Ethics of "bonus payback" when quitting a job

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neilpilot
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Re: Ethics of "bonus payback" when quitting a job

Post by neilpilot » Tue Jul 30, 2019 3:53 pm

Sounds like his future employer would like him to start ASAP. Maybe he should tell his current employer he will stay thru Nov 1 only if he can retain some or all of his retention bonus. Otherwise, consider leaving much earlier; I.e. the current employer will not benefit from his retention thru Nov 1.

H-Town
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Re: Ethics of "bonus payback" when quitting a job

Post by H-Town » Tue Jul 30, 2019 3:53 pm

coalcracker wrote:
Tue Jul 30, 2019 12:53 pm
OP here.

To clarify (and perhaps change opinions), he did receive a letter stating terms of departure which included a line like: "corporation will be expecting repayment of $xx,xxx bonus by the last day of your employment." But in an immediate follow up conversation, the HR rep alluded to the fact they may not pursue repayment. :oops:
I don't know what HR rep was thinking. HR rep should keep his/her mouth shut.

OP - I suspect that you'll get more info as the exiting process continues. Just verify the number to see if it's correct and expecting to repay it.

Note that, terms should be negotiable.

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Re: Ethics of "bonus payback" when quitting a job

Post by EddyB » Tue Jul 30, 2019 3:58 pm

neilpilot wrote:
Tue Jul 30, 2019 3:53 pm
Sounds like his future employer would like him to start ASAP. Maybe he should tell his current employer he will stay thru Nov 1 only if he can retain some or all of his retention bonus. Otherwise, consider leaving much earlier; I.e. the current employer will not benefit from his retention thru Nov 1.
The OP indicated that November was the earliest the old employer would "let him leave"---I'd want to know more about how the old employer controls that, and ask whether the new employer would make him whole if he could start in, say, two weeks.

123
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Re: Ethics of "bonus payback" when quitting a job

Post by 123 » Tue Jul 30, 2019 4:01 pm

He should review the terms of his contract. It sounds he had an individual employment contract rather than being a member employee in a negotiated union contract. Due to the potential tax issues that complicate such a situation I would hesitate to repay it until the company came calling for it. They may not do anything. If the company has a standard conventional practice of not enforcing that aspect of the contract it may not be an issue. If the company asks for the return of the funds he should do some discreet investigation to determine if others in similar situations have had recovery efforts taken against them. If the company selectively enforces some contract provisions against some employees but not others it could be violating some EEO regulations.

Depending on state law involved the employer may not be able to withhold or adjust his final paycheck without his consent, and he should not give such consent. If the state involved does not routinely allow adjustment of pay he should not go against the wishes of the people of his state.

Are the executives of the firm required to pay back their bonuses in similar circumstances when they retire?

Maybe he should have retired instead of quit. No reason one can't start another job after one retires.
Last edited by 123 on Tue Jul 30, 2019 4:26 pm, edited 1 time in total.
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rich126
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Re: Ethics of "bonus payback" when quitting a job

Post by rich126 » Tue Jul 30, 2019 4:14 pm

Maybe I missed the explanation but this baffles me -
Unfortunately (or fortunately) he took a position elsewhere and they need him ASAP. November was the earliest his current employer would let him leave.
Unless you are in the military, you can leave a job any time you want. Sure their may be paybacks (relocation, education, etc.) but I don't know how anyone can say "You can't leave now." If a company would prefer you to stay longer, then I would have requested the bonus not be paid back or out the door I'd go. Employers have very little allegiance to their employees and employees should not bend over backwards to appease them in most cases. Do your best job, try to be ethical but anything from giving 2 weeks notice or staying longer is not required and no one should feel obligated to do so.

The longest noticed I gave was 2 weeks. Once you find a new job your motivation, interest, etc. disappears in your current job. Now in my cases, I usually worked it so that I was done the project, or hadn't been assigned to a new one so I didn't leave in a critical time but many companies are managed poorly and then they expect the employee to burden their mistakes. I did leave one job not long after my relocation commitment was gone and the stupid manager inadvertently included me on her email where she was asking "How did he find a job there? Etc.". It wasn't anything bad but I thought it was typical of that company and I was glad to be rid of them.

In the days of no pensions, at will employment laws, etc. don't go overboard to please employers. Unless you live in a one company town or something else weird, move on, they sure will.

Now back to the OP, if the written rule was that you had to stay out the year and I didn't, sure I would pay it back. But if I was given a bonus for worked performed and I decided to resign the next day, I wouldn't feel bad about it because it was something I had earned and there was no rule to do so.

