Here are 10 Ideas to Guide You
“To achieve anything, you must be prepared
to dabble on the boundary of disaster.”
– Stirling Moss
ACTUAL “CASE HISTORIES”: Bernie was both proud and pleased when, after 24 months of extra effort, he obtained his Executive MBA in Finance. Though it was 24 months of both full-time work and part-time study, requiring time away from his family and hobbies, he was certain it would be worth it in the long run. And, too, he was fortunate that his employer covered two-thirds of the costs of tuition and books, which came to their contributing almost $70,000.
To take advantage of his employer’s MBA Assistance Plan, Bernie had to sign a simple “Reimbursement Agreement” that required him to remain with the company for three years, so that the company would see a “return” on its “investment” in him. If he did not remain there for three years, he had to repay the $70,000.
Bernie’s Repayment Agreement was rather standard, and read something like this:
“(1) As a material condition to your eligibility for MBA Assistance Plan benefits (hereafter called “Plan Benefits”), you promise that you will immediately repay to the Company all Plan Benefits you have received, or that have been paid on your behalf, if you should depart from the Company’s employment for any reason whatsoever, other than due to (a) death, (b) medically certified disability lasting more than twelve months, or (c) retirement under the Company’s Retirement Plan (which three events shall be called “Waiver Events”) within three (3) years from the last date you received Plan Benefits or Plan Benefits were paid on your behalf.
(2) In the event of your failure to immediately repay the Company the Plan Benefits as required, other than in a Waiver Event, you will be liable for, and promise to repay, the Company for all of its reasonable legal expense incurred in its collection efforts.”
All Bernie had to do was remain with the company for three years, and the $70,000 repayment obligation would be entirely forgiven. He gladly signed, because he saw an Executive MBA in Finance, substantially financed by his employer, as entirely in his interests, and a mutual expression of confidence in his future. And his employer saw it in its interests, as well.
Fourteen months later, it didn’t seem so simple. Bernie was notified that his division was being relocated from Connecticut to Texas to consolidate operations and reduce overall costs. He was asked to relocate from Connecticut to Texas with the division. However, with two children in high school, and one in middle school, he was not keen on making the move. His wife, too, was strongly against it, as her mother was in a nursing home a few blocks away from their home, and she visited with her mother on a daily basis.
Through discussions with Human Resources, Bernie learned that, if he decided not to make the move to Texas with his division, he would be entitled to six weeks of severance. Though it seemed meager, it was, at least, something. However, he also learned that his failure to relocate would also entail his having to repay the company the $70,000 MBA assistance it had invested in him. How’s that for an unexpected “bump in the road?”
Bernie consulted us about his dilemma. His initial question was “Does my repayment duty really take effect in this situation? I mean, I’m not resigning to go work for another employer.” As is our usual role, we sought ways to assist in solving his problem. We read his Reimbursement Agreement, and found some of its wording helpful. We considered, too, other facts, events and circumstances which would be helpful in Bernie requesting a waiver of his reimbursement obligations.
With our assistance, Bernie “presented his case” to Senior Management regarding why his Reimbursement Agreement obligations should be waived. After a few weeks, and two meetings with Human Resources, Senior Management finally agreed; his repayment was waived. That $70,000 savings was surely worth the effort.
LESSON TO LEARN: It is a very good thing for everyone that employers invest in their employees. It may be by means of educational assistance, relocation assistance, loans to enable purchases of the employer’s stock, retention bonuses, emergency advances of salary or commissions, or even sign-on bonuses. And it is entirely appropriate for employers to want – and expect – to get a “return” on their “investment,” and for this reason to require written agreements that give both employer and employee a clear understanding of the terms of the employer’s “investment” and the employee’s obligations regarding it.
But, in life, “stuff happens.” That is, unforeseen events unfold that bring about changes in circumstances that we were unable to predict, but must nevertheless respond to. That ability to predict what might take place “up the road, around the curve, and over the horizon” is not without its limits. As the old proverb goes, “Man plans, God laughs.”
Chances are you may one day sign a Repayment Obligation of one sort or another, and then be faced with a good reason to ask that your repayment be waived. If so, you owe it to yourself and your family to make that request.
There are many good reasons upon which to support a request for a waiver of a Repayment Obligation. In fact the list is nearly limitless. And, too, there are better ways to request waiver of a Repayment Obligation. The important lesson is “If you don’t ask, you surely won’t receive.”
