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When a former employee steals customers

by on
in Employment Law,Firing,Human Resources

Q. One of our employees left and is stealing our customers. Can we sue him for breach of the duty of loyalty?

A. No, unless the employee was an officer or had an employment contract imposing a duty of loyalty or a noncompetition obligation. In the case of Dalton v. Camp, 353 N.C. 647 (2002), the North Carolina Supreme Court surprised many employers and stated there was no common law cause of action against an employee for breach of the duty of loyalty. Thus, an employee can only be sued for violating a duty of loyalty if a statute requires it.

Generally, business laws require officers, managers and other business executives to exercise loyalty to the employer. If an employer seeks loyalty from non-officer employees, the employer should ask employees to sign noncompete agreements. Note, however, the Supreme Court did acknowledge that an employee may be terminated for being disloyal to his or her employer and this would not be a wrongful termination.

To avoid this problem in the future, consult with an attorney. He or she can help you draft a valid noncompete agreement. 

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