Here at the Law Office of Vincent Miletti, Esq. and the home of the #UnusuallyMotivated movement, we take pride as a resilient and dependable legal services firm, providing such services in both a traditional and online, web-based environment. With mastered specialization in areas such as Employment and Labor Law, Intellectual Property (IP) (trademark, copyright, patent), Entertainment Law, and e-Commerce (Supply Chain, Distribution, Fulfillment, Standard Legal & Regulatory), we provide a range of legal services including, but not limited to traditional legal representation (litigation, mediation, arbitration, opinion letters and advisory), non-litigated business legal representation and legal counsel, and unique, online legal services such as smart forms, mobile training, and legal marketing & development.

Still, here at Miletti Law®, we feel obligated to enlighten, educate, and create awareness about how these issues and many others affect our unusually motivated® readers and/or their businesses. Accordingly, to achieve this goal, we have committed ourselves to creating authoritative, trustworthy, and distinctive content that looks to educate and deliver in a manner that only Miletti Law® can. Usually, this content is featured as videos posted on our YouTube Channel https://www.youtube.com/channel/UCtvUryqkkMAJLwrLu2BBt6w and blogs that are published on our website WWW.MILETTILAW.COM. With the ball in your court, yours is an effortless obligation to subscribe to the channel and sign up for the Newsletter on the website, which encompasses the best way to ensure that you stay in the loop and benefit from the knowledge bombs we drop here!

As the authoritative force in Employment Law, we are committed to providing you with authoritative, up-to-date, and trustworthy content through which you can draw enlightening information to stay ahead of the game in your business. In this regard, this blog, titled “Breach of Duty of Loyalty Claims under the DTSA & UTSA,” is Part XIV of our multi-part series on the “Enforcement of the Protection of Employers’ Confidential Information & Trade Secrets.” In Part XIII, we hammered on the “Breach of Fiduciary Duty Claims under the DTSA and/or UTSA” and mentioned that when it comes to the law of employment, employees are obligated to act in the best interest of their employers and/or the businesses of these employers. This is known as a “fiduciary duty.” We also added that when asserting the breach of fiduciary duty claim, the employer should allege that the employee’s action(s) benefitted a competitor or harmed the employer’s business despite holding a fiduciary obligation to act in the employer or its business’s best interests.

To continue our discussion, we have hammered, in this blog and Part XIV of the series, on the “Breach of Duty of Loyalty Claims,” which is part of the common law tort claims brought under the UTSA and DTSA.

Breach of Duty of Loyalty Claims under the DTSA and/or UTSA

A breach of duty of loyalty occurs when an employee (such as a manager or top-level employee) utilizes their employer’s business to further their personal interests. Usually, employees are free to prepare and plan to compete against their current employees before parting ways with their employers and/or terminating their employment as long as no non-compete agreement exists. However, an employer may find it necessary to bring a claim for breach of the duty of loyalty if, leading to the actual realm of aiding a competitor or actual competition, an employee acts in a manner that goes beyond mere preparation or planning, such as misusing and/or misappropriating an employer’s trade secrets and/or confidential information. This implies that an employer should, before making a breach of the duty of loyalty claim, be certain that the employee used the employer’s trade secret(s) against a non-compete agreement while still employed or engaged in competitive activity, as opposed to merely preparing and planning to compete.

Furthermore, the scope of the employee’s duty of loyalty to the employer and their position and level of employment with the employer should be factored in before a breach of the duty of loyalty claim is brought. Usually, officer employees of the employer are often held to a greater fiduciary duty than non-officers, although the duty of loyalty is generally applicable to all-level employees irrespective of salary, class, or position, and even in the absence of a written confidentiality or non-compete agreement.

Additionally, the employer should factor in the possibility that such a claim for breach of the duty of loyalty would be dismissed by a court in their jurisdiction as confusingly similar to a breach of a restrictive covenant claim.

Further, after the breach occurs and a claim for the same has been made against the employee, the employer should consider what kind of relief to request. For starters, the employee should consider seeking injunctive relief (a TRO (Temporary Restraining Order) discussed in our blog accessible through https://milettilaw.com/blog/f/tips-for-seeking-injunctive-relief-temporary-restraining-orders or a Preliminary Injunction discussed in our blog accessible through https://milettilaw.com/blog/f/tips-for-seeking-injunctive-relief-preliminary-injunctions, or both). Additionally, after convincing the court that, indeed, the employee breached their duty of loyalty, the employer may also recover disgorgement from the compensation of the employee or money damages, even without being required to show evidence that, following the breach of duty of loyalty, economic loss was incurred.

In Part XV of this series and our blog titled “Tortious Interference Claims under the DTSA & UTSA,” we will move the discussion forward by hammering on the “Tortious Interference” and the circumstances under which it could be sought to protect an employer’s trade secrets and/or confidential information from misappropriation.

Until then, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions and/or comments on our website at the Contact Us page!

Always rising above the bar,

Isaac T.,

Legal Writer & Author.