Under What Circumstances Can an Employer Sue an Employee?

Attorney Headshot

Article By: Marc Newman

A Leading Commercial Litigation Attorney in Michigan

Under What Circumstances Can an Employer Sue an Employee?

Published on: July 13, 2020

can an employer sue an employee
Frequently when we talk about employment litigation, it involves an employee suing an employer. However, there are also many circumstances where an employer might need to sue an employee.

The Miller Law Firm has successfully represented many employers who need to sue an employee for things like breach of a noncompete agreement, employee theft, and breach of fiduciary duty.

If you believe you have a cause of action against an employee, we can answer your questions and advise you of your options.

To get you started, we have compiled summaries of some of the most common types of claims employers have against employees.

Breach of Fiduciary Duty

Employees are agents of the company they work for. As such, they owe their employer duties of loyalty and care. In other words, they are expected to act in the best interests of their employer and not do anything that would be contrary to those interests.

Examples of a breach of an employee’s fiduciary duty include:

  • Doing something that benefits the employee at the employer’s expense (self-dealing);
  • Acting on behalf of another entity with interests contrary to the employer;
  • Failing to use reasonable care to fulfill work duties;
  • In the case of salespeople, failing to present the employer’s product in the way they have directed;
  • Keeping material information from the employer; and
  • Disclosing confidential information or trade secrets.

 

If an employee commits one of these actions or any other breach of fiduciary duty that harms your business, you have the right to seek compensation.

Breach of Employment Agreement

Most of the time, employees are “at will” and are not subject to an employment contract. However, you may have an employment contract with an employee that requires them to fulfill certain duties, restricts them from certain actions, or requires them to give a certain amount of notice before they can quit.

Employment agreements are used most often with highly skilled employees or those who also have a stake in the company.

If an employee breaches a material term of their employment contract, you can sue them for any damages. For example, a contract might require an employee to give two weeks notice before quitting. If the employee then left without notice and you lost revenue as a result, you could pursue a claim against them.

Defamation

Although everyone has the right to speak their mind, they do not have the right to make knowingly false statements that damage your company. If an employee or former employee spreads lies about your business, you have the right to hold them responsible.

To sue someone for defamation in Michigan, you need to show that:

  • They made a false and defamatory statement about you;
  • They communicated the statement to a third party;
  • The communication was not privileged;
  • They were at least negligent as to the truth of the statement; and
  • The statement caused you harm or was so egregious that it constitutes “defamation per se” (such as a claim that you committed a serious crime).

 

Remember, defamation applies only to false statements. While you can likely fire an employee for badmouthing your business, you can sue them for defamation only if you can show that what they said was untrue.

Violating a Nondisclosure or Nonsolicitation Agreement

Your employees have a lot of inside information about your company. You need to be able to trust that they will keep this information confidential. To ensure this, many companies ask workers to sign nondisclosure agreements. Depending on the type of work the employee does, they may also be subject to nonsolicitation or noncompete agreements.

If an employee harms you by violating any of these agreements, you can sue them for damages.

Tortious Interference

Tortious interference occurs when someone does something intentional to sabotage a contract or business relationship. Tortious interference in Michigan has four elements:

  • You have an existing business relationship with a third party or a reasonable expectation of one;
  • The defendant knew about the relationship or expectancy;
  • The defendant did something to intentionally interfere with the relationship, which caused the third party to breach or terminate the relationship; and
  • You suffered damage from the action.

 

When an employee commits this type of action, it likely constitutes both tortious interference and a breach of fiduciary duty.

Destruction or Theft of Company Property

If you have an employee who steals or damages company property, you may have a civil cause of action against them for conversion. This would be in addition to any criminal penalties they may incur. In Michigan, you can pursue a conversion claim under either common law or statute.

Under common law, you can recover damages for the value of your property simply by proving that the other person wrongfully exerted control over your property and deprived you of its use. An example might include a disgruntled employee coming to your office and destroying a bunch of office furniture.

If you can also prove that the person put the property to some use of their own, then you can recover additional damages with a statutory conversion claim. Under the Michigan conversion statute, you could get three times the amount of your actual damages, plus costs and attorney fees. This might occur if the employee stole the furniture and sold it or put it in their own home office.

Contact the Miller Law Firm Today

If you need help with a lawsuit against an employee, call the Miller Law Firm or contact us online. We have been representing employers in Michigan and around the country for nearly 25 years. We know how important your business is to you, and we will work hard to help you protect it.

Leave a Reply

Your email address will not be published. Required fields are marked *