Matthew 6:24: “No one can serve two masters.”*
*I did not include the Bible verse above in an attempt to win converts. This verse (or at least the concept) has often been used by Virginia courts in the past when explaining the common law duty of loyalty that an employee owes to their employer.
When a job applicant is searching for employment, the last thing on their mind is a fiduciary duty of loyalty. After all, do you even know what fiduciary duty is? Probably not, unless of course you’re going into the field of law. Here’s a close look at fiduciary duty of loyalty, how it applies to employees, and how to avoid litigation.
Yes, You Owe Your Employer a Fiduciary Duty of Loyalty in Virginia
When working in Virginia, employees owe a common law duty of loyalty to their employer. “Common law” means that the duty exists even though there is no specific statute on point or no contract exists. This duty of loyalty means that the employee should not take any action which might harm his/her employer. However, this does not prohibit a regular employee from working for a competitor. This happens frequently.
1st Example: Employee Bob works for Restaurant ABC and Restaurant XYZ. Bob is free to do so if it would not harm the other. However, Bob would be in violation of his duty of loyalty if he took Restaurant ABC’s secret recipes and provided them to Restaurant XYZ.
2nd Example: Employee Susan works for Office ABC and Office XYZ (who are in direct competition). While on the job site of Office ABC, she uses her work time to carry out the tasks of Office XYZ. In addition, she forwards confidential ABC information to XYZ. This would be a violation as well.
3rd Example: Employee is starting a new business (in direct competition with employer) while still employed. It would not be a breach of the duty of loyalty for Employee to plan his departure. After all, Virginia law favors competition. However, Employee cannot begin to tell Employer’s to send their business somewhere else while he is still employed.
Remember that an employee agreement could require greater than the employee duty of loyalty. In addition, officers, directors and managers (dependent on the situation) owe a greater duty to their employer than someone lower on the pay scale. This area of the law is extremely fact specific and each instance should be reviewed with an attorney.
You will also be breaking your fiduciary duty of loyalty if you steal from your employer. As a result, you can be held accountable for not providing the loyalty your employer deserves, plus you can face criminal theft charges. All in all, the basics behind a fiduciary duty of loyalty in Virginia are:
- Don’t steal from your employer; including client lists, account numbers, etc.
- Don’t compete with your employer before your employment has ended
- Don’t get other employees to leave your employer before your employment has ended
Please keep in mind that this doesn’t mean you can’t ever secure another job with a different employer or start your own company. If an employee is considering starting a competing business, they should do so during non-working hours. Nor does it mean that you can’t work for two or more employers at the same time. If an employee is working for two employers, extra care should be taken that the employee is not disclosing confidential information or providing a benefit to one employer at the expense of another. Once again, this would depend on the specific facts of the case.
In addition to the duty of loyalty owed to employer(s), an employee must also abide by any employment agreements (contracts) they have signed. These contracts will typically outline the provisions employees are to adhere to, including no stealing of intellectual property rights, maintaining confidentiality of client and employer information, and employees must also abide by the Virginia Uniform Trade Secret Act, which prohibits the misappropriation of trade secrets.
Ryan C. Young | Richmond, Virginia Business Attorney
