGAN REACHES SETTLEMENT WITH NATIONAL PAYDAY LENDER FOR IMPOSING UNLAWFUL NON-COMPETE AGREEMENTS

Madigan’s Settlement Ensures Store-Level Employees Will No Longer be Subject to Highly Restrictive Non-Compete Agreements Unenforceable Under Illinois Law

Chicago — Attorney General Lisa Madigan today announced she has reached a settlement with Check Into Cash of Illinois LLC (Check Into Cash), a subsidiary of national retailer Check Into Cash Inc., to end its practice of imposing highly restrictive non-compete agreements on low-wage customer service employees at its 33 locations throughout Illinois.

“My settlement with Check Into Cash ends the company’s inappropriate practice of limiting low-wage workers employment options by requiring them to sign unfair non-compete agreements,” Madigan said. “Low-income workers should be free to use their experience to get better, higher-paying jobs.”

Prior to the settlement, Check Into Cash required all employees at all of its store locations, including workers who earn less than $13 per hour, to sign a non-compete agreement as a condition of employment. Madigan’s settlement ensures that no store-level employees will be subject to non-competes moving forward, the company must train managers and personnel on the change and must also notify impacted employees. In addition, Check Into Cash must pay $75,000, which Madigan’s office will use toward public outreach and education on non-compete agreements.

Check Into Cash’s unlawful non-compete agreement restricted employees from working for any other business that provides consumer lending services or products for one year after they left the company. These services and products included any payday advance services; check-cashing services; pawn or title pawn services; secured or unsecured credit lending services; secured or unsecured installment lending services; or essentially any other consumer lending service or money transmission service. Madigan’s October 2017 lawsuit against Check Into Cash alleged that a wide variety of businesses could fall within this broad definition, including retail stores or auto dealerships that extend credit on an incidental basis or entities like Western Union or the U.S. postal service that transmit money.

Under the terms of the former non-compete agreement, Check Into Cash employees were prohibited from working for any business that fell within this broad definition within 15 miles of any office or retail location of Check Into Cash, as well as any location of the company’s parents, affiliates or subsidiary companies. This included not only all of Check Into Cash’s 33 Illinois locations, but all of the more than 1,000 such locations in 32 other states as well.

According to U.S. Treasury reports, non-competes impact approximately 30 million – nearly one in five – U.S. workers, including roughly one in six workers without a college degree. Under Illinois law, non-compete agreements must be premised on a legitimate business interest and narrowly tailored in terms of time, activity and place. Since January 2017, the Illinois Freedom to Work Act has prohibited the use of non-compete agreements for employees earning minimum wage or less than $13 an hour.

Madigan has been concerned about the growing use of inappropriate non-competes to bind low-wage workers. In September, she reached a settlement with WeWork Companies Inc. (WeWork), which provides a network of shared spaces for rent and associated services to clients in 88 global cities, to end the company’s use of overly broad and unfair non-compete agreements for nearly all of its employees nationwide. WeWork, which has eight locations in Chicago, had previously required all employees in Illinois to sign such agreements, including custodians and receptionists. Similarly, in June 2016, Madigan filed a lawsuit against Jimmy John’s upon learning the sandwich shops required employees such as sandwich makers and delivery drivers to sign a non-compete agreement as a condition of employment. The company settled with Madigan’s office in December 2016 and agreed to not only end the use of non-competes for these low-wage workers, but also to inform current workers that the agreements were unenforceable.

Workplace Rights Bureau Chief Jane Flanagan and Assistant Attorneys General Anna Crane, Matthew Martin and Andrew Tonelli handled the lawsuit and settlement for Madigan’s Workplace Rights Bureau. The mission of the Workplace Rights Bureau is to protect and advance the employment rights of Illinois residents, particularly low and moderate-income and immigrant residents.

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