I would actually start with the ex-employee. If he just hands it over, that is the only easy way to handle it. This time, put it in the business owner's name to make sure it doesn't happen again.
If the company screwed him over, or there's any hostility between them, he could be a jerk about it. If Godaddy doesn't help out at that point, it's probably time to consult with an attorney.
Since there really isn't a case of domain-hijacking here, Godaddy might not do anything about it unless told to by a court. I mean, it's in the same name that was used when he signed up with Godaddy, so they're probably not going to just hand it over because of an employer/employee feud.
Company name helps, but it still won't be simple, as you could pick a domain you like (somerandomdomain.com), go incorporate as Some Random Domain, Inc., then try to get the registrar to hand over someone else's domain.
If the company name is trademarked, that would probably help out more.
Since he's in control at this point, it's important to be nice to him... or the company site might turn into a kiddie porn site or a "This company sucks" site.
Anyway, this is the order I'd go in:
Contact the ex-employee and hope that being nice is all it takes.
Contact Godaddy and explain it to them. Be ready to hand over any proof they ask for.
2-1/2. Try to buy it back, if it's cheaper than #3 will be.
- Call an attorney.
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