Fiduciary Principles in Employment Law

Abstract

Employees are agents of their employers, and in some cases, are in a position to undermine the interests of their employers in ways that the employers cannot fully anticipate or contractually protect themselves against. While most jurisdictions historically treated all employees as fiduciaries of their employers, by now only a minority of jurisdictions regards all employees as fiduciaries. Most states treat only high-level employees of “trust and confidence” as fiduciaries, while other employees owe a lesser duty of loyalty. Some scholars have made arguments in support of recognizing employers as fiduciaries to employees, but as yet, employers owe neither fiduciary duties nor any lesser duty of loyalty to employees. Only employer-related entities such as pension funds and employee stock option programs owe fiduciary duties to employees under the Employee Retirement Income Security Act (ERISA). The doctrinal status and conceptual basis for the fiduciary duties of employees are discussed in Section I. Section II addresses fiduciary duties under ERISA. Section III touches on potential fiduciary duties of employers.