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17 Cards in this Set
- Front
- Back
Damages for Breach of Contract
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When an employee has a contract, and they breach it, they are liable for damages as a result of that breach
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Cost of finding a replacement
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The employer has a duty to expend a reasonable effort to find a replacement. If the person happens to be more experienced and costs more then the employee is on the hook.
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Types of Employee Duties to Employer (4)
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1) Duty of Loyalty
2) Written non-compete 3) Confidential Tort 4) Trade Secrets |
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Employee Duty of Loyalty (non-compete)
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There is a duty not to compete with the employer while you are still working for them. Can't
1) use company resources to compete 2) solicit customers |
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Employee Duty of Loyalty - Solicit customers
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(LaMorte Burnes v. Walters)
an employee cannot solicit the employer’s customers while they are still an employee. |
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Employee Duty of Loyalty - Making arrangements/planning
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An employee may make arangements to compete with their employer prior leaving, as long as no unfair acts are committed or any injury is sustained by the employer
- Failure to disclose intent to compete – OK - Maintenance/building of client relationships: This is ok as long as it is part of the job and they are not trying to solicit the client to leave or taking other improper action. |
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Inevitable competition/disclosure
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When someone knows information that they can’t help but use against the old employer, then SOME states will not let you work for a competitor.
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Employee Duty of Loyalty - Contract Protections (types) (2)
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1) Non-compete
2) confidential information |
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Written non-compete agreement (3)
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Must be reasonable:
1) Time: Generally 2 years or less 2) Geography: Must meet/pair up with where the employees activities took place - No floating: Must be stated at the outset of the agreement 3) Scope: The prohibited behavior has to pair up with what the employee actually did for the employer. |
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Near permanency test
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professional entities have an easier time getting protection under/enforcement of non-compete clauses. The employer has to show:
1) By the nature of the business the customer relationship is near permanent 2) But for his association with the employer the employee would not have had contact with the customer. - EX: vets and doctors. |
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Employee Duty to Employer Contract Protections - Confidential information (2)
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Confidential information can be protected by a written agreement but it must actually qualify as this type of information. To qualify must:
1) Be protectable information: the information has to rise to the level of something that should be protected - “must show reasonable expectation of lost advantage because of employee action.”: • Value added: The employer must have spent time/money/effort into developing the information • More than is publically available 2) Employer must have taken steps to protect the information |
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Zipper Clause
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This is a clause in a new contract that keeps all of the confidentiality/non-compete clauses in a previous contract intact. These are honored by the courts.
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Customer Lists
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Customer lists can be confidential info
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Learned information:
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Generally courts won’t prevent an employees from using information that they learned unless the TAKE it.
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Employee Duty to Employer - Confidential Tort
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an employee can be liable under tort law if they misuse confidential information even without an agreement. The standard for this varies from state to state.
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Employee Duty to Employer - Trade Secret (3)
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This is afforded the highest level of protection as well as has the highest requirements. It is not a matter of written agreement, but is created by state statute. An employee is prohibited from using trade secrets regardless of whether there is a written agreement. For something to be a trade secret it must:
1. Actually be a trade secret: This is a very high burden. 2. Employer must have taken steps to protect it 3. Employee is actually going to use the trade secret (Teradyne): Has to be more than a high probability that it will happen, there has to be some action by the employee. Saying that their new company couldn’t work without information is not enough. |
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Lamley rule
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While a court cannot make you do a job, if there is an employee with unique talents then you can keep them from working for anyone else.
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