Competing with Your Current Employer

Your employer has the right to the undivided loyalty of its employees. The duty of loyalty is breached and may give rise to the employee’s liability in a civil suit for unfair competition when the employees takes action adverse to the employer’s best business interests. Stokes v. Dole Nut Co. (1995). For example, employees who take for themselves, against their employer’s interests and to the employer’s loss, business opportunities in the employer’s line of business may be subjected to liability.

Normally, the unfair competition actions are governed by California Labor Code 2860, which states that “Everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment. In one case, while still employed, several employees of a company attempted to divert business to their newly formed company by using confidential client information. The court found that their conduct constituted misappropriation of employer’s trade secrets. Courtesy Temporary Service, Inc. v. Camacho (1990).

However, an employee may announce a change of his or her employment to the current employer’s customers, if no solicitation of customers to switch vendors / service provides takes place. “Solicit” implies “personal petition to a particular individual to do a particular thing” which in the context of employment and unfair competition means personal petition to customers to change the way they conduct business.

If you have any questions about trade secret or unfair competition issues, feel free to contact San Francisco employment lawyer Arkady Itkin to discuss your business and employment issues.