“If an employee has a Master’s Degree paid for by an employer, based on the employee’s promise to stay three years, or repay the $30,000, what happens if the employee is laid off?”

Question: My daughter-in-law works for a large company who paid her over $30,000 in education costs for her Master’s Degree. In return, she is obligated to stay employed by the company for three years, although she doesn’t believe she ever signed a contract.

If she happens to get laid off by her company in the meantime, would she still be obligated to repay this money, whether or not she signed a contract?

Thanks!

 Dan
 Louisville, Kentucky

Answer: Dan, though it would depend on (a) what was signed, (b) what was said or written in an email, and (c) what might be in an employee handbook, or a company policy, chances are your daughter-in-law would not have to repay the education monies. 

(aIf a contract or agreement was signed: In this case, whether your daughter has to repay the education monies would depend on what is in the contract. My experience with these things is that (i) chances are that your daughter-in-law did, in fact, sign some sort of contract or agreement. Large companies are usually very careful about such things as this. My experience with these things is also that (ii) most agreements about education monies – maybe 90% – say that you must repay the monies if you voluntarily leave, but not if you are laid off.

(bIf a contract was not signed, but a promise was spoken or in an email: If a contract was not signed, but a promise was spoken or in an email, then it would be just as enforceable as a signed contract, just harder to prove. But, just as above, it is unusual to hear of a promise or email requiring a laid off employee of having to pay back education monies.

(cIf an employee handbook or company policy applies: Even if nothing was signed, nothing was spoken and nothing was written, the “rules and regulations” of an employment relation can also be found in an employee handbook or a company policy. That is because, almost always on the first or second day of work at a large company, all employees are required to sign that he or she agrees to follow the “rules and regulations” in the company’s employee handbook and employment policies. However, just as noted above, it is unusual to see a laid off employee have to repay education monies.

(dJust in case your daughter-in-law is required to repay: Though unusual, some employees are required to repay education monies if their employment terminates, regardless of the reason for termination. In this case, I strongly recommend that your daughter-in-law request of a high-level executive in her department or division, preferably not Human Resources, that this be forgiven, as she will have a hard enough time paying her mortgage and family food bill. In most situations, as part of a severance package, an employer will agree to such a request. If she is turned down in this effort, then she should (i) insist that installments of repayment be held off until she is re-employed, or (ii) write to the company’s Board of Directors requesting their humane intervention.

By the way, it might be a good idea for her to email the question of repayment upon layoff to Human Resources, just to see their response. I don’t see how it could hurt.

I hope that helps; really do. 

Best, Al Sklover

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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