General Rule: Every employee owes his/her employer a duty of loyalty. That duty is not violated by an employee making some advance preparations for new employment or for the creation of a new competing business. Likewise, the duty of loyalty is not violated if an employee fails to disclose his plans or preparations to accept new employment or compete.
Exception: In Navigant Consulting v. Wilkinson, the Fifth Circuit Court of Appeals upheld a $4 million judgment in favor of a former employer based on former employees having violated their duty of loyalty. In this case, prior to their departure, the employees caused the employer to enter into a contract that would be detrimental to the long-term interests of the employer. The employees also secretly negotiated to have key employees leave the employer and take trade secrets data.
Impact: An employee who is not subject to a covenant not to compete is entitled to plan for future employment, including competing with the former employer, but that planning cannot include sabotaging the soon-to-be former employer.