The California Court of Appeal recently issued a decision in Guild Mortgage Company LLC v. CrossCountry Mortgage LLC. In this case, Guild alleged that CrossCountry conspired with Guild employees while they were still employed by Guild to recruit coworkers, divert customers, convert active loan applications, and access/copy confidential information. The decision held that California employees owe a duty of loyalty to their employers and while they may prepare to compete with their employer before ending their employment, they may not transfer their loyalty to a competitor before leaving. Additionally, the court in this decision found that a manager may owe fiduciary duties based on actual trust, discretion, and responsibility, not just title.

Based upon this new decision, employers should be careful when recruiting employees from a competitor. While such recruitment is generally lawful, employers who recruit employees cannot encourage or require them to take actions that are disloyal to their former employer until after the employee ends their employment with the former employer.

If you have any questions regarding this new decision, contact our employment attorney Scott Liner at [email protected].

Questions about hiring employees from a competitor?
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_{Please note that this article is for informational purposes only and should not be considered legal advice and does constitute an attorney-client relationship. It is recommended to consult with an attorney and your insurance carrier directly for specific guidance pertaining to your business and its practices.}