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Can An Employer Sue An Employee?

 Employee fired after being sued by her employer.

In 2024, the Equal Employment Opportunity Commission (EEOC) announced that they had recovered a record-breaking $665 million for American workers during the previous year. While many workers receive settlements from their employers after successful lawsuits, money often flows in the opposite direction. In other words, employees may be forced to pay their employers compensation. Can an employer sue an employee? The answer is a clear “yes,” but only under specific circumstances. To learn more about the possibility of suing an employee, contact an experienced labor and employment lawyer in New York today. Choose Schwab & Gasparini, and schedule a consultation at our many offices throughout the Empire State. Call (315)422-1333 for our Syracuse office, (518)591-4664 for our Albany office, (914)304-4353 for our White Plains office, or (914)304-4353 for our Hudson Valley office. 

Suing an Employee for Breaching Their Contract

Perhaps the most obvious reason to sue an employee is for breaching their contract. Like any contract between two consenting individuals, employment contracts are legally enforceable in New York. As long as the contract is valid, an employer can sue their employee for breaching it. Note that employment contracts are invalid if employees sign them under duress. To learn more about the requirements for valid employment contracts, contact Schwab & Gasparini. 

Can You Sue an Employee for Quitting Without Notice?

Most employment contracts state when and how the employee may terminate their relationship with the company. The employer might agree to terminate this employment relationship only for specific reasons. On the other hand, the employee might agree to provide notice before quitting. If the employee violates this agreement and quits without the required advance notice, the employer could sue them for breach of contract. 

Can You Sue an Employee for Breaching a Non-Disclosure Agreement?

Another common clause in an employment contract is a non-disclosure agreement (NDA). This type of agreement helps companies protect their intellectual property, and it prevents employees from disclosing certain company-related information in public. This information might involve trade secrets, patents, copyrights, or anything else the company wants to protect. If an employee violates their NDA, their employee is fully justified in taking legal action. 

Can You Sue an Employee for Breaching Their Non-Compete Agreement?

Throughout the years, many employers have included non-compete agreements in their employment contracts. These clauses were enforceable, and many employees faced legal action for violations. As the name implies, this agreement bans employees from competing with their previous employers. “Competition” in this context might involve starting a rival business or working in a specific industry. These agreements often expire a few years after the employee leaves the company, and they can be highly specific. Sometimes, they involve additional restrictions on revealing trade secrets and other proprietary information. 

Prior to 2024, the State of New York only enforced non-compete agreements under very specific circumstances. However, non-competes are now completely unenforceable on a federal level. In 2024, the Federal Trade Commission (FTC) announced that they had banned non-competes across the entire nation. That being said, those who have already signed non-compete agreements remain bound by them. The ban is not retroactive, and it only prevents companies from creating new non-compete agreements in the future. 

Suing an Employee for Defamation

Can an employer sue an employee for defamation? Yes, although there are no special laws that apply to defamatory remarks made by employees. An employer can sue an employee for defamation in the same way that they would sue any other individual damaging their reputation. For example, a disgruntled employee might publicly speak about their experiences while working at a specific company, perhaps raising issues that paint the company in a negative light. 

New York has specific requirements for defamation lawsuits. First and foremost, these lawsuits are only possible if the statements are false. Secondly, a company must establish that these statements caused legitimate harm or “injury” to its reputation or earnings. If the statements were published, they fall under “libel” laws. If the statements were oral, they are “slander.” A common trend in the modern era involves former employees discussing why they were fired on YouTube. If any of these statements are false, a company could theoretically file a lawsuit against the employee. 

Suing an Employee May Not Be Worth It

Although companies may ask “can an employer sue an employee,” a more appropriate question might be “should a company sue an employee.” The lawsuit may be possible, but it may prove to be a waste of time. The average employee in the United States does not have millions of dollars in assets, and suing them may not be a profitable endeavor from a purely financial perspective. Lawsuits may also appear vindictive and bitter, causing further damage to the reputation of a company. 

On the other hand, lawsuits can help protect the reputation and financial well-being of a company – even if an employee lacks the funds to pay damages. For example, holding an employee liable for disclosing trade secrets could discourage other workers from making similar disclosures. Defamation lawsuits may also establish the falsehood of harmful statements in court, proving to the public that accusations from a bitter ex-employee are not true. 

When Is Suing an Employee Impossible?

Generally speaking, New York labor laws prevent employers from suing their employees for losses and injuries caused by ordinary negligence. Even the most expensive mistakes and accidents caused by employees will not lead to lawsuits in New York. An employee is a legal representative of their employer, and it does not make sense for a company to “sue itself.” Furthermore, companies are responsible for the actions of their employees because they specifically chose them during the hiring process.

Contact Schwab & Gasparini Today

Can an employer sue an employee? While online research provides a few basic answers, a consultation with an experienced business litigation attorney in New York offers greater insights. Each company is different, and it is impossible to determine whether suing an employee is possible without targeted legal guidance. Even if suing an employee is possible, it may not be advisable. Call (315)422-1333 for our Syracuse office, (518)591-4664 for our Albany office, (914)304-4353 for our White Plains office, or (914)304-4353 for our Hudson Valley office. 


Sun Jun 30 2024, 12:00am