Articles on Law, Science, and Engineering

PART II: Duties of an Ex-employee (cont'd)

What Can You Do to Avoid Conflicts?

Often the first steps one takes toward securing future income occur during previous employment. As described in Part I, an employee is obligated to treat his employer with strict fairness during this period of preparation for change in employment. Unless authorized by the employer, the employee should not use facilities or time paid for by the employer to locate future employment. This obligation is not limited to items that would cause "large" direct expense to the employer. Employees should also avoid using "small" items such as postage, long distance calls, and office supplies, as well as items which generate no apparent direct cost to the employer, such as local telecommunications, duplicating or computing facilities, and secretarial services.

If the employee intends to establish a business that will compete with his former employer, it is especially important that preparations should be made without violating the employee duties described in Part I. For example, the employee should not use his position to lure colleagues to join him in his new enterprize or conspire with them to the detriment of his employer. In some situations, despite the financial hardships, preparations for establishing a competing business cannot be initiated until after employment is terminated.

Several examples where former employees have been found during litigation to have unfairly used their position as employees are discussed in Part I. In the 1978 New Mexico case involving four employees who had applied for a federal grant for a former employer and subsequently applied for a similar grant for a new organization they formed, the court found that the employees breached their duty not to do acts that were disloyal to their employer in anticipation of their future competition with it. In the 1980 Florida case involving three employees who began forming their new business while still employed, the court found that the pre-resignation behavior violated the duties of ex-employees to their former employer. In that case, the court found that the competition by the ex-employee's new business was unlawful even though there was no non-competition agreement between the parties.

In a 1948 Ohio case, an employee who was negotiating a contract on behalf of his employer quit and continued negotiations on his own behalf. The court found that the duties of the employee to the employer continued after termination of the employment and awarded the employer all the profits received by the ex-employee under the contract. In a 1986 Illinois case, an ex-employee solicited several clients he had serviced for his former employer. The court held that the former employer had a claim against both the ex-employee and his new employer.

Next - Conclusions
Previous - Non-Competition and Non-Disclosure Agreements