Business competitors are always looking for an advantage against one another. To get an advantage, some companies will try to get their competitor’s key employees to quit their competitor and join their company instead. But is there anything wrong about inducing such an employee to leave one employer for another?
That depends on the inducement and other factors. A skilled employee without a contract who wants to leave their current position for a competitor usually can do so. But when the competitor uses tactics that are unfair, deceptive or harmful to the employee’s former employer then that competitor may be liable for any damages the employer suffered as a result of their acts.
What Has to be Proven in Order to Sue for Wrongful Inducement of an Employee to Leave Employment?
While the law varies state to state, the following list includes the general elements that must be proven to make a successful claim. The employer claiming to be harmed by a competitor’s inducement of its employee must prove:
- The induced employee and the former employer had an employment contract or relationship.
- The inducer knew that their actions interfered with the employment relationship and intended to create the interference.
- The inducer’s actions caused the employee to terminate the employment relationship.
- The inducement action was wrongful.
- The inducer’s action caused actual damages to the former employer.
What is Wrongful Inducement?
Courts in every state have seen a variety of tactics used to wrongfully induce an employee to leave. Generally, an inducement is wrongful if does one or more of the following:
- The inducer intended their actions to harm the employer. Targeting several employees performing in a specific department to leave altogether may show this intention. Also, making a job offer to a competitor’s employee who holds an important position or whose departure would be challenging to fill and then requiring that employee to resign immediately without notice may show such an intent. While actual malice may not be necessary, showing that the inducer knew or should have known the damaging effect of the employer and actual damage occurred may be sufficient.
- A breach of contract was made by the employee’s resignation or by working with a specific competitor after resigning.
- The inducer breached its fiduciary duty to the employer.
- The inducer hired the employee to obtain the former employer’s trade secrets or other confidential material. If the employee is quickly terminated from the inducer after leaving the employer this may demonstrate the inducer got the confidential information they desired and had no intention of actually keeping the employee at all.
Can it be Wrongful Inducement if the Employee is an At-Will Employee?
Yes. Even if the employee is an at-will employee and is under no contract to stay with the employer for a specific length of time, wrongful inducement can still exist. For example, an employee who has no specific time obligation to their employer may still owe a duty of confidentiality or previously agreed to not accept employment with a competitor for a specific length of time after resignation. A competitor who induces such an employee may be liable to the former employer.
Is there Liability for Attempting to Wrongfully Induce of an Employee to Leave Employment?
Generally no, actual damages must have been incurred for this claim to be successful. Actual damages are an proven losses, like when the employee leaves their position and then loses out of potentially earned income or any other benefits that were lost due to the fact they left.
Are there any Defenses to Claims for Wrongful Inducement of an Employee to Leave Employment?
Yes, some common defenses to these claims include the following:
- The accused was not aware of the employment or contract relationship.
- The accused did not cause the resignation.
- The inducement used was not wrongful or was legitimate business competition.
- The employer did not suffer any actual damages or loss.
Do I Need an Attorney to Handle a Claim for Wrongful Inducement of an Employee to Leave Employment?
If you have been accused of wrongful inducement, an employment lawyer may defend you and assist you in determining any defenses you may have. A lawsuit for wrongful inducement of an employee to leave is a serious concern and can negatively impact your career, as well as your personal finances and reputation. It's important to challenge the claim as soon as possible and make sure that you and your attorney are ready to see it through.