Fiduciary Duty: Employee Responsibilities To A Workplace

Fiduciary Duty: Employee Responsibilities To A Workplace

In the dynamic landscape of employment, employees shoulder a significant responsibility beyond their job descriptions – a responsibility known as “fiduciary duty.” This intriguing concept extends far beyond the routine tasks and job titles, diving deep into the realm of ethical and legal obligations that employees owe to their workplace. In this blog, we embark on a journey to unravel the intricate web of fiduciary duty, exploring the essential responsibilities that employees bear in maintaining the integrity and success of their workplace. Join us as we delve into this critical aspect of the employer-employee relationship, shedding light on its significance and impact in today’s professional world.

What Is Fiduciary Duty?

Fiduciary duty is a legal and moral responsibility that requires one person to always act in the best interests of another person or group. Among other things, fiduciary employees owe their employers a duty of loyalty, good faith and honesty. Even after the termination of their employment, they may be required to still follow their fiduciary duties.

Fiduciary employees are individuals within a company or organization who have a legal and ethical obligation to prioritize the best interests of the company and its stakeholders. They are responsible for making decisions and taking actions that benefit the company and its shareholders or owners.

These employees often hold positions of authority or responsibility, such as executives, directors, and managers. They are expected to avoid any situations where their personal interests might conflict with those of the company. Fiduciary employees play a crucial role in ensuring transparency, accountability, and the long-term success of the organization.

What Are Fiduciary Duties and When Do They Exist?

Generally, employees in management or executive positions, such as senior managers or directors, are most likely to be found to owe a fiduciary duty to their employer. This is partly because these positions hold a high amount of control and decision-making power within the company and over other stakeholders. In some scenarios, lower-level managers and non-managerial employees may be found to owe their employer a fiduciary duty, especially if they are found to be “key employees”.

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Fiduciary duties include, but are not limited to, acting in the best interest of their employer, exhibiting good faith and loyalty. There is also a duty to not use any of the insider or confidential knowledge obtained during the course of the employment against their employer. For example, as a fiduciary employee, you cannot leave and compete with the employer’s business. This could include competing for a certain contract within the same industry or implementing business plans similar to your previous employer to who you owed a duty. These duties continue even after the employee’s employment ends.

Factors Of A Fiduciary Relationship

Not all employees are considered to be fiduciaries or owe fiduciary duties. Any general position between employer and employee does not automatically amount to a fiduciary relationship. The Courts have held in various cases that fiduciary relationship can be found between the employer and employees in scenarios such as:

  • Whether the fiduciary is able to exercise some discretionary powers
  • Whether the fiduciary can unilaterally use their discretion or power to affect the beneficiary’s legal or practical interest
  • The beneficiary is specifically vulnerable to the fiduciary holding the discretion or power

What Are The Remedies For Breach Of Fiduciary Duties?

If an employee is found to have breached their fiduciary obligations, equitable relief can be granted to the employer. For example, the Courts can issue compensation to the employer for any profits gained through the breach. Additionally, the Courts can also grant an injunction to the employer and prohibit the employee from continuing their practice.

How Long Does A Fiduciary Duty Last?

A fiduciary duty is expected to continue during the employment tenure and in some cases continues after the employment relationship is terminated. In the event of a resignation, a fiduciary employee is still held to their duty to provide loyalty and confidentiality to their previous employer.

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The relationship between the employer and employee is best outlined through well-drafted employment contracts. Whether you are an employer or an employee looking for assistance with your disputes or employment relationships, our team of experienced employment lawyers at Achkar Law can help.

Contact us today at +1 (800) 771-7882 or email [email protected] , and let us help you find the solutions you need to move forward.

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