Persons Who Hire Away Employees can be Liable to the Employer even though Employees were at-will and free to Leave on Their Own

Employers now have another legal tool available when defecting employees who go to work for a competing business hire away their former employer's other employees. The California Supreme Court has held that such persons can be liable for injuries sustained to the former employer, even though the employees who were hired away were "at-will" and did not have any contract requiring them to work for the former employer for any specific period of time; however, the Court made clear that, to be actionable, the defendant's conduct must include "wrongful" acts independent of the mere act of extending offers of employment. The case is Reeves v. Hanlon, which issued on August 11, 2004.

In reaching its decision, the Court balanced a number of competing factors, including the public policy interest in maintaining "stable economic relationships" as between an employer and its employees, the right of businesses to compete fairly with each other, and the right of employees to consider and accept other opportunities of employment.

The Court set forth the following test for determining whether there exists an "independently wrongful" act to support a claim under these circumstances: the act must be one "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standardthat induced an at-will employee to leave [the former employer]."

While this test is sufficiently vague to keep employment lawyers actively engaged on both sides of the issue, the Court concluded that defendants in the Reeves case met the test by committing the following acts among others: after working in key attorney positions with the plaintiffs' law firm, defendants abruptly resigned without notice; they left no status reports or list of pending matters or deadlines on which they were working; they deleted and destroyed plaintiffs' computer files containing client documents and forms; they misappropriated confidential information, improperly solicited plaintiffs' clients, and cultivated employee discontent. In short, "defendants did not simply extend job offer to plaintiffs' at-will employees. Rather, defendants purposely engaged in unlawful acts that crippled plaintiffs' business operations and caused plaintiffs' personnel to terminate their at-will employment contracts."

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.