Breach Of Duty Of Loyalty

Duty of loyalty is one of the main categories of fiduciary duties. Most of these fiduciary relationships exist in a variety of legal contexts, e.g., attorney-clients, agent-principals, trusts, wills, and contracts. If your employee did not adhere to their contract and breach their duty of loyalty, you may file a claim against them. In such cases, it is important that you work with experienced employment law attorneys.

Understanding Breach Of Duty Of Loyalty

Under employment law, aspects of the duty of loyalty include an employee’s duty to avoid competing with their employer, as well as soliciting the latter’s other employees and clients prior to leaving the company. Additionally, employees may not pursue their personal interests during normal working hours.

It is important to note that all employees owe a certain degree of loyalty to their employers. It typically depends on the level of trust and responsibility that an employer grants an employee. In some cases, employees have access to confidential information or extensive independent responsibility. This means that their duties have risen to a fiduciary level. After taking hold of this fiduciary responsibility, employees must handle their employer’s matters with the highest degree of fidelity and integrity. Simply put, their actions and decisions at work must benefit the employer.

Contact Us

Home Page Form

Why Should You Hire Attorneys For Breach Of Duty Of Loyalty Claims?

Certain actions constitute active steps to compete against one’s employer. Fiduciary duties, however, vary from state to state and this topic is constantly evolving. That’s why you should contact an experienced attorney to accurately determine if an employee has taken active steps.

Practice Areas

Common FAQs About Breach Of Duty Of Loyalty

What does duty of loyalty refer to?

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.

When can employers claim for a breach of duty of loyalty?

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.

What remedies are employers entitled to if their breach of duty of loyalty claims are successful?

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.

Can an Individual Be Held Personally Liable for Breach of Duty of Loyalty?

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.

What Should an Organization Do if a Breach of Duty of Loyalty is Suspected?

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.

How Can Organizations Protect Themselves From Breaches of Duty of Loyalty?

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.

Breach Of Duty Of Loyalty