Does A Garden-Variety Employee Owe Fiduciary Duties to His Employer in IL?

I’m going to answer with a (soft) “yes.”  Its a soft yes because the duty owed by a “regular”, non-officer employee is more limited than that owed by a corporate officer.  There also aren’t many published Illinois cases that discuss an employee’s duties to his erstwhile employer.

By contrast, cases are legion that detail the fiduciary duties owed by corporate officers to their corporate employers.  The case law is replete with multi-factored tests that describe what factors a court considers when determining whether a corporate officer breached fiduciary duties to his former corporate employer.

So what can and can’t a non-officer employee do once his employment ends? Here are some quick-hits that I extracted from several years’ worth of Illinois state and Federal cases:

(1) Employees who are not officers or directors are also bound by fiduciary obligations;

(2) An agent is a fiduciary with respect to matters within the scope of his agency and is required to act solely for the benefit of his principal in all matters concerned with the agency;

(3) A non-officer employee breaches fiduciary duties to the corporation where he diverts potential corporate clients to a competing business;

(4) In Illinois, former employees may compete with their former employer and solicit former customers as long as they do not do so before the termination of their employment;

(5) Employees may plan, form and outfit a competing corporation so long as they do not commence competition before their employment ends.

Sources:

LCOR, Inc. v. Murray, 1997 WL 136278 (N.D.Ill. 1997);

E.J. McKernan Co. v. Gregory, 252 Ill.App.3d 514, 530 (2d Dist.1993);

Veco Corp. v. Babcock, 243 Ill.App.3d 153, 160 (1993

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PaulP

Litigation attorney at Fisher Kanaris, P.C. representing businesses and individuals in all types of commercial disputes.