WHAT YOU CAN DO: Many of our clients have been successful in getting Repayment Obligations of all kinds – including assistance for education, relocation, loans and sign-on bonuses – waived when they depart from their employers. Here are ten thoughts to guide you, as well, to that goal:
1. Read your Repayment Obligation Agreement carefully, at least three times. As an attorney whose law practice has for many years been devoted to agreements of one kind or another, it never ceases to amaze me how many times people – at times including me, I must admit – fail to read agreements carefully. There is just no substitute: I often see things in the course of my third reading that I would have sworn were not there after my first two readings. So, I read each document three times, and think while I am reading about the three things below:
a. During your first careful reading, think about this: “What, exactly, was EXPRESSED?” Said differently, “What, exactly, is written?” For example, sometimes Repayment Agreements might say, “If you leave the company voluntarily . . .” Then the question is, “Is this departure truly voluntary?” Or, some Repayment Agreements say “You must repay the monies unless agreed otherwise . . .” Then the question is, “Might someone have agreed, explicitly or implicitly, to waive your repayment?” If so, “That was not what was written” might well be your best path to achieve waiver of your Repayment Obligation.
b. During your second careful reading, think about this: “What was MEANT?” Sometimes a Repayment Agreement says, “Upon your departure from full-time employment by the Company . . .” In that case, was it meant that you must immediately repay the monies if you take a 60-day leave of absence to take care of a very sick child? Probably not, even though the words seem to suggest that. So, “That was not what was meant” might well be your best path to achieve waiver of your Repayment Obligation.
c. During your third careful reading, think about this: “What was (or might have been) LEFT OUT?” Suppose that your employer’s Repayment Plan is amended to provide that “Effective immediately, repayment in full will not be required if the employee leaves employment more than one full year after receipt of educational assistance monies.” Does that change in the “policy” amend the terms of your agreement? No, not necessarily. However, events or circumstances not anticipated or addressed in your Repayment Agreement might then be your best path to achieve waiver of your Repayment Obligation.
2. Has anyone, in any way, at any time, agreed not to enforce, or waive, your obligation? I always ask my clients facing Repayment Obligations whether anyone in authority, anyone in Human Resources, or even in a large meeting of colleagues ever (a) wrote, (b) said, (c) represented, (d) assured, (e) suggested, or (f) implied that “Well, in that circumstance, surely we would not require repayment from you.”
Some Repayment Agreements include provisions like “No amendment or waiver will be effective unless signed by a Senior Vice President or higher in management”; most are silent on that point. Whether or not your Repayment Agreement limits (a) changes to written promises, or (b) future amendments or modifications to certain methods, by certain people, or at certain times, in any case if there have been such “waiver” statements, representations, assurances, suggestions or implications, they form a solid basis for a convincing argument for waiver of your Repayment Obligations, and surely are not to be overlooked.
3. Consider the many common contractual defenses possibly available. Like any other agreement, a Repayment Agreement is a kind of contract that can be overcome by certain factual and legal defenses. These would include (a) fraud in the inducement (like promising you a promotion if you finished the courses, but without any real intention to fulfill that promise), (b) absence of a “meeting of the minds” (that is, if you never signed the Repayment Agreement or provision) or (c) the employer’s failure to uphold its end of the “bargain.” Over many years, we have assisted clients in these situations, and quite commonly find many such defenses. While these are easier to spot if you have legal training and experience, many non-lawyers can often identify them purely intuitively.
Former employer’s Collection Agency coming at you? Use our Model Response to Former Employer’s Collection Agency. Strong, Firm, Effective. It shows you “What to Say, and How to Say It™” just [click here.] Delivered by Email – Instantly!
4. Consider what lawyers call “Implied Conditions.” In attempting to bring order and orderliness into our lives, which is one of the central reasons we enter into agreements, we make certain presumptions. In legal circles, these are sometimes referred to as “implied conditions.” The best example of that is “Was your layoff, and your being unemployed, really meant to initiate your obligation to repay thousands of dollars?” Probably not.
As another example, if your job and office were relocated to the mountains of northern Afghanistan, would you really have to move yourself and your family there to avoid repayment of an educational grant? I think not. Likewise, if you were demoted from Executive Vice President to Junior Janitor, would your leaving your “new position” really entail your having to repay your sign-on bonus? I think not. Now, I could be wrong in this, but I do believe most people – and most juries, as well – would not require you to be relocated or demoted to avoid repayment.
The argument here is simply that “Well, it doesn’t say that, but it sure is implied.” In these two examples the “Implied Conditions” to the validity of your repayment obligation would be (i) continued location in a reasonable place, and (ii) continued employment in a reasonable position. “Implied Conditions” like these, and others, too, may be your best path to waiver of Repayment Obligations.
5. If you departure is “involuntary,” then your Repayment Obligation may be void. By (i) the words of your Repayment Agreement, (ii) what was meant by your Repayment Agreement, (iii) an implied condition to your Repayment Agreement, or by other reasons, if when you leave your job, you do so truly involuntarily, your Repayment Obligation may be void. For example, even if you “resigned,” if you left your job due to extreme sexual harassment bordering on rape, or a supervisor’s directive that you lie to government investigators, you surely didn’t do so “voluntarily,” and for such reasons it would not be expected that your employer – or any reasonable employer – would expect repayment.
