An employer seeking to stop or slow down a former employee who is unfairly competing with business needs to examine every possible legal claim as options to use against the employee. In many cases, the employee spent time laying the groundwork for new employment or business ventures while still employed by the previous employer. These situations present another legal opportunity to employers, in addition to the usual considerations of non-compete, non-solicitation and trade secret violation claims. The employer and its attorney should consider a claim against the former employee based on a common provision in employment contracts: the requirement that the employee devote his “full time and attention” (or similar language) to the employment. There’s not a lot of case law interpreting these provisions, but the cases that do show that this boilerplate language can potentially provide another arrow in the employer’s quiver. In example:
- A doctor who spent time managing his rental property business instead of seeing patients during office hours was potentially liable to his employer for failing to devote his “full, entire and undivided professional time and attention” to his employer. See Bhandari v. Southwest Community Health Corp., 2011 U.S. Dist. LEXIS 37750 (D.N.M. 2011).
- A casino-building company was allowed to maintain a suit against its CEO for breach of fiduciary duty based upon a “full time and attention” clause where the CEO was allegedly doing consulting work on the side for a company that built water processing systems, collecting over $600,000 for such work. See Endacott v. Int’l Hospitality, Inc., 910 So. 2d 915 (Fla. Dist. Ct. App. 3d Dist. 2005).
- A CFO who concocted a plan to take over his employer using insider knowledge was held to have breached his contractual obligation to “devote his full business time and attention and best efforts” to his duties for the employer. See Lydall, Inc. v. Ruschmeyer, 282 Conn. 209 (Conn. 2007)
BURR POINT: While non-compete claims focus on what an employee did after they left their employment, the employee’s activities prior to their departure could lead to a claim for breaching a contractual duty to devote their “full time and attention” to the former employer’s business.