Hold on. Did you know you “owe your employer a duty of loyalty? A fiduciary duty of loyalty?”
What is a “fiduciary duty?”
Well, in Virginia, it is … ugh, when you ugh… don’t compete or umm… take business and stuff from your boss, and give it to well – someone else.
Not a very articulate explanation I realize. Let me defer to the many judges across the Commonwealth who have written very detailed opinions about the subject.
Virginia Supreme Court in Williams v. Dominion Technology Partners, LLC (2003) explained:
We have long recognized that under the common law an employee, including an employee-at-will, owes a fiduciary duty of loyalty to his employer during his employment. See, e.g., Horne v. Holley, 167 Va. 234, 241, 188 S.E. 169, 172 (1936). Subsumed within this general duty of loyalty is the more specific duty that the employee not compete with his employer during his employment. Hilb, Rogal & Hamilton Co. of Richmond v. DePew, 247 Va. 240, 249, 440 S.E.2d 918, 923, 10 Va. Law Rep. 981 (1994). Nonetheless, in the absence of a contract restriction regarding this duty of loyalty, an employee has the right to make arrangements during his employment to compete with his employer after resigning his post. The employee’s right in such circumstances is not absolute. Rather, “this right, based on a policy of free competition, must be balanced with the importance of the integrity and fairness attaching to the relationship between employer and employee.” Feddeman & Co. v. Langan Assoc., 260 Va. 35, 42, 530 S.E.2d 668, 672 (2000). Thus, “under certain circumstances, the exercise of the right may constitute a breach of fiduciary duty. . . . Whether specific conduct taken prior to resignation breaches a fiduciary duty requires a case by case analysis.” Id.
Helpful, eh? The Virginia Supreme Court says the following:
- you have a duty while an employee
- that duty means you cannot compete while an employee
- and you may be able to plan your next job which may be in competition
- but in some cases that will be a breach of this duty
- and so it all depends on the specific facts of your case
While not helpful (the case by case basis stuff) – let us dig deeper.
Circuit Courts have to take this “case by case” language – and actually apply it to facts.
Roanoke City Circuit Court says – “Theft of an employer’s customer lists or business information, by an employee, constitutes a violation of that fiduciary duty.” Phoenix Fin. Corp. v. Radford, 44 Va. Cir. 445 (Va. Cir. Ct. 1998).
Richmond City Circuit Court says that encouraging other employees to leave, is not a breach of fiduciary duty. BB&T Ins. Servs. v. Thomas Rutherfoord, Inc., 80 Va. Cir. 174 (Va. Cir. Ct. 2010).
So. Let us revisit the question. What is the duty you owe to your employer?
It is a general duty, not to compete while an employee – or take stuff that isn’t yours.
So play nice, don’t compete while still employed and hopefully we won’t be asking your local Circuit Court to determine whether your actions are in breach.