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ARTICLE · 10 MARCH 2017

When Does Preparing To Compete Cross The Line?

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An employee or former employee who starts preparing to compete with his employer or former may get tripped up in one of two scenarios: (1) breaching a fiduciary duty of loyalty; or...

United StatesEmployment and HR
David Johnson
David Johnson
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An employee or former employee who starts preparing to compete with his employer or former may get tripped up in one of two scenarios:  (1) breaching a fiduciary duty of loyalty; or (2) running afoul of a noncompete agreement.  Let's look at each of these.

Duty of Loyalty

It is widely recognized that all employees—and especially officers—owe a duty of loyalty to their employer.  This ends when the employment ends.  Does the employee breach this duty by preparing to compete with her employer before termination of employment?  The answer is "probably not," provided that the employee's actions aren't unfairly harming the employer.

Courts have found that it's ok for an existing employee to take the following preparatory steps:

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