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Re: Ethics of "bonus payback" when quitting a job

Post by wrongfunds » Tue Jul 30, 2019 4:26 pm

If the OP (or the father) has given the notice now to leave in Nov 2019, he must be key member of the corporation who is required to give 6 month notice before leaving.

It does seem somewhat odd that the new job needs for him to join in November but they can't wait until January when both these months are so far ahead. I am amazed at the "urgency" shown by the new employer to get him on board :-)

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Re: Ethics of "bonus payback" when quitting a job

Post by Shallowpockets » Tue Jul 30, 2019 4:43 pm

There are no ethics from the top down in this country, why should there be from the bottom up?
No megacorp ever operated from an ethical position if it was in their interest not to.
This is the way it works now.
The game was changed by the ones at the top

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TomatoTomahto
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Re: Ethics of "bonus payback" when quitting a job

Post by TomatoTomahto » Tue Jul 30, 2019 4:52 pm

Shallowpockets wrote:
Tue Jul 30, 2019 4:43 pm
There are no ethics from the top down in this country, why should there be from the bottom up?
No megacorp ever operated from an ethical position if it was in their interest not to.
This is the way it works now.
The game was changed by the ones at the top
I understand why you feel that way, but I don’t think it’s absolute. I have seen both shady and honorable behaviors in my years at megacorps.
Okay, I get it; I won't be political or controversial. The Earth is flat.

illumination
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Re: Ethics of "bonus payback" when quitting a job

Post by illumination » Tue Jul 30, 2019 4:53 pm

If the person in charge is saying "don't worry about it, it's not a real policy" I don't think it's unethical to see if the company does in fact want it back. All that's required is for them to send the invoice.

Now do I think it would be unethical if you say played a game of chicken if they requested the funds back and you wanted to see if they would pursue formal legal action and sue you.

barnaclebob
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Re: Ethics of "bonus payback" when quitting a job

Post by barnaclebob » Tue Jul 30, 2019 4:54 pm

greg24 wrote:
Tue Jul 30, 2019 3:44 pm
coalcracker wrote:
Tue Jul 30, 2019 12:53 pm
To clarify (and perhaps change opinions), he did receive a letter stating terms of departure which included a line like: "corporation will be expecting repayment of $xx,xxx bonus by the last day of your employment."
For those who are saying the company needs to ask him to pay it....
They also need to provide a method to do so. I bet they have no actual process in place to get the bonus back and properly report it to the IRS.

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Re: Ethics of "bonus payback" when quitting a job

Post by Soon2BXProgrammer » Tue Jul 30, 2019 5:02 pm

coalcracker wrote:
Tue Jul 30, 2019 12:14 pm
My father gave notice that he will be quitting his job in November 2019. Per the language of his contract, he is required to payback the entirety of a bonus (low-mid 5 figures) which was distributed end of 2018, if he leaves the position anytime in 2019. He inquired about paying back a portion of the bonus given he is working most of 2019, but this request was denied.

He works for a subsidiary of a large regional corporation (20,000+ employees), and he would be required to pay the bonus back to "the corporation." When speaking with the HR representative at his offices, he was told something to the effect that the rep would be very surprised if the corporation would pursue repayment if he decided to not pay it back *winkwinknudgenudge*. He was surprised and a bit taken aback.

Would you consider delaying the payback until if/when corporate comes a-knocking at some point in the future? Legally, if they call his bluff, he will need to pay back per his contract. But the amount of money is nothing to sneeze at, and he will have "earned" at least some of the bonus by working most of 2019.

p.s. I can give more details in necessary, but would like to keep it vague to protect anonymity.

Edit: Staying until 1/1/2020 is not an option. His future employer needs him before that time, and is unwilling to let him stay the year.

I can't speak about that megacorp, but i know of one that they will automatically attempt to withhold all debts from the last paycheck that is after the last day of work. This could be your normal salary or your saved vacation, etc. If you still owe money after that, they automatically send a bill.

The manager and most "general HR" people are normally clueless how it works because they don't face it often.

I've seen this clawedback for education benefits, relocation benefits, etc. anything that had a time period of retention post benefit to the employee.
Last edited by Soon2BXProgrammer on Tue Jul 30, 2019 5:03 pm, edited 2 times in total.

