In many situations, employers expend considerable expenses on behalf of new employees.  These costs can take the form of payment of relocation expenses, or outside training courses intended to ready the employee for the job.  Employers sometimes feel taken advantage of when these expenditures are made, and the employee quits a short time later to take another job.  Their inclination is to protect themselves by requiring the employee to agree in advance to repay such costs if they do not remain employed by the company for a certain period of time.

On their face, these reimbursement agreements are legal.  They usually provide for reimbursement if the employee quits or is terminated for cause.  The relocation or training costs are often forgiven in increments over a set number of years.  Problems can arise, however, when employers seek to enforce the terms of the agreements.  In many cases, former employees will simply ignore an employer’s demand for reimbursement.  The cost of suing a former employee often exceeds the amount that can be expected to be recovered.  Judges are often skeptical of these agreements, and view the expenditures as the employer’s risk in hiring that person.

The agreements can provide that the training or relocation costs can be deducted from final wages owed to the employee.  However, many states including North Carolina, require that before making the deduction, the employer notify the employee and provide them with an opportunity to revoke their authorization.

In reality, these agreements do not provide a satisfactory answer to the problem of losing upfront costs expended on new employees.  Better alternatives may include more careful screening of applicants, or delays in providing training or full reimbursement of relocation expenses until the employee has proven that he or she can do the job, and intends to remain employed for the long term.