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Do I Need to Repay a Sign-On Bonus If I Didn’t Complete My Term of Employment?

On Behalf of | Mar 10, 2014 | Firm News

In most cases, employees who voluntarily terminate their employment before a certain timeframe must repay the sign-on bonus they were given when they started the job. For example, if Joe agrees to take a sign-on bonus that stipulates he must stay with the company for one year, leaving his job voluntarily nine months in would require him to repay his bonus. Some employment contracts allow individuals to repay a pro-rated amount of their bonus as credit for time served with the company. If Joe’s contract followed this model, he would owe only a fraction of his bonus to the company since he worked for them for nine months.

All too often, individuals hear the tempting offer of a sign-on bonus and fail to look at the conditions attached. Other individuals take the money and use it right away, without being sure the job they have agreed to will work out. This leaves many in the tight spot of having to either beg their employer for mercy or figure out a repayment plan. Let’s say Joe’s contract stipulates he would owe his company the full sign-on bonus if he leaves before his first year is up, but Joe’s contract fails to give any timeframe for this repayment. Joe could offer smaller repayment sums and still be true to the conditions of his contract, since no timeline was attached.

For many individuals in this situation, the job they thought they took turned out to be entirely different than the description they originally saw, or they realized their new employer was unbearable. While not all of these employees will have recourse, some may be eligible to sue their employer for breach of contract, or for failing to uphold their end of the responsibilities listed in the contract.

If you are faced with repaying a sign-on bonus, a skilled Houston business attorney can review your employment contract and help you understand your options. With more than 28 years of business law experience, I have worked with a variety of clients, providing guidance and working toward the best solution possible for each of their situations. Schedule a confidential consultation to discuss your concerns – contact Patricia M. Davis, Attorney at Law today.