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TomatoTomahto
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Re: Ethics of "bonus payback" when quitting a job

Post by TomatoTomahto » Tue Jul 30, 2019 5:02 pm

This might be why all the retention bonuses I’m familiar with are granted with a known vesting schedule, but not paid in advance with a clawback provision. I guess they’re slightly more effective (not in this case) when given up front, as people will experience the loss more acutely if they actually have to pay it back rather than not receive it.

Presumably, this is not the only retention bonus the company has ever given. I can’t imagine them being very effective if HR tells people they will fold like a cheap suit if you terminate prematurely. What a goat rodeo!
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Ethics of "bonus payback" when quitting a job

Post by Broken Man 1999 » Tue Jul 30, 2019 5:06 pm

TomatoTomahto wrote:
Tue Jul 30, 2019 4:52 pm
Shallowpockets wrote:
Tue Jul 30, 2019 4:43 pm
There are no ethics from the top down in this country, why should there be from the bottom up?
No megacorp ever operated from an ethical position if it was in their interest not to.
This is the way it works now.
The game was changed by the ones at the top
I understand why you feel that way, but I don’t think it’s absolute. I have seen both shady and honorable behaviors in my years at megacorps.
Yep. After my accident for months DW was considered "at work" if she signed on to her laptop. At the time we both worked for same MegaCorp.

Same company, a hourly employee who had cancer had exhausted his sick time, but his management told his workgroup that anyone who said they might have seen "Joe" at work was good enough for them to pay him. Sure, it was a sham, but pretty dang supportive of the young man who needed a paycheck.

Some MegaCorps were very supportive of their employees, not sure if would fly today. Nah, no way.

Broken Man 1999
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Re: Ethics of "bonus payback" when quitting a job

Post by Watty » Tue Jul 30, 2019 5:07 pm

wrongfunds wrote:
Tue Jul 30, 2019 3:31 pm
How are the taxes and deduction handled on a "negative paycheck" ?

Assuming the bonus check received in 2018 was for $10K. OP had paid taxes (and other deduction). OP would have been lucky to see $5K in his bank account.

Does he now write $10K check to the employer? And does he then files amended tax returns? How does he get the FICA back? Or only federal and state taxes are deducted from the bonus check? What about 401K deducted from the original bonus check?

Do you see how complicated this becomes? Only if bonus and claw-back happens in same FY year, it could be handled by the payroll.
That was might thought too.

It would also impact the company since if they tried backing out a 2018 payment that could affect their books and it would be an area that would be ripe for abuse to make their numbers look better by shifting expenses from one fiscal year to another to cook the books.

My memory is sort of vague but I recall hearing of a retention bonus that was in the form of an interest free loan that would be forgiven on a certain date if the specified terms were met. I would suspect that your Dad's retention bonus was something like that and would not be reported on his taxes until the loan was forgiven on Dec 31st, 2019.

It would be good to have an accountant or lawyer review this but I suspect that he will need to pay it back.

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Re: Ethics of "bonus payback" when quitting a job

Post by HawkeyePierce » Tue Jul 30, 2019 5:24 pm

Here's my experience with leaving one of the big consulting companies. I had a signing bonus which I was supposed to return if I left within a year of starting.

I gave my notice six months after starting the job. I was leaving because the job wasn't what I'd been hired to do (literally they had me in a completely different function). I told them I was keeping the signing bonus as a fee for my trouble.

I received the standard letter about repaying before I left the company. I didn't repay. The kept my unused PTO but paid out my salary.

A few months later I get another letter saying I need to pay them back. I have a lawyer buddy look at it and he laughs. He sends a reply on his letterhead via certified mail and we never get a response.

A year later, another letter, same thing. Another certified letter, once again no response.

Another year goes by and I get another letter. This one I just ignore.

Four years later and I haven't gotten any more letters.

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Re: Ethics of "bonus payback" when quitting a job

Post by HEDGEFUNDIE » Tue Jul 30, 2019 5:26 pm

HawkeyePierce wrote:
Tue Jul 30, 2019 5:24 pm
Here's my experience with leaving one of the big consulting companies. I had a signing bonus which I was supposed to return if I left within a year of starting.

I gave my notice six months after starting the job. I was leaving because the job wasn't what I'd been hired to do (literally they had me in a completely different function). I told them I was keeping the signing bonus as a fee for my trouble.

I received the standard letter about repaying before I left the company. I didn't repay. The kept my unused PTO but paid out my salary.

A few months later I get another letter saying I need to pay them back. I have a lawyer buddy look at it and he laughs. He sends a reply on his letterhead via certified mail and we never get a response.

