Do Fiduciary Duties Survive a Termination in Maryland?

If you operate a business that requires the use of trade secrets and other confidential information to succeed, you will want to protect that information fiercely. When an employee departs a company, there is always a question of whether he or she may engage in the use of confidential information to further their own interests. When this happens, it is prudent business owners to be familiar with their rights. If you believe that a former employee breached his or her fiduciary duty, you should consult with an experienced Maryland fiduciary litigation lawyer today. The Heyman Law Firm is prepared to help you protect your business from being negatively impacted by a breach of fiduciary duty. The Heyman Law Firm is here to explain whether fiduciary duties survive a termination in Maryland.

When Does a Former Employee Violate Fiduciary Duty?

The employee of a company may have a number of fiduciary duties that they must not breach. Generally, a fiduciary duty is an obligation of an employee of a company to act in the best interest of the company. Fiduciary duties can be categorized into various types depending on the circumstances:

• Duty to account
• Duty to act fairly
• Duty of care
• Duty of confidentiality
• Duty of full disclosure
• Duty of loyalty
• Duty of good faith and fair dealing

An officer or director will definitely be subject to the duty of care and the duty of loyalty. These duties require officers and directors to be extremely mindful of how their decisions affect the business and whether their personal interests are conflicting with the job.

An employee that is familiar with the trade secrets of a business and other confidential information would be subject to the duty of loyalty and possibly other duties. When an employee decides to resign from their position, the employer may be concerned about the possibility that the employee would leak trade secrets and other intellectual property the business relies on to succeed.

Maryland courts have thoroughly discussed when a resigning employee should be subject to fiduciary duties. In one case, the Maryland Court of Appeals determined that an employee did not violate his fiduciary duty to his employer by making preparations to start a competing company. It was held that although the employee made preparations to leave, concealed his resignation, and bought equipment, his work remained exemplary and did not harm the employer and therefore did not violate any duty.  Maryland courts have held, however, that under certain circumstances, doing things such as taking a client list from a former employer could be considered a breach of fiduciary duty as an employee is using the resources of their employer.

To learn more about what your business can do to prevent a breach of fiduciary duty, you should continue reading and speak with an experienced Baltimore business litigation lawyer.

Non-Competition Agreements

If a high-ranking employee decides to resign from a company, it is likely she will use her knowledge to eventually compete against their former employer. When this happens, an employer may wonder whether it has any grounds to prevent the former employee from leaking these secrets. Fortunately, this may be possible by using a non-competition agreement.

A non-competition agreement is designed to prevent a former employee from taking knowledge from a former employee to utilize in a position with a new employer or to prevent them from operating a competing business. Many non-competition agreements will have limitations on how long a former employee must wait before competing with a former employer. For example, a former employee may have to wait six months before he can seek a position in the same field as their former employer.

Another limitation often placed in a non-competition agreement is a restriction on when a former employee can seek a job. For example, a former employee may be able to work for a competitor of their former employer if the competitor’s business is located a certain number of miles away from their former employer, according to our Baltimore Non-Compete Agreement Lawsuit Attorney.

It is important that an employer drafts a non-competition agreement extremely carefully. If the terms of the agreement are too restrictive on a former employee, the court could invalidate the contract. As a result, an employer may not have an avenue to seek damages for a former employee’s breach of fiduciary duty and a non-competition agreement violation.

Work with an Experienced Maryland Fiduciary Litigation Attorney Today

If you require legal assistance to manage a breach of fiduciary duty, contact an experienced Maryland business advisory attorney. The business litigation attorneys at the Heyman Law Firm possess a broad range of experience with litigation regarding fiduciary duties, and we would be honored to utilize this knowledge while representing your business. To schedule a confidential legal consultation, contact the Heyman Law Firm at (410) 305-9287, or contact us online.