Even Low Level Employees Have Duty to Employer
by Michael Fox
All was not harmony on the island paradise of Hawaii as two lower level employees prepared to compete with their employer before leaving their employment. Mere preparation was not a problem, but actually submitting a competing bid for a government contract and winning while still employed was. At least that is how the 9th Circuit thought the Supreme Court of Hawaii would rule. In Eckard Brandes, Inc. v. Riley et al ((th Cir. 8/11/03) [pdf] the court found that the violation of the duty of loyalty would create a cause of action, that it would be governed by the six year statute of limitations and that disgorgement of the profits on the government contract was a proper remedy. What is interesting is not only the 9th Circuit's enforcement of the duty of loyalty against lower level employees, but the irony that it was the employees' lawsuit for wage and hour violations that led to a counterclaim for the breach of the duty of loyalty. A good example of why one should think twice of one's own conduct before initiating litigation.
Labels: competing employees