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17 Cards in this Set

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Damages for Breach of Contract
When an employee has a contract, and they breach it, they are liable for damages as a result of that breach
Cost of finding a replacement
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.
Types of Employee Duties to Employer (4)
1) Duty of Loyalty
2) Written non-compete
3) Confidential Tort
4) Trade Secrets
Employee Duty of Loyalty (non-compete)
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
Employee Duty of Loyalty - Solicit customers
(LaMorte Burnes v. Walters)
an employee cannot solicit the employer’s customers while they are still an employee.
Employee Duty of Loyalty - Making arrangements/planning
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.
Inevitable competition/disclosure
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.
Employee Duty of Loyalty - Contract Protections (types) (2)
1) Non-compete
2) confidential information
Written non-compete agreement (3)
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.
Near permanency test
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.
Employee Duty to Employer Contract Protections - Confidential information (2)
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
Zipper Clause
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.
Customer Lists
Customer lists can be confidential info
Learned information:
Generally courts won’t prevent an employees from using information that they learned unless the TAKE it.
Employee Duty to Employer - Confidential Tort
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.
Employee Duty to Employer - Trade Secret (3)
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.
Lamley rule
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.