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Tuition Reimbursement Repayment Questions

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rated:
Hey all,

Overview:
I recently left an employer in the State of Michigan.  While employed, I had agreed to return to school at the cost of the company in order to be eligible for a promotion which I was approached by the company about.  I was aware of their policy for tuition reimbursement repayment when I signed the contract allowing me to take classes at their expense, and fully expected to have to pay them back for the expenses was I to leave within 2 years of taking any classes. 

Potential Key Factors:
   -  I began schooling only because the organization had made it clear that in order to be an eligible candidate for the role I must be actively pursuing a degree in the field. This was not documented and only communicated verbally.

   -  I was approached by the company and asked to take the position, I did not actively seek out the promotion.

   -  The contracts (one per semester) which I signed stating that tuition would be repaid in full did not specify any sort of timeframe as to when the full amount would be expected to be paid back to the organization.

   -  I left the organization purely because I felt that I was being pushed out of the company and harassed.  Organizational changes had been made which essentially made my position obsolete (it had been overheard approximately 4 months prior that they did not intend to have anyone in my position in the future).

   -  Approximately 1.5 months prior to making the decision to leave the organization, I received a review which made unsubstantiated claims about my performance and ability to handle stress, and it was "suggested" that I step down from my position.  These claims were brought to the attention of our Human Resources department as well as one member of executive level leadership, along with information and details which supported my argument. 

   -  When asked for their substantiations, the individuals in charge of writing my review were unable to produce anything of merit or otherwise.

   -  The situation that I was put in essentially would require me to take years worth of steps back in my career, essentially representing a significant loss of value in opportunity cost.

   -  The organization has sent me correspondence demanding more than 50% of my income for 6 months in order to re-coup the amount

Questions: 
  1.) Some information I have read has provided conflicting data related to my expectation to repay the amount.  As I stated in my overview, I intend to pay back the full amount.  I have found some data which suggests that the repayment plan must be reasonable to both parties, however when reviewing the actual case (Sands Appliance Services v. Wilson), I struggled to find any wording which suggested that this is the case.  Is it legal for the company to demand more than 50% of my monthly net income as a repayment?

   2.) I have also read some information (from out of my state) which suggests that if you feel that you were harassed out of the organization there may be the potential that the repayment could be nullified entirely, as it could be potentially equated to being fired.  Is this the case?  Though I intend to pay them back, I do feel as though they did not hold to their end of the agreement (me maintaining a position as long as I was continuing my education) and in fact that they maliciously went out of their way to force me out of it, in a way which also would have likely prevented me from ever advancing my career with them.

   3.) Any other information or suggestions would be appreciated.  I am the type of person to always pay my debts expeditiously, however in this situation I feel many factors are present which need to be scrutinized before I agree to any payment plan or arrangement.

Thank you

Member Summary
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Edit:fark mobile double post.

Bend3r (Jun. 05, 2017 @ 4:55p) |

Review saying to move to a lower paying position is like "firing" from current position, depending how it was worded.
A... (more)

Bend3r (Jun. 05, 2017 @ 4:56p) |

The argument OP would make is that he/she was forced out.

taxmantoo (Jun. 05, 2017 @ 6:04p) |

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rated:
When you say that they are demanding 50% of your income, what kind of language are they using? Are they threatening legal actions or collections?


Seems as if you plan to repay them. You signed a contract agreeing to do so. The only dispute is the time frame for repayment.


I might try and just negotiate repayment terms. How fast can you repay it? Make them an offer.

rated:
What's the timeframe for the tuition reimbursement -- when was tuition paid vs when was your employment terminated?

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Jerosen:
- Unfortunately I don't have the paperwork with me, however they sent me a contract, which they have asked me to sign and return, stating something along the lines of:
"Full payment is expected within 3 - 6 months. In order to repay the full amount within this specified timeframe your minimum monthly payment would be $XXXX due by the 1st day of every month"

- I do not remember them necessarily threatening any legal action, however I do believe it stated that legal action COULD be taken in the event that I fail to pay back the full amount

I have already made an attempt to contact the Director of HR and had to leave a voicemail. I stated my intent to pay the organization back but that I felt that the amount they were asking for was unreasonable and that I would like to negotiate a reasonable payment plan with them. I just want to ensure that before that negotiating process actually begins I understand my rights within the contract


Stanolshefski:
- The timeframe in which I was reimbursed ranged from September 2015 to April 2017


Thank you both

rated:
As far as number 2 is concerned... it would have been better to have consulted with an employment attorney about your situation prior to resigning. You can still consult with them now, but there is only so much they can do for you since it sounds like you left the company voluntarily (even though it didn't feel that way).

rated:
Thank you for the feedback, meade18.

