Reembursement of relocation expenses

I have been employed by my company in Ohio for 5 months in a Director level position. This position is not what it was described to me and therefore, I would like to ask to pursue other employment. I do not have a contract, am emplyed contract-at-will. My offer letter did not indicate any requirement to reemburse the company for my relocation expenses. However, on my first day of employment, I was required to sign a document which indicated I acknowledged that if I left within 12 months, I had to reemburse the company for all relo expenses by signing a promissory note. Upon reviewing my file today, I now canot find this document.

My question is: Was it legal for the company not to put the reembursement requirement in the offer letter? What are my options? Am I legally oblgated to pay back relo expenses?

Jeff Miller

1 answer  |  asked May 25, 2001 08:32 AM [EST]  |  applies to Ohio

Answers (1)

Neil Klingshirn
You may have a contract to repay your relocation expenses

Hi Jeff:

The answer to your question is "maybe yes," you do have an enforceable agreement to repay the relocation expenses. The main issue is whether you received anything in exchange for the promise that you made to do so.

The general rule is that an employment agreement is enforceable against the employee if the employee received "consideration" for making the agreement. Consideration is anything of value.

In your case your employer will say that you received a job and the relocation benefits in exchange for your agreement to pay the relo expenses back if you left within your first 12 months. It sounds, however, like the payback agreement had nothing to do with either the job or the relocation itself, especially if you had started the job and had already moved by the time you signed the pay back agreement. Even if you had not signed the agreement, but your new employer had convinced you to take the job by promising to pay reloctation expenses, you may be able to argue no "new" consideration for the pay back agreement. If you did not receive anything new, the employer arguably cannot enforce the contract in court.

In other employment agreement contexts in Ohio, however, particularly in the non-competition context, courts have allowed employers to get around the no new consideration problem by treating employees at will as getting something valuabe each new day of employment. If that theory of consideration is applied to your pay back agreement, you will not be able to avoid it.

Bottom line: a conservative approach will be to treat the pay back agreement as binding. If you really want to leave, invite the new employer to cover those expenses for you, if you are forced to pay them.

Best regards,

Neil Klingshirn

posted by Neil Klingshirn  |  May 25, 2001 3:18 PM [EST]

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