A year later, another letter, same thing. Another certified letter, once again no response.

Another year goes by and I get another letter. This one I just ignore.

Four years later and I haven't gotten any more letters.
What was the reasoning in your letters? Unenforceable in your state?

wrongfunds
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Re: Ethics of "bonus payback" when quitting a job

Post by wrongfunds » Tue Jul 30, 2019 5:27 pm

On the other hand, it is *extremely common* for new graduates of excellent schools to be given "incentive bonus" for early commitment (aka early acceptance of the job starting in July Next Year) paid out in September of *this* year. Employer wants the candidate to stop looking for better offer. The school wants employer to NOT put such a restriction until all the employers had a chance to interview the school. The way to get around is to have different "incentive bonus" and associated drop-dead date and "sign-on bonus" and different (and later) drop-dead date.

The "incentive bonus" is given as straight payment. I don't recall how it was handled from tax perspective. For a young yet to graduate student, this is *lot* of money for partying in the last year of the school and there is no way for her to repay this amount if she did NOT join the company next year. I think sign-on bonus is given *after* the 1st day on the job.

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Re: Ethics of "bonus payback" when quitting a job

Post by HawkeyePierce » Tue Jul 30, 2019 5:30 pm

HEDGEFUNDIE wrote:
Tue Jul 30, 2019 5:26 pm
HawkeyePierce wrote:
Tue Jul 30, 2019 5:24 pm
Here's my experience with leaving one of the big consulting companies. I had a signing bonus which I was supposed to return if I left within a year of starting.

I gave my notice six months after starting the job. I was leaving because the job wasn't what I'd been hired to do (literally they had me in a completely different function). I told them I was keeping the signing bonus as a fee for my trouble.

I received the standard letter about repaying before I left the company. I didn't repay. The kept my unused PTO but paid out my salary.

A few months later I get another letter saying I need to pay them back. I have a lawyer buddy look at it and he laughs. He sends a reply on his letterhead via certified mail and we never get a response.

A year later, another letter, same thing. Another certified letter, once again no response.

Another year goes by and I get another letter. This one I just ignore.

Four years later and I haven't gotten any more letters.
What was the reasoning in your letters? Unenforceable in your state?
Honestly it's been so many years that I don't even recall but I think it was a fairly feisty letter. I had a screenshot of a chat transcript with an HR rep admitting they'd screwed up when they placed me in my role so my lawyer's attitude was more along the lines of "come and fight us". He figured it was such a small amount (a few grand) that it wouldn't be worth their trouble, especially since we had evidence they'd acted in bad faith.

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Re: Ethics of "bonus payback" when quitting a job

Post by oldcomputerguy » Tue Jul 30, 2019 5:33 pm

rich126 wrote:
Tue Jul 30, 2019 4:14 pm
Maybe I missed the explanation but this baffles me -
Unfortunately (or fortunately) he took a position elsewhere and they need him ASAP. November was the earliest his current employer would let him leave.
Unless you are in the military, you can leave a job any time you want. Sure their may be paybacks (relocation, education, etc.) but I don't know how anyone can say "You can't leave now."
The OP specified that his father was under contract. It's not uncommon for the language of an employment contract to specify a specific period of employment.
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Re: Ethics of "bonus payback" when quitting a job

Post by BeneIRA » Tue Jul 30, 2019 7:19 pm

I have seen some things over the years in HR/Benefits World. I've seen high level executives receive some pretty outlandish things and if they didn't fulfill their contract, it was usually on a case by case basis if they would be pursued. There were a few wink wink, nudge nudge things that happened. We'd continue your coverage thru the end of the month if you left the company even though the SPDs stated it was date of termination. No, we would not put it in writing, but that's how it was. If you didn't pay your bill, nothing would happen and we wouldn't go after you. No, you will not get that from me in writing. So on and such with.

Ethically, yes, your relative should repay the money. I always like to "keep my side of the street clean." Yes, employers have wronged me, but I have always felt better about being a good sport and not trying to take advantage on the way out. If your dad had any excess PTO, he possibly could have used it to bridge the service. Even if the company required working on the last day, then just take a PTO day at the other job and work, keep the retention bonus.

If your dad doesn't plan on coming back to this employer, as in, is positive they won't be needed in the future, I don't see why he couldn't leave earlier. Maybe you'll tell me it is something in the medical field, but everyone is replaceable and I can't imagine he is truly needed for over three months. Two weeks is standard, three is generous. Holding someone hostage for almost four months, unless it is a contractual obligation, is crazy.

