Breach Of Duty Of Loyalty

Fiduciaries must always act in the best interests of the beneficiary. For example, an employee should make decisions that do not put the beneficiary at a disadvantage.

You can file a claim if an employee takes active steps to compete with you prior to their resignation. For example, an employee may divert clients to a competing business; take a current employer’s customer lists for their own use; solicit fellow co-workers to join new employer; or utilize trade secrets for the benefit of their new employer and themselves.

Depending on applicable laws and an employer’s unique circumstances, they may recover paid bonuses, collect profits received by an employee via a constructive trust, get employee to forfeit wrongful gains, seek injunctive relief (employee stops a specified act via a court order), withhold employee’s unpaid commissions, and more.

Yes, individuals can be held personally liable for breaching their duty of loyalty. This can result in personal financial liability for damages, loss of employment, or removal from a position of authority.

If a breach is suspected, an organization should:

• Conduct a thorough investigation.
• Document findings and gather evidence.
• Seek legal counsel to assess the situation.
• Take appropriate action, including potential legal proceedings.
• Review and strengthen policies to prevent future breaches.

Organizations can protect themselves by:

• Implementing clear conflict of interest policies.
• Conducting regular audits and compliance checks.
• Requiring disclosure of potential conflicts of interest.
• Providing training on ethical behavior and fiduciary duties.
• Establishing mechanisms for reporting and addressing breaches.