D. STEALING AWAY EMPLOYEES

Generally, one company has the right to persuade another company's employees to join its ranks where the employees are not bound by a contract or restrictive covenant. A defecting company executive can, however, be successfully sued for luring away key employees.

TIP: The principle that a top managerial employee may not, before termination of employment, solicit employees to work for a competitor has been applied in many situations. The rule is most clearly applicable if the supervisor-manager, as a corporate pied piper, leads his company's employees away, thus destroying the employer's business.

In addition to suing an individual on the basis of breach of the fiduciary duty of loyalty and good faith, some attorneys commence lawsuits against the new employer, based upon a legal theory called tortious interference with contractual relations, when they induce a valued employee to break a contract and go to work for them. Generally, if the key employee is under contract with a definite term and the employee breaks the contract before the expiration of the contract period, a lawsuit may be successful. However, when no formal written contract exists, and the employee is merely hired at-will (capable of being terminated or leaving at any time), such suits have less chance of success.

Counsel Comment #66: To increase the odds that your company will prevail, consider inserting a clause in your employment agreements prohibiting key employee and executives from inducing employees to leave.