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Employment Law/1-year contract with training refund clause on quitting

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Question
Hello Frank,

I recently signed a 1-year job offer contract with a company. The offer letter states "In the event you terminate your employment voluntarily or if you are terminated for cause within 1 calendar year from your start date, you will be required to reimburse company x for the full cost of the Training which is valued at $40,000"

I don't really understand how this clause works. If I'm fired, for example, due to "Poor Job performance" such as not meeting a sales quota, will I have to reimburse company $40,000?

Thank you, please let me know anything you know about a clause like this.

Answer
Jeremy:

This is becoming fairly common among employers today.  In general, it is lawful in most states, including New York.  You should ask the employer exactly what they mean by "terminated for cause", however, to be sure you understand the agreement.  It could mean termination for any reason deemed to be "cause" by the employer at the time, or it might be limited to misconduct (violations of company rules or applicable laws.)  There are also strict rules in New York State about how an employer can recover money allegedly owed by an employee.  For example, in many situations it is unlawful for the employer to deduct money from wages or salary to satisfy an alleged debt to the company.  

You may wish to consider consulting a local experienced employment attorney to get more complete advice on the enforceability of this agreement.  Knowing the nature of the work, the type of training and the complete text of the offer letter, he or she would be in a position to tell you more than I can about the situation.

I hope you find this helpful.

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Frank C. Magill

Expertise

I can answer questions about any U.S. labor or employment law question. I cannot answer questions about non-US law. I am not a specialist in employee benefit law (ERISA and HIPAA) or Workers' Compensation law, but will do my best to point questioners toward good resources availabe online. Expertise includes, without limitation, EEO/Affirmative Action/Employment discrimination (Title VII, Age Discrimination in Employment Act, Americans With Disabilities Act, GINA, Fair Credit Reporting Act as applied to employment); Fair Labor Standards Act; Texas labor code; Family Medical Leave Act; employee compensation; discipline and dismissal; force reductions, severance pay programs and administration; collective bargaining, union representation, grievances and arbitration, National Labor Relations Act and National Labor Relations Board; employee handbooks; staffing; dispute resolution outside of traditional labor agreements; employee communications; employment policies and compliance programs; codes of ethics; employment or labor litigation.

Experience

30+ years experience as corporate counsel for a Fortune 100 telecom company, specializing in labor and employment law issues. In addition to providing day-to-day advice to my company's internal HR leadership and staff, I've represented the company in numerous labor arbitration cases and at the bargaining table.

Organizations
Texas, Illinois and Missouri state bars

Education/Credentials
J.D. 1979, Harvard Law School. B.A., Summa Cum Laude, 1976, Illinois Wesleyan University.

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