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employment law, fiduciary duty, duty of loyalty, employee governance, incomplete contracts


Under traditional agency law doctrine, employees are agents of their employers and owe an agent’s concomitant fiduciary duties. Employers, in turn, are merely principals and have no corresponding fiduciary duties. A new wave of thinking has unsettled this approach by concluding that only high-level employees have fiduciary responsibilities to their employers. Taking this controversy as a starting point, this Article reconceives the employment relationship as a mutual fiduciary relationship in which both employers and employees are fiduciaries of one another. Even though current law does not consider employers to be fiduciaries of their employees, employers have long had significant statutory and common-law responsibilities toward their employees that reflect a fiduciary character. Looking to these responsibilities as well as research on the theory of the firm, the Article argues that employers are fiduciaries and must refrain from opportunism, especially when employees have no voice in governance. However, in an organizational setting where employees do participate in governing the firm, it would be appropriate to recalibrate the reciprocal fiduciary duties to require a balanced set of obligations between all parties.