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Department laid off 2 months after starting; repayment of signing bonus New York

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  • Department laid off 2 months after starting; repayment of signing bonus New York

    Earlier this year I joined a prominent company in New York. My offer letter included a signing bonus along with the provision that I must repay it in full if I were to separate from the company with or without cause within one year.

    Two months after my first day, the entire department, including department head, was laid off in a single day.

    The company's general counsel is now demanding that I repay the signing bonus they gave me. For reasons that are irrelevant to my question I am going to refuse repayment. My question specifically is this:

    What happens after I refuse to pay them? Are there any state laws in New York that govern this situation? Is there any relevant case law that I could read?

  • #2
    I don't believe there are any special laws in NYS that address this sort of thing. I believe this is a matter of contract law.

    If you signed a document agreeing to repay the signing bonus if you leave the company for whatever reason within one year, then you may well be on the hook to repay it should the company decide to sue you for it.

    What I recommend you do is to run this document by an attorney who specializes in contract law, to determine whether it's enforceable or not, and therefore worth fighting over in court (if it's determined to be not enforceable).

    Comment


    • #3
      I agree with eerelations, both on the substance (that it is a matter of contract law) and that you should talk to an attorney in NYS to see whether there is something unique to New York law that would change the result.

      Assuming that your employer has the contractual right to recover the signing bonus, it would presumably have the same rights that any party would have against another for breaching the contract, including the right to sue (if there is no mandatory arbitration) and to seek to recover any judgment through a citation to discover assets, a wage garnishment, etc...

      I will say, though, that it does not reflect well on a company to terminate a department and then seek to recover a signing bonus. Hopefully, the company would consider the impact on current employees and future potential hires before it takes aggressive action in a situation like yours.
      David K. Staub (www.illinoisbusinessattorney.com)
      Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

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      • #4
        A while back I worked at a large software company everyone has heard of. I had a question I gave my in house legal department to answer. We had seven lawyers (in house) and after I was directed to the right lawyer, I was told that the other 6 lawyers were contract law specialists. At one point I asked the lawyer I was working with does this mean she was not a contract law specialist, her answer was that she was, and she had drawn the short straw and was tasked to support payroll/HR and that she worked contracts the rest of the time. She told me that all lawyers know a fair amount of contract law and it was labor law that was the specialty area. I fairly quickly learned that I knew lot more about labor law then she did because I worked with it every day, and spent several thousand dollars a year on library services and training. Which our Legal did not.

        We occasionally used one of the big national labor law firms, who know what they are doing, but whom frequently get their answers from exactly the same payroll library I was using. Getting charged $5K to copy an answer I already had gets old quickly.

        In my experience, most lawyers can handle simple contracts and most lawyers know jack about labor law.

        I agree that you should talk to lawyer about the contract but contract law cannot override labor law and many/most lawyers do not know labor law. The ones who used to call me on the employee's part never seemed to. They all seemed to think withholding (including FICA) was optional. Or following child support orders was optional.

        I used to occasionally get scary letters from lawyers representing former employees. When I asked Legal what to do with them, the answer was "throw them away". They said if the former employee had an actual case, the lawyer would be calling Legal (not me) and inviting them to lunch.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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        • #5
          As a lawyer who admittedly fits DAW's description of knowing less about the intricacies of employment law than most non-lawyer HR professionals, I had thought about adding a sentence to my original answer suggesting that rather than running the document "by an attorney who specializes in contract law" as suggested by eerelations, that you run it by an employment law attorney. Chances are that the document appears enforceable on its face and if there is something in New York law that prevents the company from enforcing it, it is likely to be a statute, regulation or case law that is more familiar to an employment law lawyer rather than one who specializes in contracts generally.
          David K. Staub (www.illinoisbusinessattorney.com)
          Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

          Comment

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