Fiduciary Employees

• Author: Paul Wearing
• Pages: 23-24

•23

CHAPTER FIVE

Fiduciary Employees

What You Should Know

All employees owe their employer a general duty of good faith, loyalty,

and f‌idelity, even if they are not f‌iduciaries. Fiduciary employees are held

to a higher duty of f‌idelity than ordinary employees.

A job title alone does not determine f‌iduciary status. There must be

real, substantive authority and control exercised by an employee over

an employer’s business to deem the employee a f‌iduciary employee.

High-echelon managers and directors of an organization are normally

found to be f‌iduciary employees and, as such, to owe their employer a

f‌iduciary obligation that transcends their implied duty of f‌idelity as regu-

lar employees. A f‌iduciary duty is based o n trust, loyalty, and conf‌idence.1

The features that the courts use to determine whether a f‌iduciary rela-

tionship exists are as follows:

1) The f‌iduciary has scope for the exercise of some discretion or

power.

2) The f‌iduciary can unilaterally exercise that power or discretion

so as to aect the benef‌iciary’s legal or practical interests.

3) The benef‌iciary is pe culiarly vulnerable to or at the mercy of the

f‌iduciary holding the discretion or power.2

A f‌iduciary duty has three components:3