What if an employer has incurred no economic loss as a result of an employee’s breach of his duty of loyalty? Is the disloyal employee to retain compensation earned while he committed acts of misconduct because his employer fortuitously sustained no actual loss?
This is a recurring issue in employment law governed by the New Jersey Supreme Court’s decision in Kaye LLC v. Rosefielde, a decision of which all practitioners should be aware. In Kaye the New Jersey Supreme Court reaffirmed, after a misreading of a prior Supreme Court case by the trial court and the Appellate Division, that a court’s equitable power, with its attendant broad discretion to fashion remedies that are fair and practical, includes the power to order disgorgement of an employee’s compensation as a remedy for a breach of loyalty in an appropriate case even if the employer suffered no economic loss.
