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Changing Jobs Without Getting Sued

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By: Dow Glenn Ostlund

In today's economy, opportunities to change jobs have greatly increased compared to the employment market of just a few years ago.Although there are also pits into which employers may fall, this article will focus on a few of the more dangerous traps into which the uninformed departing employee might land.

Termination:

Arizona is an employment-at-will state.This means that unless the written employment contract provides employment for a fixed term or contains statements that create implied-in-fact terms regarding job security or employee disciplinary procedures, either party may terminate the employment relationship for any reason and at any given time without fear of liability for wrongful termination.Although statutes set forth some limitations on the ability of an employer to terminate an employee, those limitations generally arise out of retaliation for whistle-blowing or are based on age, religion, sex, race, or national origin.

As a general rule, unless the written employment contract provides otherwise, the employee has no vested right to job security.

Prohibited In Term And Post Term Competition:

Certain types of employment relationships carry with them their own set of ethical and legal "do's and don'ts" concerning competition with the current employer.They are controlled by some generally applicable restrictions.One of the more obvious is that during employment, the employee ought not to be engaging in activities that are in direct competition with the employer (in term competition).In most employment relationships, there is an implied-in-fact requirement that the employees will devote their time on the job to furthering the business of the employer and not their own business interests, whether or not their businesses are in competition with the employer.

Following the termination of employment (post term competition) and even though there may be no written agreement between the employer and employee on this point, there are certain things that an employee may not do to compete with a former employer.For instance, without the former employer's consent (preferably given in writing for the employee's protection), the departing employee may not take with him or her, and use to the disadvantage of the former employer, the:

1. Trade secrets of the former employer's trade or business, such as customer lists, formulas, uniquely developed forms, and the like;
2. Protected intellectual property, such as copyrighted materials, trademarks, service marks, and the like;
3. Financial information about the former employer that is not also already available in the public domain;
4. Financial or purchasing information about the customers or clients that is not also available in the public domain; or
5. Pricing or purchasing policies of the former employer or its customers or clients that are not also available in the public domain.

Permitted Activities

Arizona case law makes it clear that employees are not required to undergo the equivalent of a frontal lobotomy each time they change jobs but stay employed in the same industry, business, or profession as that of the former employer.Employees are entitled to use the general knowledge, skill, and experience that they have gained through their previous employment.If their knowledge, skill, and expertise are not unique to their former employer, they may, nonetheless, use them for the benefit of a direct competitor.Factors such as:

1. the geographic distance between the two employers,
2. the passage of time between the two employments,
3. the difference between their business and customer base,
4. the more generic their businesses are, and
5. the absence of written materials taken by the employee

will all be material factors in determining whether the former employer can restrain the current employment activities of the former employee.

A good way to gauge the acceptability of what an employee can do is to follow the "golden rule":Treat your former employer as you would want to be treated by a former employee if you were the former employer.