Good Listener
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Re: Ethics of "bonus payback" when quitting a job

Post by Good Listener » Tue Jul 30, 2019 7:26 pm

I think I would retitle the subject line. This is not an ethical question as it is obvious what is ethical. It is basically a legal question. I would pay it back myself as I signed a contract and said I would.
Last edited by Good Listener on Wed Jul 31, 2019 7:13 pm, edited 1 time in total.

T4REngineer
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Re: Ethics of "bonus payback" when quitting a job

Post by T4REngineer » Tue Jul 30, 2019 7:46 pm

If I understand this correctly, your father agreed to take a lump sum of money that stipulated he stay to the end of 2019 otherwise forfeit. He has written request to pay this back because he is choosing to leave in Nov. but because he ALMOST stayed somehow only a part of it should be paid back?

How on earth is this even a question,I would love to post a "contractor paid upfront, did 90% job and wants to stop work , can not finish job due to taking a higher profit/easier work elsewhere, offered 10% back, should I take it or fight it? or even better frame it in some sort of bonus for finishing early such as paid an extra 10,000 to finish in Nov, non expedited job was expected in Jan - took till December but contractor only offering 5,000 back........that would go over well here.

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Re: Ethics of "bonus payback" when quitting a job

Post by DJP1944 » Tue Jul 30, 2019 8:14 pm

Trader Joe wrote:
Tue Jul 30, 2019 12:27 pm
coalcracker wrote:
Tue Jul 30, 2019 12:21 pm
anonenigma wrote:
Tue Jul 30, 2019 12:19 pm
Delay departure to 1/1/20?
Unfortunately (or fortunately) he took a position elsewhere and they need him ASAP. November was the earliest his current employer would let him leave.
The expected loss of a bonus should have been negotiated with the new employer, typically as a sign-on bonus. In all scenarios I would pay the bonus back. Best of luck.
X2

Sounds like it's too late, but new employer should factor this into their offer if they have the information.

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Re: Ethics of "bonus payback" when quitting a job

Post by KyleAAA » Tue Jul 30, 2019 8:18 pm

A duly appointed company representative more or less told you that you didn’t have to repay it. Case closed. If you think if will harm you not to repay it, then do so. There are no ethical considerations at play. If you choose to take your chances, you will have to deal with the consequences. Either choice is equally ethical.

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Re: Ethics of "bonus payback" when quitting a job

Post by KyleAAA » Tue Jul 30, 2019 8:25 pm

dcabler wrote:
Tue Jul 30, 2019 2:05 pm
HEDGEFUNDIE wrote:
Tue Jul 30, 2019 12:44 pm
wilked wrote:
Tue Jul 30, 2019 12:39 pm
If I signed a contract I would live up to it. I am surprised at the folks above who say otherwise.

I work in Engineering, and in my industry it's a small world. I wouldn't want the reputation of someone who tries to wriggle out of an obligation
At megacorps it is not the hiring manager’s job to enforce corporate policy like bonus clawbacks. Even if the bonus is clawed back it sure doesn’t go back into the hiring manager’s budget. Likely the hiring manager won’t even know whether the bonus is repaid or not.

Why should the OP be concerned about the Megacorp’s lack of operational procedures?
Hired a guy into my team at engineering megacorp with a sign-on bonus. He left after 6 months to pursue greener pastures and the employment agreement stipulated that he would owe a portion of his sign-on bonus back (A pro-rated amount). He tried to negotiate not having to pay any of it back with HR and they brought it to me, the hiring manager, and asked my opinion. While it wasn't my job to enforce it, the signing bonus did come out of my budget and I requested that the employment agreement be enforced. It was. Funny thing is that several years later, his resume' appeared on my desk again. You can probably guess what became of it. :D As noted above, the engineering world is smaller than people realize. And memories are a lot longer than people may realized.
Wait, you tossed his resume merely because he asked if he could pay back a portion of his signing bonus??? Penalizing somebody simply for attempting to negotiate reflects a lot more on you than him.

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Re: Ethics of "bonus payback" when quitting a job

Post by Watty » Tue Jul 30, 2019 8:27 pm

BeneIRA wrote:
Tue Jul 30, 2019 7:19 pm
If your dad doesn't plan on coming back to this employer, as in, is positive they won't be needed in the future, I don't see why he couldn't leave earlier.
Being in the medical field depending on what he does there could be a possibility of a malpractice lawsuit possibly after he has left the job with that company. I never worked in that field but leaving on good terms could be very important.

