How Can Your Employer Sue Thee? Let Me Count The Ways

When people hear the term “employment law, ” they frequently think of employee claims against employers.  But employers can also sue their employees for various civil wrongs in a type of claim that’s more like a business practices or contract law claim.  Here are some of the more common examples of employer claims against employees:

1.  Theft of money, property, ideas, etc.  That should be obvious.  Steal from your employer, and beside a criminal prosecution you could also face a civil lawsuit seeking reimbursement for the stolen property and punitive damages.

2.   Stealing or soliciting your employer’s customers after you leaving your employment, especially if you start a directly competing business.  Solicitation of customers can be unlawful even absent a formal nonsolicitation agreement.  That could also be considered tortious interference with contracts or prospective business relationships.

3.   Encouraging customers to go to a direct competitor while you’re still working for your employer.  Same concept as “2” above, except you’re still working for the people you’re funneling business from.  That’s always a great idea and a good way to make long-term friends in your business. Also a surefire way to get fired if your employer catches you doing this.

4.  Directly competing against your employer after you leave employment, either while working for a competitor or after starting your own business.  Competition can sometimes be unlawful even absent a noncompete agreement.

5.  Negligence.  Yup, when you agree to work for your employer you impliedly represent that you have the requisite minimum skills and competency to adequately fulfill your job responsibilities.  I wonder if a fast food restaurant owner would ever consider suing one of its sixteen year-old grill workers for not properly flipping the burgers?

6.  Lying to or concealing information from your employer about something important.  For example, you fail to close the big sale your employer’s counting on and paying you to close.  You don’t tell your employer that the deal fell through.  Maybe worse yet, you lead your employer to believe that the deal’s in its final stages and about to be done.  Some people might call that fraud.  Some employers will sue employees for pulling a stunt like that.

7.  Not acting in good faith and in your employer’s best interests at all times.  Using the fast food analogy above, this might be as simple as visibly chowing down on a Burger King Whopper while ringing customers out at the McDonald’s that employs you.  You could go even farther and tell said customers that you have no doubt that the Quarter Pounder they just ordered will never taste as good as your Whopper and that you’re sorry that they weren’t able to drive an extra two blocks to the nearest Burger King for a quality burger.

8.  Disloyalty or acting in a manner that conflicts with your employer’s best interests.  See “7.”

Not only can these claims result in money damages, but many of them also come with the possibility of injuctive relief.  For example, an employer may seek a court order enjoining a former employee from soliciting customers, operating a competing business, or using stolen ideas.

Another very interesting type of relief against a misbehaving employee is “disgorgement.”  That’s when an employer literally demands its money (wages paid) back from the employee for a job not well done.  Courts do have the power to order that remedy, although it rarely happens.  The best candidates for disgorgement would be cases in which the employee was starting or helping a competing business while still working for the employer.  In that instance, it seems most clear that the employer has an argument that the employee should not be allowed to keep the employee’s wages given that the employee’s first focus was not where it should have been — on the employer’s business.

On a final note, you may have noticed that many of these claims are similar to that available against employees in other contexts, such as noncompete agreements or intellectual property law.  And those are the primary areas of litigation against former employees.  The point of my comments here is that there are some other areas of employee liability (loyalty and conflicts of interest, for example), that people may not necessarily think of.  Regular employees do not get a pass from these types of obligations merely because they’re not board members, officers, or management.