My understanding is companies rarely resort to suing former employees to recover bonus payouts, as it's a lot of work and generally deemed not worth the time and effort to go through the full protracted legal process. The legal advice I received about this as a hypothetical situation / concern was to simply not respond to any further inquiries from the company after resigning.
This particular case is egregious since she only ended up with 10% of the bonus amount as cash due to ridiculously high moving costs.
Being required to pay back sign on bonuses, etc if you leave within 12 months is fairly typical, though I think often amortized or some such based on time.
Now some of this seems excessive (one account in the article says 2 years, which is BS), but in this particular case it seems she was employed remotely and then they changed the terms of employment to require in office work.
In that case I would argue the relocation costs are entirely the fault of the business, not the employee and morally they have no right to charge her. Of course that has no meaning in the law, especially in anti-worker countries like the US.
When I got hired to work at Wizards of the Coast (no longer there), the contract I signed said I would have to pay back my signing bonus if I left within one year, and 50% of my relocation package if I left before 2 years.
The one thing that often gets difficult with these things is that you get charged tax on the signing bonus (as additional income), but when you are required to pay it back you're expected to pay the full amount pre-tax.
You can eventually get the taxes back, though it might take a while.
Your former employer should take care of the FICA part after you repay them. For federal income tax, you'll claim a tax credit when you file your return according to "Repayment over $3,000" under IRS Pub 525. State income tax may have a similar process, though it can vary depending on the state.
In my specific case they sent over an amount to repay that was higher than what I calculated from my original contract, I asked for an itemized breakdown (the original communication just had a single flat number), and I never heard from them again. It was probably more expensive for their lawyers to double check the numbers than the amount they would have received from me.
Companies that do this should be named, shamed and you should question how financially liable they are. Nobody keeps their bonus to return it, this sounds weirdly illegal. I say let them sue and find a lawyer that challenges the lawsuit on the grounds of what bonuses are meant to be, if you don't want someone to leave before X years, hold their bonuses till their Xth year working for you, but let them pile up, and no take backsies.
It wasn't a bonus like a year end bonus, it was a sign on bonus and a relocation package. So they gave her money and helped her move cities in the idea that she would work for them, and then she decided to renege on that deal. I've had a similar offer made and they were very clear I would need to pay it back if I quit within the year. I don't really see what is wrong with no this.
I'm wondering if this is even real. The Daily Dot link seemed to have no fact checking and the original source, an unsubstantiated TikTok video was already taken down.
12 comments
[ 3.2 ms ] story [ 24.7 ms ] threadThis particular case is egregious since she only ended up with 10% of the bonus amount as cash due to ridiculously high moving costs.
Now some of this seems excessive (one account in the article says 2 years, which is BS), but in this particular case it seems she was employed remotely and then they changed the terms of employment to require in office work.
In that case I would argue the relocation costs are entirely the fault of the business, not the employee and morally they have no right to charge her. Of course that has no meaning in the law, especially in anti-worker countries like the US.
The one thing that often gets difficult with these things is that you get charged tax on the signing bonus (as additional income), but when you are required to pay it back you're expected to pay the full amount pre-tax.
Your former employer should take care of the FICA part after you repay them. For federal income tax, you'll claim a tax credit when you file your return according to "Repayment over $3,000" under IRS Pub 525. State income tax may have a similar process, though it can vary depending on the state.
https://www.irs.gov/publications/p525#en_US_2022_publink1000...
In my specific case they sent over an amount to repay that was higher than what I calculated from my original contract, I asked for an itemized breakdown (the original communication just had a single flat number), and I never heard from them again. It was probably more expensive for their lawyers to double check the numbers than the amount they would have received from me.