Playing Hardball with Employees Who Defect to Competitor

Most of the news today is about employers laying off employees, sometimes resulting in getting sued by the laid off employees. As reported by The Seattle Times, it’s possible, even today, for the shoe to be on the other foot.

When an employee defects to a competitor, an employer will sometimes sue the former employee, particularly if there is a non-compete agreement in play. What if there’s not such an agreement? A lawsuit is still possible.

In the Seattle case, JP Morgan Chase has sued 16 former employees who left to go to work for Sterling Financial’s Golf Savings Bank. It appears there were no non-compete agreements with any of the employees.

JP Morgan alleges that the employees, some veterans with customer contacts, not only left and started working for Golf Savings. They took with them computer monitors, keyboards and telephone headsets. They also took papers and files containing confidential customer information.

Worst of all, it’s alleged that the employees held back customer loan applications so they could bring the deals to their new employer. JP Morgan seeks unspecified damages for misappropriation of trade secrets and a variety of other claims. If these allegations can be proved, JP Morgan has a case. Even if no employment or non-compete agreement exists, employees must be loyal to their employer while they continue to work, and they can’t take with them confidential information. In some states, that’s even a crime.

What’s interesting in this case is that JP Morgan didn’t sue Golf Savings. It’s putting all the pressure on the invidual employees. Although there’s 16 of them, it’ll take a lot of money to defend this kind of case. If you’re faced with this kind of situation, playing hardball may be quite appropriate. Just make sure you can prove what you’re alleging.