It is for situations like these that we have “invented” the concept of “Involuntary Resignation”. (You might want to read my newsletter entitled “Involuntary Resignation – Standing Up, Not Giving Up, to an Intolerable Situation at Work” that explains this powerful concept in detail. To do so, just [click here.])
We offer a “Model Involuntary Resignation” letter that you can use if you decide to submit your own Involuntary Resignation. To obtain a copy – Delivered Instantly by Email, 24 Hours a Day – just [click here.] “What to Say and How to Say It.”™
6. If your employer has breached a legal obligation to you – such as paying your final salary, commissions or expense reimbursements – your own payment obligations are arguably void, as well. Sometimes, employers take the position that “Until a resigning employee has fulfilled all of his or her obligations to us, we will not honor our legal obligations to them, including those required by law.” This abdication of legal responsibility is unfortunate, and in some cases unforgiveable. It almost always backfires, as well.
While other facts, circumstances, and laws may determine whether or not it is legally justified, I commonly suggest to clients that the position should be taken that “What is good for the goose . . .”, at least initially. Often that is sufficient to motivate the employer to simply “back off” on trying to enforce the Repayment Obligation. Care should be taken, though, to avoid any imposition of legal or collection expense if the employer’s legal or collection expenses are clearly reimbursable by you to your former employer in your Repayment Agreement.
7. “Pro Rata” is always a strong and attractive argument for waiver, or at least partial waiver. What if, just by chance, you did not remain in your job for the full three-year “forgiveness” period (if that is the required period), but instead remained in your job for two years and ten months, which is 94% of the required period? In that case, did your employer enjoy the benefits of your sign-on bonus or enhanced education? Yes, surely. Would that two-month gap really justify repayment of 100% of the amount “invested” in you? I think not. In such circumstances suggesting a pro rata repayment – just 6% in the above example – is often a winning argument.
8. Might you have the leverage of “sensitive” counterclaims? A legal claim is one that is based solidly in the facts and in relevant law. Some legal claims have more leverage than others because of their “sensitive” nature. What do we mean by “sensitive” nature? Generally, a legal claim that carries with it not just legal and financial risk, but one that may carry with it relational, reputational and/or regulatory risk. If you sue someone for breaking your toe, then they or their insurance company might have to pay you perhaps $5,000; however, as examples, if you sue someone for forcing you to engage in sexual relations, or requiring you to violate federal laws that prohibit bribery of foreign government officials, they might have to pay you money, but might also have to go to jail. Ouch!
Be mindful, though, that you can NEVER threaten to “expose” or “embarrass” someone unless they do something for you. That is the very serious crime of extortion, and could put you into prison for many years. That said, you can threaten to sue someone in open Court IF you have a truly sound basis for a legal claim, even if that legal claim is a particularly “sensitive” one. Giving up your potentially “sensitive” legal claims might be considerable motivation for your former employer to give up its legal claim against you for failure to fulfill your tuition, relocation, sign-on bonus, or other repayment obligation.
9. Extreme personal or family need often represents quite considerable leverage to receive waiver of repayment obligations. In almost any workplace context, extreme personal or family need is potential leverage upon which to base a request, and is leverage upon which to request waiver of repayment obligations, as well. Either you or a family member having pressing need for expensive chemotherapy, or having two parents simultaneously in nursing homes, as just two examples, might just be enough to motivate a former employer – at least a former employer with a heart – to waive your repayment obligation.
If you have a Repayment Obligation “hanging over your head,” and would like to get it waived by your former employer, whether it is for (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, we offer our Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons. It shows you “What to Say, and How to Say It.”™ To obtain your copy, to be adapted to your own facts and circumstances, just [click here.] – Delivered by Email – Instantly!
10. Don’t forget that you might also request that your next employer pick up the cost of repayment. Although it is not a “waiver” of your repayment obligation by your former employer, you might accomplish the same objective by asking if your next employer might reimburse you for your repayment. This is justified by the fact that your next employer will surely reap the benefits of your educational enhancement, and might also save money by not having to pay to relocate you, as it might another out-of-town candidate. Your leverage to ask for such reimbursement is highest when your prospective employer is asking what you seek in compensation, not after you’ve accepted the job.
These 10 Ideas to Guide You to Getting your Repayment Obligation Waived are intended to give you an understanding (a) that waiver of repayment obligations is not an unusual request to make, (b) the best reasons to base that request, and (c) the best path to pursue your goal of waiver. Of course, this is not and cannot be considered to be legal advice, but only helpful suggestions in navigation of workplace issues.
P.S.: Consider the wisdom of having a telephone consultation with Mr. Sklover about negotiating your own Repayment Obligation, or any other workplace problem or opportunity you face. We offer telephone consultations 7 days a week ranging from 30 minutes, 60 minutes, or two hours. For more information, and to schedule a consultation, just [click here.]
SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you, and to then understand what to do to achieve waiver of any Repayment Agreement you may have signed.
Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.
*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.
Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.
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