Can an Employer Sue its Former Employee?

The Spitz Law Firm handles a lot of lawsuits against employers who discriminate, harass, or retaliate against employees. But can an employer also file a lawsuit against one of its former employees? The answer, perhaps not surprisingly, is yes. One of the most common bases for an employer suing a former employee is the employee’s violation of the non-compete provisions in the parties’ employment agreement. In a recent case, Quicken Loans, Inc. sued Lydia Garza, an ex-mortgage banker with the company, for an alleged violation of the no contact/no raiding and the non-compete provisions of her employment agreement. However, in the course of litigation, Garza’s attorney reviewed the employment agreement and discovered that the provisions potentially violated the law.

Garza then turned around and sued Quicken Loans for violations of the National Labor Relations Act (NLRA). In Quicken Loans, Inc., a National Labor Relations Board (NLRB) administrative law judge invalidated the confidentiality and non-disparagement provisions of the employment agreement between Quicken Loans and Garza. The judge held that the provisions violated the NRLB’s definition of protected concerted activity. After ruling that the provisions violated the NLRA, the judge ordered Quicken Loans to revise its non-compete provisions.

 The lesson from this case is that, as an employer, make sure that you conduct an analysis into your potential liabilities before you sue a former employee. If you discover something that may come back around to bite you, you may want to consider not going after your former employee. And as an employee, if you are being sued by your former employer, be sure to check into whether the basis under which the employer is suing you violates the law.

If you even think that your employment rights have been violated or that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at (216) 271-3742. The Spitz Law Firm is dedicated to protecting employees’ rights and solving employment disputes.

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