I now regret not making that decision as I believe it, at the very least, weakens my case as it is now difficult for me to obtain proof of my claims. Unfortunately, though the situation was poor and I felt that I was being pushed out, my opinion of the company was still high enough that I foolishly assumed that they would be reasonable in their expectation of repayment and believed that the partnership could be severed both amicably and professionally by both parties.

rated:
martia said:      2.) I have also read some information (from out of my state) which suggests that if you feel that you were harassed out of the organization there may be the potential that the repayment could be nullified entirely, as it could be potentially equated to being fired.  Is this the case?
 

  
Yes, the term is "constructive dismissal". Proving it may not be easy, though.

rated:
That demand for 50% of income sounds crazy - that does not seem reasonable to me.

How much in tuition are you talking about right now?

rated:
DigiornosHunter said:   That demand for 50% of income sounds crazy - that does not seem reasonable to me.

How much in tuition are you talking about right now?

  They probably don't know what OP makes in their new job. Its probably just their normal calculation XX owed/Months to repay.

rated:
DigiornosHunter/Tiggerlgh:
- The total value is about $9,200 owed to the organization.
- A couple of interesting things about the situation are:
1.) What they are asking for is actually nearly 80% of what my net income was while I was working for them
2.) The contract which they sent me to arrange for payments has the expected timeframe manually entered, pointing to the potential that they do not actually have a standard policy for a repayment timeframe

Doveroftke:
- Thank you for the information, I will try to do some digging in to this definition and review if it may be worth contacting a lawyer to discuss

rated:
martia said:   DigiornosHunter/Tiggerlgh:
1.) What they are asking for is actually nearly 80% of what my net income was while I was working for them

 

  

Then they should then understand that paying this amount of money back is going to be a significant burden.

I'd pursue negotiating a payment plan that is more reasonable like 10-20% of your pay if you can swing that.

 

rated:
Jerosen:
- Thank you for the suggestion. I believe this is likely the route I will end up going.

I have looked up some information regarding constructive dismissal and I believe, had I been pro-active about this when I put in my resignation, that I would likely have been able to make that claim as I appear to meet multiple of the various potential scenarios which can lead a court to side with the employee. Unfortunately, as I said prior I was under the impression that it was just a few bad apples in upper management who were acting unreasonably and that they were not indicative of the actual corporate structure, sadly this appears to have been a mistake in judgment on my part.

rated:
> The organization has sent me correspondence demanding more than 50% of my income for 6 months in order to re-coup the amount
> What they are asking for is actually nearly 80% of what my net income was while I was working for them
> The total value is about $9,200 owed to the organization.

So are you saying that $9,200/6 = 1533 was 80% of your net income i.e. your net income was only $1916 - i.e. about 24K a year? Really surprising to me that company will offer free tuition for 2 years for such a low paying job.

> demanding more than 50% of my income for 6 months

Hmm.... that sounds like the real reason you left - got a nice offer that made a jump in the net income from $24K to $38K. Makes sense - I would bail too. But pay up and move on. You signed a contract and you can easily afford to pay the amount after the jump that you just received.
 

rated:
I know people that ignored those types of communications from former employers and never repaid the money.  The employer typically sent a few letters requesting payment and then dropped the issue without requiring reimbursement when they were not repaid.

rated:
Having no "sunset" period listed for tuition reimbursement is a big problem and I would not have used it at that point except for it being like a 0% loan. Most organizations have a defined sunset period and while it varies, it is commonly around 2 years. The last time I took advantage of it, I had to pay 100% from 0-18 months after the contract, 50% 18-24 months, and 0% after 24 months; this is just an example.

