Published on May 25th, 2012 by Alan L Sklover
Question: Hi, Alan. I received a job offer from a major Fortune 100 company (you definitely have heard of the firm.)
On the offer letter, it says: “If I voluntarily terminate my employment within 12 months of my start date, I agree to reimburse the Company for any expenses paid or reimbursed and for any hiring bonus provide by my offer letter.”
This offer does not have any relocation package or sign on bonus. Could they be talking about – and could I be liable for – their other internal expenses? For example, since the Company outsourced its recruiting function to another service company, could I be liable for money they pay to the service company for recruiting efforts associated with me?
Manchester, New Hampshire
Answer: Dear J.M.: From the wording of the agreement that you have provided me, I think it is unlikely that the Company would make such a claim, and even if it did, I think it is even more unlikely that you would be found liable if it ever went to court. Here’s my thinking:
1. In figuring out what an agreement means, we must first look at what the words say. This is always the first step in analyzing an agreement. Your agreement says “expenses paid or reimbursed.” It does not say “internal costs and expenses.” Since companies do not “pay” or “reimburse” themselves, it is hard to imagine that “paid or reimbursed” applies to “internal expenses.” Bear in mind: any employer – and especially a large, sophisticated employer like yours – could have written “internal expenses incurred” if they wanted the agreement to cover those. They did not, and we must presume they did not because they did not mean that.
So, in looking at the exact words – and only the exact words – it sure looks like you should not be liable for “internal costs and expenses” because “internal costs and expenses” was not expressed by the words.
2. Next, if any doubt remains as to the meaning of the words, we then consider their most likely meaning. In considering what is most likely meant by the words expressed, we can then take into account their context, other words used in the agreement, our experience, and logic. [As an aside, I think of this phase of analysis as an arithmetic equation: context + experience + logic = common sense.]
In this phase of analysis, I notice that your agreement also requires repayment of hiring bonuses, but you did not get a hiring bonus. This leads me to believe your employer used a “form” or “stock” agreement, even though it does not totally apply to you. The same is probably the case for the “expenses” sentence: it is likely meant to be for relocation, temporary housing and similar expenses commonly “paid or reimbursed” to new hires, but not to you. So, context, experience and logic all suggest that “expenses paid or reimbursed” in your agreement refers to such other expenses – such as relocation and temporary housing – and not to “internal costs or expenses.”
In fact, I view “internal costs or expenses” to be a real stretch of logic and experience: as an attorney doing these things for 30+ years, I have never seen an offer letter that requires a new hire to repay “internal costs or expenses.”
3. Also, there is a general “rule” of legal interpretation: “If a document is unclear as to its meaning, then it is interpreted against the interests of the author.” In this, too, we see that the law is common sense and simple fairness passed down from one generation to the next. Quite a long time ago, our Courts decided that our entire society would be better served if people did not use vague words – either intentionally or accidentally.
So, slowly but surely more and more Judges wrote in legal opinions, “If anyone should lose out in a battle over vague words, it ought to be the person who wrote them.” As you might imagine, this encourages people to be clear, and precise, and not to claim words meant something that they didn’t express. It is in this way that the law helps our society remain a peaceful and orderly society. It gives people confidence that “The rule of law will protect the honest among us.” Though we often feel that the law is difficult and expensive, we truly underestimate how wonderful it is in preventing problems and “keeping the peace.”
J.M., for these reasons I think you do not have to worry about repayment of “internal costs or expenses” being demanded if you voluntarily leave your employer before the 12 months is up. If you do receive such a request, respond with this reasoning in an email, and ask them how they can ignore (a) words, (b) context, (c) experience, (d) logic, (e) common sense, and (f) the rule of interpretation I have mentioned above. That, I think, will surely do the trick.
You may also want to review our other blogsite articles on repayment obligations. To do so, just [click here.]
Thanks for writing in. I hope this has been helpful, to you and to all of our blog readers.
P.S.: If you plan to resign, one of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate Resignation Package” consisting of four Model Letters/Memos and our 100-Point Pre-Resignation Checklist.” To obtain a copy, just [click here.]
If you agreed to repay your former employer (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, you may be able to have that obligation waived and forgiven. To obtain a copy of our Model Memo entitled “Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons,” just [click here.] “What to Say, and How to Say It.™” – Delivered by Email – Instantly!
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© 2012 Alan L. Sklover, All Rights Reserved.