Recently, the New Jersey Supreme Court decided an important case that further protects employers from disloyal or “faithless” employees. The central issue in Kaye v. Roseflelde is whether “a Court may order the equitable remedy of disgorgement of an employee’s compensation when the employee has breached their duty of loyalty to the employer, but the employer had not sustained any economic loss.” The Kaye decision is an extension of Cameco Inc. v. Gedicke, 157 N.J. 504(1999), which allowed Courts to disgorge (or give back) compensation earned if the employee caused their employer to suffer damages.
The facts of Kaye are fairly simple and straightforward. Kaye hired his former attorney, Mr. Roseflelde, to work directly for his timeshare companies. During the course of a twenty-plus day trial, Kaye was able to demonstrate that Mr. Roseflelde committed many serious acts of misconduct during working hours when he acted on his own behalf instead of his employer’s best interests.