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Re: Ethics of "bonus payback" when quitting a job

Post by mighty72 » Tue Jul 30, 2019 8:34 pm

The company has asked for it and OP's dad should pay for it or renegotiate with new company for either a later join date or more joining bonus. Even if the company doesn't file lawsuit, it will be on his file. Also, the manager, HR, etc would know. Trust me, people like to talk and if the amount is big enough, it will be a story that will be shared with others. Most of the times, name doesn't come up but sometimes it does. These people might even change their jobs and might be in a position to offer a job to the dad. I don't see any positive coming out of this except the short term gain of the bonus

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Re: Ethics of "bonus payback" when quitting a job

Post by mighty72 » Tue Jul 30, 2019 8:36 pm

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Re: Ethics of "bonus payback" when quitting a job

Post by NYC_Guy » Tue Jul 30, 2019 8:56 pm

mighty72 wrote:
Tue Jul 30, 2019 8:36 pm
KyleAAA wrote:
Tue Jul 30, 2019 8:18 pm
A duly appointed company representative more or less told you that you didn’t have to repay it. Case closed. If you think if will harm you not to repay it, then do so. There are no ethical considerations at play. If you choose to take your chances, you will have to deal with the consequences. Either choice is equally ethical.
The contract is in writing, the conversation is not. It has no value in court of law or opinion
This is legal advice, and it’s bad legal advice. And I am a lawyer.

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Re: Ethics of "bonus payback" when quitting a job

Post by keith6014 » Tue Jul 30, 2019 9:05 pm

Watty wrote:
Tue Jul 30, 2019 5:07 pm
wrongfunds wrote:
Tue Jul 30, 2019 3:31 pm
How are the taxes and deduction handled on a "negative paycheck" ?

Assuming the bonus check received in 2018 was for $10K. OP had paid taxes (and other deduction). OP would have been lucky to see $5K in his bank account.

Does he now write $10K check to the employer? And does he then files amended tax returns? How does he get the FICA back? Or only federal and state taxes are deducted from the bonus check? What about 401K deducted from the original bonus check?

Do you see how complicated this becomes? Only if bonus and claw-back happens in same FY year, it could be handled by the payroll.
That was might thought too.

It would also impact the company since if they tried backing out a 2018 payment that could affect their books and it would be an area that would be ripe for abuse to make their numbers look better by shifting expenses from one fiscal year to another to cook the books.

My memory is sort of vague but I recall hearing of a retention bonus that was in the form of an interest free loan that would be forgiven on a certain date if the specified terms were met. I would suspect that your Dad's retention bonus was something like that and would not be reported on his taxes until the loan was forgiven on Dec 31st, 2019.

It would be good to have an accountant or lawyer review this but I suspect that he will need to pay it back.
I too am curious. I was taxed near 55% (Fed+State) for a sign on bonus. If I get fired or leave the job how do taxes work on something like that?

oilrig
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Re: Ethics of "bonus payback" when quitting a job

Post by oilrig » Tue Jul 30, 2019 9:16 pm

HawkeyePierce wrote:
Tue Jul 30, 2019 5:24 pm
Here's my experience with leaving one of the big consulting companies. I had a signing bonus which I was supposed to return if I left within a year of starting.

I gave my notice six months after starting the job. I was leaving because the job wasn't what I'd been hired to do (literally they had me in a completely different function). I told them I was keeping the signing bonus as a fee for my trouble.

I received the standard letter about repaying before I left the company. I didn't repay. The kept my unused PTO but paid out my salary.

A few months later I get another letter saying I need to pay them back. I have a lawyer buddy look at it and he laughs. He sends a reply on his letterhead via certified mail and we never get a response.

A year later, another letter, same thing. Another certified letter, once again no response.

Another year goes by and I get another letter. This one I just ignore.

Four years later and I haven't gotten any more letters.
I have worked in HR for several fortune 100 companies. It is my understanding that in your situation and the OP's, if you do not pay back the bonus then the company can/will turn your case over to collections and let them deal with it after a year. I know for sure that one of the previous company's I used to work for did that. Thats only the case if you get some kind of written notification from the company about paying back the bonus, which appears to be the case based on OP's reply.

Regardless of what the HR person told your dad, I would pay back the bonus if he received that written notification from the company. It's not worth the potential hit to your credit and getting harassed by debt collectors.

