Can I sue an employee for his wages as he started a competing business while working for me?

UPDATED: Sep 30, 2022

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Can I sue an employee for his wages as he started a competing business while working for me?

I have a company and one of my managers, and a former employee, started a company at least 6 weeks before he resigned. I have documentation of the dates as he left his private e-mail activated on a work computer. He did not sign a non-compete. I have full documentation of a lot of his activity while employed with me that shows he was actively involved in a competitive venture.
We have been trying to update our employee manual, but I am not certain if the one that was in use at the time of his hire was given to him. However, there is a paragraph in it that discussed competitive employment.

Asked on November 29, 2015 under Employment Labor Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

No, as a general rule, in the absence of a non-competition clause in a written contract or agreement, there are no grounds to sue an employee for competing with his employer. You would only have a viable claim against him if:
1) He used proprietary business information (e.g. customer list[s]) which he only had access to as part of his employment to launch his competitive business. In this case, it is the misppropriation of your business property which would give rise to a cause of action, and you could sue for competition and for an injunction (court order) to stop him from using your proprietary information.
2) You can prove he worked on his own business during work hours for you, in which case you could sue to recover the salary, wages, etc. paid him during that time, since by not actually doing work for you while he was being paid to work for you, he in essence "stole" his wages.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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