Employee Duty to the Employer
All employees have a duty of care and loyalty to their employer during the period of time that they are employed. Absent a non-competition agreement, these duties end on the date the employee leaves employment.
Maryland courts have routinely held that while working for an employer, all employees have an implied duty of loyalty and care that they owe to the employer. “It is well established that in every employment relationship there is ‘an implied duty that an employee act solely for the benefit of his employer in all matters within the scope of employment, avoiding all conflicts between his duty to the employer and his own self-interest.” Dworkin v . Blumenthal, 77 Md. App. 774, 779 (1989) (quoting, Maryland Metals, Inc. v. Metzner, 282 Md. 31, 38 (1978)). An employee has a right to prepare to leave the employment of his employer and start his own competitive business, but the employee must be certain that his actions are not in violation of his duty to the employer. See Becker v. Bailey, 268 Md. 93, 99 (1973).
The degree to which an employee may prepare to leave is a factual determination determined on a case by case basis. Absent an enforceable restrictive covenant, an employee may prepare to compete with his employer, which may include the formation of a competitive entity and registering for any licenses that the business may need during the time that the employee is still employed without violating his duty to his employer. An employee’s actions may breach this duty of loyalty “where the employee has committed some fraudulent, unfair, or wrongful act in the course of preparing to compete in the future.” Maryland Metals, Inc., 282 Md. 31, 40 (1978). “Solicitation of [the] employer's customers prior to cessation of employment ... [and] usurpation of [the] employer's business opportunity” are examples of such misconduct.” Id. Prior to termination of employment, an employee must refrain from competing with his employer or soliciting business for himself which he should be obtaining on behalf of his employer. Id at 38. Once the employment relationship is terminated, an employee is free to compete with his former employer as long as the employee does not use confidential or trade secret information that he gained from the employer.