Iridium
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Re: Ethics of "bonus payback" when quitting a job

Post by Iridium » Tue Jul 30, 2019 9:27 pm

barnaclebob wrote:
Tue Jul 30, 2019 4:54 pm
greg24 wrote:
Tue Jul 30, 2019 3:44 pm
coalcracker wrote:
Tue Jul 30, 2019 12:53 pm
To clarify (and perhaps change opinions), he did receive a letter stating terms of departure which included a line like: "corporation will be expecting repayment of $xx,xxx bonus by the last day of your employment."
For those who are saying the company needs to ask him to pay it....
They also need to provide a method to do so. I bet they have no actual process in place to get the bonus back and properly report it to the IRS.
Depending on the size, I would guess they do. Granted, slightly different situation, but I was overpaid by a Megacorp (they kept depositing my salary after I quit). It took them something like 3 months, but they eventually got around to sending me a form letter asking me to pay them back and even included a helpful info sheet on the tax implications. The fact that it was a generic form letter sticks with me to this day: overpaid salaries are apparently common enough that not only do they have an official process, they couldn't even be bothered to write a personal letter.

bstewie
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Re: Ethics of "bonus payback" when quitting a job

Post by bstewie » Tue Jul 30, 2019 9:30 pm

Do the right thing, pay it back. The proper way to handle this specific item of the transition was during negotiations with both parties to ensure the pro-rated amount remained in your pockets.

MathIsMyWayr
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Re: Ethics of "bonus payback" when quitting a job

Post by MathIsMyWayr » Tue Jul 30, 2019 9:36 pm

You willingly signed a contract and are breaking it for your own benefit (not unable to live up to the contract due to a circumstance beyond your control such as illness) ... what is the contract for?

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willthrill81
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Re: Ethics of "bonus payback" when quitting a job

Post by willthrill81 » Tue Jul 30, 2019 9:41 pm

HomerJ wrote:
Tue Jul 30, 2019 12:26 pm
greg24 wrote:
Tue Jul 30, 2019 12:22 pm
If his contract stipulates repayment if he leaves, it would be unethical to attempt to avoid repayment.
Yep. He needs to pay it. He took the other job. He should have asked the other job to make him whole.

If he made the decision that the new job was worth it to lose the bonus, then he should live with that decision.
:thumbsup You make your bed, and then you sleep in it.
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bhsince87
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Re: Ethics of "bonus payback" when quitting a job

Post by bhsince87 » Tue Jul 30, 2019 10:08 pm

Since you specifically said "ethics", then yes, by all means, if he signed a contract stipulating the rules, he should pay it back.

"Legally" is a different question altogether.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

NoFred
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Re: Ethics of "bonus payback" when quitting a job

Post by NoFred » Tue Jul 30, 2019 10:15 pm

Yes the words agreed to are to pay it back.

I think any employment-based clawback is garbage, I believe work in = money out, but that’s what was agreed to.

Choose to fight but be ready to die on that hill, ethically follow the letter of the law, give it back
-NoFred

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Re: Ethics of "bonus payback" when quitting a job

Post by HawkeyePierce » Tue Jul 30, 2019 10:17 pm

oilrig wrote:
Tue Jul 30, 2019 9:16 pm
HawkeyePierce wrote:
Tue Jul 30, 2019 5:24 pm
Here's my experience with leaving one of the big consulting companies. I had a signing bonus which I was supposed to return if I left within a year of starting.

I gave my notice six months after starting the job. I was leaving because the job wasn't what I'd been hired to do (literally they had me in a completely different function). I told them I was keeping the signing bonus as a fee for my trouble.

I received the standard letter about repaying before I left the company. I didn't repay. The kept my unused PTO but paid out my salary.

A few months later I get another letter saying I need to pay them back. I have a lawyer buddy look at it and he laughs. He sends a reply on his letterhead via certified mail and we never get a response.

A year later, another letter, same thing. Another certified letter, once again no response.

Another year goes by and I get another letter. This one I just ignore.

Four years later and I haven't gotten any more letters.
I have worked in HR for several fortune 100 companies. It is my understanding that in your situation and the OP's, if you do not pay back the bonus then the company can/will turn your case over to collections and let them deal with it after a year. I know for sure that one of the previous company's I used to work for did that. Thats only the case if you get some kind of written notification from the company about paying back the bonus, which appears to be the case based on OP's reply.

Regardless of what the HR person told your dad, I would pay back the bonus if he received that written notification from the company. It's not worth the potential hit to your credit and getting harassed by debt collectors.
My lawyer didn't believe they'd be able to turn it over to collections in our state without first securing a judgement against me, which wouldn't be worth the trouble given the relatively small amount and would be a headache for them after they ignored my lawyer and had admitted they'd wronged me in writing.

