Willcox, Buyck & Williams, PA Blog

Saturday, June 25, 2016

Breach of Employment Contracts

Finding out that several of your most trusted employees have been jointly planning to steal your clients and usurp your business opportunities, all while using corporate assets, is every employer's worst nightmare.  This story hits close to home for one law firm where four partners devised an arrangement over the span of eighteen months to leave and begin a new firm with their current employer's clients.  

While these employees continued to collect their robust paychecks, they demonstrated no shame in utilizing the firm's resources and confidential information to benefit themselves financially.  A forensic exam exposed a trail of emails which confirmed the appropriation of client lists and other confidential information by.  The employer brought a legal action based on the fact that the partners each signed an acknowledgment in the handbook, which expressly prohibited conflicts of interest and other breaches of the duty of loyalty. 

THE EMPLOYEE HANDBOOK AND WHAT EMPLOYERS SHOULD KNOW

An attorney must decipher whether your current or former employee was "at-will," or rather, whether the agreements in the employee handbook rise to the level of an employment contract.  A determination must be made with regard to whether the elements of a contract exist, such as a clear employment offer and acceptance, and whether the parties relied to their detriment on the agreement.  The attorney must also analyze whether disclaimers included in the employee handbook were conspicuous, that is, likely to grab the attention of the employee with the use of bold or capital letters, or on a page where it can be clearly seen.  To be valid, the words must be capable of being understood by a typical employee. 

Moreover, disclaimers may affect whether or not an implied contract exists.  Other provisions listed in your company handbook may verify what promises were mutually agreed upon as a condition of employment.  Restrictive covenants are also typically evaluated by attorneys to determine whether they are enforceable.  For example, the conditions and scope of non-compete agreements must be very narrow and limited in order to be enforceable in South Carolina. 

With the above considered, an attorney can determine whether it is more financially practicable for you to attempt to settle with your employees, pursue a lawsuit, or neither.  Damages available for a breach of an employment contract by an employee may include disgorgement of monies received as a result of breach, attorney's fees and lawsuit costs, injunctions, restitution, and other remedies. 


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