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Here’s the right way to recoup training costs

by on
in Compensation and Benefits,FMLA Guidelines,Human Resources

It’s expensive to train employees, especially if the content is highly specialized. Smart employers protect their investments by getting employees to agree to repay training costs if they leave soon after receiving the valuable benefit.

Here’s how to recoup those costs. First, make it clear as soon as employees are hired that they’ll have to pay back at least some costs if they quit before a certain date. If the employee leaves before that specified date, you can withhold any accrued vacation or other pay due after termination, plus demand the rest of the money if withholding doesn’t cover the whole amount.

Just don’t mess with the employee’s final paycheck. As the following case shows, the employee should receive that last check in full and on time.

Recent case: The Oakland Police Department hired Courtney Gordon as a police officer and sent her to the police academy for training. She signed an agreement stating that she would repay the city on a sliding scale: the full $8,000 training cost if she left within the first year, with nothing due if she remained on the police force for five years.

Gordon quit before two years had gone by. She got her last paycheck in full, but got nothing for her accrued sick and vacation balances. The police department took those amounts and applied them to her training cost debt. Then it demanded the balance due.

Gordon sued, alleging that the demand for money was illegal under the Fair Labor Standards Act.

The court dismissed her case. It said it was clear that Gordon had agreed to what amounted to a loan for the cost of the training when she became a police officer. Therefore, the demand for payment was legitimate. Plus, it didn’t bring her last check below minimum wage. (Gordon v. City of Oakland, No. 09-16167, 9th Cir., 2010)

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