Breach of Fiduciary Duty
Employee’s Fiduciary Duties
While employed, an employee owes fiduciary duties to his or her employer. Unless otherwise agreed, an employee is, among other things, prohibited from competing with his employer. The duty ends when the employment relationship ends. A restrictive covenant, however, may still exist that impacts whether or how a former employee can compete with his former employer upon termination of their employment relationship. There is also a difference between making plans to compete and competing.
After the termination of his agency, in the absence of a restrictive agreement, the agent can properly compete with his principal as to matters for which he has been employed. … Even before the termination of the agency, he is entitled to make arrangements to compete, except that he cannot properly use confidential information peculiar to his employer’s business and acquired therein. Thus, before the end of his employment, he can properly purchase a rival business and upon termination of employment immediately compete. He is not, however, entitled to solicit customers for such rival business before the end of his employment nor can he properly do other similar acts in direct competition with the employer’s business.
McCallister Co. v. Kastella, 170 Ariz. 455, 457-58, 825 P.2d 980, 982-83 (App.1992).