Chapter § 8.4

• Jurisdiction: New York

[8.4] What can an employer do about an employee who violates the duties owed by the employee to the employer?

Remedies for breach of employee and employer common law duties are largely the same remedies as are available for correcting a breach of contract.¹¹ An action may be brought in the appropriate New York court (and, in certain circumstances, may also be brought in federal court if federal jurisdictional requirements are met).¹² However, for breach of the duty of loyalty, an employer may, as an alternative to more traditional contract damages, instead elect to recover all of the salary, commissions, and expenses paid to the disloyal employee during the period of disloyalty.¹³

The remedies available from the courts depend in part on the nature of the injury and also on what needs to be done to rectify the harm. For example, an employee may not take a benefit from someone else as a reward for what the employee should be doing for his or her employer.¹⁴ Accordingly, an employee who, "on the side," makes a profit or receives a benefit for services performed for his or her employer is under a duty to give that profit or benefit to his or her employer.¹⁵ If the employee does not turn over the profit or benefit, the employer may sue the employee for restitution.¹⁶

If a material breach of the common law duties is proven, then the remedies available to the injured party are designed to make that person or entity whole and to recover any profit or gain that the employee realized by the wrongful behavior.¹⁷ This can include monetary relief (e.g., cash compensation for economic...