If you own a business or are in a high-level position within your company, you have what is referred to as a fiduciary duty. Employers and their employees are entrusted to properly do their jobs, remain honest, and otherwise act in the best interest of the business. When this does not happen, it becomes a breach of fiduciary duty. Breach of fiduciary duty is problematic and costs a lot of money to recover from. Here is what you need to know:
What Constitutes Breach of Fiduciary Duty?
Those who are entrusted with the sensitive nature of a business, such as financials, inventory, and other assets are expected to deal with these areas of the business in a responsible manner. The company can suffer a lot of harm when this trust is broken.
There are several ways a fiduciary breach can occur. Sharing secrets about a product or method with a competitor of the business is considered a fiduciary breach. Misrepresenting information to partners or C-level employees that results in a financial loss for the business can also be considered a fiduciary breach. Promoting a competitor's product on the side is also a major fiduciary breach. Starting a side business that is in direct competition with the business is also a significant fiduciary breach.
What Can You Do About a Fiduciary Breach?
Your response to a fiduciary breach depends on your level at the business. If you are a C-level employee or higher, the CEO or the leading official in the company needs to be made aware. If you do not work at a higher level, you should advise your supervisor immediately. If the person you would report the breach to is the individual who committed the breach, their supervisor needs to be made aware. Ultimately, a business attorney needs to be contacted right away to not only end the breach but also prevent the loss of money to the company.
What Will Happen to the Breaching Employee?
The employee who committed a fiduciary breach may very likely lose their job, but that is not all. Depending on the level of the breach, any non-compete contracts they signed, or other contracts that stated what would happen if certain information was made public, they could be sued in court for damages that could reach into the millions.
If someone in your company has committed a fiduciary breach, contact a business lawyer to find out the next steps you need to take.