Breach of Fiduciary Duty by an Employee

/ 02/09/2011

An employee in Texas may owe his or her employer a general duty of loyalty. This requires an employee to act primarily for the benefit of the employer in matters connected to the job. For example, an employee must fully disclose information about matters affecting the employer’s business and cannot usurp an opportunity that rightfully belongs to the employer.  If an employee fails to fulfill this duty of loyalty, the employer may sue the employee for breach of fiduciary duty.
Breach of fiduciary duty cases often arise because an employer alleges that an employee competed with it while still employed.  In Texas, an employee cannot actively compete with an employer, although the employee may prepare to compete. Such preparatory conduct might include renting office space, lining up investors and developing a business plan, but it would not likely include soliciting business from the employer’s customers. 

To recover damages in a breach of fiduciary duty matter, the employer must show that: (1) the employer and employee had a fiduciary relationship; (2) the employee breached a fiduciary duty; and (3) the employee’s breach resulted in injury to the employer or benefit to the employee.

To speak to a Dallas, Texas employment law attorney about employee-employer relationships or about a workplace legal matter, contact the Dallas employment lawyers at Clouse Dunn Khoshbin LLP at [email protected]


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