FORT LAUDERDALE BUSINESS LITIGATION: EMPLOYEES’ FIDUCIARY DUTIES TO CORPORATE EMPLOYER

A fiduciary relationship exists when an individual must act in the interests of another. Watkins v. NCNB Nat’l Bank of Fla., N.A., 622 So.2d 1063 (Fla. 3rd DCA 1993) (“To establish a fiduciary relationship, a party must allege some degree of dependency on one side and some degree of undertaking on the other side to advise, counsel, and protect the weaker party.”). The relationship can form expressly through contract or implicitly based on specific facts and circumstances surrounding the parties’ relationship. First Nat’l Bank & Trust Co. v. Pack, 789 So.2d 411 (Fla. 4th DCA 2001). Although some case-law suggests an employer/employee relationship does not result in the formation of a fiduciary relationship, many authorities stand for the opposite proposition. See Renpak, Inc. v. Oppenheimer, 104 So. 2d 642, 644 (Fla. 2d DCA 1958) (“A mere employee of a corporation generally does not occupy a position of trust and owe a fiduciary duty unless he also serves as its agent.”); infra. In this article, we explore two scenarios where a fiduciary duty is commonly imposed upon employees. Peter Mavrick is a Fort Lauderdale business litigation attorney. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

Employees owe their employer a fiduciary duty of loyalty. Valiant Services Group, LLC v. Commercial Works, Inc., 2022 WL 738471, at *2 (M.D. Fla. Jan. 24, 2022) (“The duty of loyalty is part of a fiduciary duty, and a breach of a duty of loyalty gives rise to a breach of fiduciary duty claim.”). This duty requires the employee to refrain from engaging in disloyal acts of competition with the employer. OPS Int’l, Inc. v. Ekeanyanwu, 672 F. Supp. 3d 1228 (M.D. Fla. 2023) (An employee cannot “engage in disloyal acts in anticipation of his future competition.”). An employee cannot therefore use confidential information acquired during the course of employment to compete against the employer, solicit the employer’s customers, or solicit the employer’s employees. Id. Notwithstanding, employees may make preparations to complete and take with him or her a customer list developed by the employee without violating their duty of loyalty. Fish v. Adams, 401 So. 2d 843 (Fla. 5th DCA 1981) (The “planning of a competing business is not ipso facto a breach of an employee’s duty of loyalty.”); Id. (An “employee may take with him a customer list that he himself has developed.”).

Employees who are also company officers owe their employers additional fiduciary duties. Renpak, Inc., 104 So. 2d 642 (“[C]orporate officers or directors are not precluded, because of the fiduciary nature of their position, from entering into and engaging in another business enterprise similar to but separate from the corporation if they act in good faith and refrain from interference with the business of the corporation.”). The corporate officer owes a duty of loyalty to the company he or she works for as well as a duty of care. McCoy v. Durden, 155 So. 3d 399 (Fla. 1st DCA 2014) (“In short, Florida courts have recognized that corporate officers and directors owe both a duty of loyalty and a duty of care to the corporation that they serve.”). These duties require the officer to act in the best interests of the corporation. Taubenfeld v. Lasko, 324 So. 3d 529 (Fla. 4th DCA 2021). The company’s “shareholders take[ ] precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the stockholders generally.” Id.; see also Cohen v. Hattaway, 595 So. 2d 105 (Fla. 5th DCA 1992) (“Corporate directors and officers owe a fiduciary obligation to the corporation and its shareholders and must act in good faith and in the best interest of the corporation.”). Therefore, an employee who is also a company officer advance company interests even to the detriment of himself or herself.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.