Beyond just working out a repayment situation, you may want to talk with them about reducing the amount. That isn't tuition reimbursement if you ALWAYS have to pay it back... it is just a loan. And if it is a loan... there are some rules about that sort of thing. If you get the right attorney on this, they may be able to convince them that this is something that they just drop entirely.

rated:
I second the notion to just 'ignore' it for about a year. Worst case is that they actually sue you - which is unlikely. $10k may seem like a lot to you, but for a company to engage legal counsel it costs thousands of dollars (minimum). I give you better than 50/50 odds that they never seriously pursue such a small amount from a former employee. They may send a few letters, but even if they sue you -- they will be willing to settle before it goes to court.

rated:
What is happening to FW Pay your Bills deadbeat? Two posts not to pay back obligated payments?

rated:
Hiring an attorney will cost you a few thousand dollars, so I would suggest that you respond to their demand promptly and explain what your net income is and what you can afford to pay in order to pay the money back over a reasonable period of time (such as one or two years), and see what their response is first.  Since you owe such a small amount, is it possible to get a personal loan from your bank or family to pay your employer back with? That would give you more reasonable monthly payments and time to pay off than your employer is willing to give you (so far at least).   

rated:
I had thought about going the bank route, the problem I have with that is that when I was younger I got in to a situation which destroyed my credit. I've gotten it back up to a fair rating, but I'm worried that taking out a loan will drop my rating to a point that my wife and I won't be able to get a home loan (which we've been working on for a while).


As far as my pay at the old location, the company is notorious for underpaying their office employees. The industry average for yearly income for that position was ~$75,000/year. My company had a decent benefits package and healthcare program that they touted would add "$18,000/year" to your income though I'm not sure that the opportunity cost really balanced out (particularly for someone my age (26)) due to my tolerance for risk being reasonably high. The company does offer tuition reimbursement to all employees, though. In my case, they specifically approached me and asked me to go to school for a particular degree because they wanted me to do the work.

Fortunately the company I am working for now has offered to pay for an initial consultation with a labor lawyer so that I can understand all of my options and whether or not I could qualify for Constructive Dismissal or if I have any bargaining power in terms of monthly payment. The old company makes around $150,000,000/year so as a couple of you guys have said they're not missing the $9,200 right now.

Thank you all for your help and opinions, I appreciate the feedback.

rated:
It's good of you to hold up your end of the agreement and be willing to pay back the money for tuition.

If you are only making $25K I do think their request for rapid reimbursement is unreasonable. Suggest you respond in writing to the sender that sent you the notice of repayment. Indicate that their payback timeline would be excessive financial hardship for you, and suggest a timeline.

Good luck

rated:
Tiggerlgh said:   What is happening to FW Pay your Bills deadbeat? Two posts not to pay back obligated payments?
Constructive dismissal means it might be employer PYBDB. Of course there's not enough info to know if that's really the case.

FW often gives the OP the benefit of doubt in these situations (and should) unless it looks really likely they're just making things up.

Employers give 0 loyalty to employees (thus few "career employee" environments now, unlike in some times in the past), employees have no reason to give any loyalty to employers or feel any obligations over what are strictly legally required.

rated:
"I won't pursue claims against you for wrongful termination if you won't pursue claims against me for the tuition you pushed me to incur"

rated:
taxmantoo said:   "I won't pursue claims against you for wrongful termination if you won't pursue claims against me for the tuition you pushed me to incur"
  
More effective if it comes on a lawyer's letterhead, but a good approach.

rated:
Not to play dirty, but the true FW way would be to delay/avoid etc. which leads to >"PYBDB". $9k is fairly high, but I've seen companies do the 'collection letter' route a couple cycles then at the fiscal year end, write off amounts of $0-$2k. It sounds like things are ending well though.

Usually a company is willing to work out a flexible payment plan, ideally that happens right at resignation time...

$10k isn't too bad - I'm sure this crazy stuff they pitched is just someone in HR throwing numbers together without any consideration for what is right or your situation.

Before worrying about 'lawyering up', I'd try to communicate with someone about the situation and work with them to establish a reasonable payment plan.

Don't know what your new salary is, but $9k over a year is $750 a month. Stretch to 18 months and you're at $500 a month.

rated:
taxmantoo said:   "I won't pursue claims against you for wrongful termination if you won't pursue claims against me for the tuition you pushed me to incur"
  OP wasn't terminated, they quit.

rated:
Edit:fark mobile double post.

rated:
Tiggerlgh said:   taxmantoo said:   "I won't pursue claims against you for wrongful termination if you won't pursue claims against me for the tuition you pushed me to incur"
  OP wasn't terminated, they quit.

Review saying to move to a lower paying position is like "firing" from current position, depending how it was worded.
A required significant change in job duties may also be a way to "leave" and is still like firing (may be eligible for UI, etc)

rated:
Tiggerlgh said:   
taxmantoo said:   "I won't pursue claims against you for wrongful termination if you won't pursue claims against me for the tuition you pushed me to incur"
  OP wasn't terminated, they quit.

  
The argument OP would make is that he/she was forced out.

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