EMPLOYER MAY SUE EMPLOYEE TO RECOVER TRAINING/EDUCATION COSTS
To increase their human capital, employers are increasingly offering highly specialized training and education to certain employees in exchange for a repayment obligation that require the employees to work for several years until the entire amount is paid; and thus evade being charged for their training. A recent case decided by the Puerto Rico Supreme Court upheld the validity of such agreements.
In Oriental Financial Services v Jose Juan Nieves, 2007 TSPR 193, a financial institution agreed to pay an employee for his stockbroker training and licensing. The employee became licensed but left the company before the full amount of the training costs had been discharged. The employer sued to recover costs.
While the employer was unable to justify the training costs, the court nevertheless held that such contracts were valid if they met certain criteria. The court did not rule on whether a 4-year term was reasonable.
Some of the critical factor are:
- "The amount of any repayment for the cost of training should be commensurate with its actual original cost to the employer. "
- "The duration of the obligation to remain with that employer should also be moderate and reasonably correlated to the cost of the training”
- "The agreement must be voluntary and free of any coercion or duress."
- It must be written.
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