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A Virginia employee was terminated within 1 year of hiring because the on-site customer felt he was "too negative". Offer Letter:

Along with this offer, you are receiving a $10,000.00 signing bonus, which includes $3,000.00 to be paid directly to you in your first company paycheck and the remaining $7,000.00 to be paid to you at 30 days of employment with xxxxx. A 1−year commitment required or the bonus will be repaid in full to xxxxx.

Can the employer legally keep the employee's last check and send the employee a bill for the remainder ?

jlo-gmail
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3 Answers3

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Virginia employer terminated employee and wants signing bonus returned

Can the employer legally keep his last check and send the employee a bill for the remainder ?

No, unless (1) the employee resigned and (2) his resignation does not amount to constructive termination. The employer may withhold the remaining $7,000 only if the employee did not meet the condition of "30 days of employment with xxxxx".

Absent any language to the contrary, the requirement of "1-year commitment" is to be construed as the consideration expected from the employee (namely, "not to quit") in exchange for the bonus. Termination by the employer is self-defeating in the sense the employer himself made it impossible for the employee to fulfill the consideration that was expected from the employee. Therefore, the employer forfeits his entitlement to reimbursement.

In the event that the employee met the condition of "30 days of employment with xxxxx", he would be entitled to the remaining $7,000 as well.

Virginia labor law has no provision for treble damages (this is in response to one of the comments, per the OP's suggestion). The statutory provisions are only a civil penalty no greater than $1,000 for each violation, a portion of attorney's fees, and "all wages due, plus interest at an annual rate of eight percent". See Code of Virginia at § 40.1-29 A.2, F, and G. Item E of that statute determines which violations are misdemeanors and which are felonies. This statute would be applicable only if (1) the employer disavows the employee's entitlement to the remaining $7,000, and/or (2) the employer withholds a portion of the employee's earned compensation in an attempt to recover the initial payment of $3,000.

Iñaki Viggers
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Since the employee made a 1-year commitment, and did not quit within the year, I see no justification for the claw-back of the signing bonus. If the letter had said "you must remain employed for one year or the bonus will be repaid" that would be different.

However, before seriously considering a suit, you will want to consult an emplyment lawyer. You may want to do so before sending a communication insisting that your final payceck be paid in full.

David Siegel
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  1. In my opinion, the sentence is a bit ambiguous. I'd lean toward agreeing that the employee kept their commitment, so termination might not apply. But, the problem with that is an employee could intentionally act in ways causing themselves to be terminated to keep the bonus. (Not saying that's what happened here.) If the judge felt it was ambiguous, like many legal issues, all that matters is which judge you get and how they rule, and no definitive answer can truly be given. You could argue the offer letter was a contract of adhesion, which means it was a standard contract and you were in a take it or leave it position. If that flies, ambiguities are generally resolved against the writer of the contract. The employer would likely counter-argue their employment offer was up for negotiation, differentiating it from terms and conditions you have no negotiation power over, like between (non-extremely-rich) people and banks.

  2. Some states have restrictions on last checks. I have no idea what, if any, Virginia laws apply to them. If you got lucky, maybe Virginia's law requires the last paycheck to be paid in full. (I have no reason to believe this is the case; all I am saying is that it should be researched.) If the judge feels the sentence applied to the situation requires the bonus be paid back, they might need to pay the last paycheck and separately attempt to collect from (including suing) the employee. Virginia may or may not have penalties for failing to give a proper last paycheck. If such penalties exist, whether they go to the state or the employee is a separate issue, again resolved through research.

  3. As David Siegel said, definitely consult an employment lawyer, before doing anything. In my opinion, actually consult with 2-3.

user1902689
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