In any case it's been seven years and they've never sent it to collections, and I haven't heard from them in over four years, so I'm not worried in my case. This was a company with 200k+ employees.

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Nestegg_User
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Re: Ethics of "bonus payback" when quitting a job

Post by Nestegg_User » Wed Jul 31, 2019 1:56 am

wrongfunds wrote:
Tue Jul 30, 2019 4:26 pm
If the OP (or the father) has given the notice now to leave in Nov 2019, he must be key member of the corporation who is required to give 6 month notice before leaving.

It does seem somewhat odd that the new job needs for him to join in November but they can't wait until January when both these months are so far ahead. I am amazed at the "urgency" shown by the new employer to get him on board :-)

I'll take a look at the question from another angle:

as OP mentioned that the position is that of a physician, perhaps it's due to either needing to staff so as to maintain a contract or to maintain capabilities due to another announced change that they are aware of,say, maternity leave or other condition.

I can't understand that if the OP is the one who breached the contract that they would be able to determine the remedy; I thought that the one who was breached had that right (but not necessarily the obligation for redress)

Imagine if the physician is, say, a radiologist or dermatologist or other hard to source specialist and that the (former?) employer needed all the specialists on contract to be able to bid for services in response to an RFP or needed certain specialties for applications for drug trials. What would be the remedy then? Might they even have recourse to the new employer?

dcabler
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Re: Ethics of "bonus payback" when quitting a job

Post by dcabler » Wed Jul 31, 2019 6:48 am

KyleAAA wrote:
Tue Jul 30, 2019 8:25 pm
dcabler wrote:
Tue Jul 30, 2019 2:05 pm
HEDGEFUNDIE wrote:
Tue Jul 30, 2019 12:44 pm
wilked wrote:
Tue Jul 30, 2019 12:39 pm
If I signed a contract I would live up to it. I am surprised at the folks above who say otherwise.

I work in Engineering, and in my industry it's a small world. I wouldn't want the reputation of someone who tries to wriggle out of an obligation
At megacorps it is not the hiring manager’s job to enforce corporate policy like bonus clawbacks. Even if the bonus is clawed back it sure doesn’t go back into the hiring manager’s budget. Likely the hiring manager won’t even know whether the bonus is repaid or not.

Why should the OP be concerned about the Megacorp’s lack of operational procedures?
Hired a guy into my team at engineering megacorp with a sign-on bonus. He left after 6 months to pursue greener pastures and the employment agreement stipulated that he would owe a portion of his sign-on bonus back (A pro-rated amount). He tried to negotiate not having to pay any of it back with HR and they brought it to me, the hiring manager, and asked my opinion. While it wasn't my job to enforce it, the signing bonus did come out of my budget and I requested that the employment agreement be enforced. It was. Funny thing is that several years later, his resume' appeared on my desk again. You can probably guess what became of it. :D As noted above, the engineering world is smaller than people realize. And memories are a lot longer than people may realized.
Wait, you tossed his resume merely because he asked if he could pay back a portion of his signing bonus??? Penalizing somebody simply for attempting to negotiate reflects a lot more on you than him.
He wanted to not have to pay back any of the bonus, not just a portion. No other option would do for him. And, what I didn't say was that he was a poor performer and that there was good reason to believe that he accepted the position only for a quick cash infusion (the bonus) with no intention of ever sticking around.

LordB
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Re: Ethics of "bonus payback" when quitting a job

Post by LordB » Wed Jul 31, 2019 6:55 am

coalcracker wrote:
Tue Jul 30, 2019 12:21 pm
anonenigma wrote:
Tue Jul 30, 2019 12:19 pm
Delay departure to 1/1/20?
Unfortunately (or fortunately) he took a position elsewhere and they need him ASAP. November was the earliest his current employer would let him leave.
Is he actually contractually obligated to stay until current employer lets him leave? Can the new job start date be moved up?

If the answer to both these is yes then I would simply tell the company that if you will not pro-rate the bonus then I am changing my notice date to today and walk out. If you want to be semi-nice then make it 2 weeks notice.

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coalcracker
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Re: Ethics of "bonus payback" when quitting a job

Post by coalcracker » Wed Jul 31, 2019 7:40 am

OP here. I'll try to address some of the questions/comments as much as I can.

*His contract stipulates a 3-month out, fairly standard in medicine. As some have pointed out, anything is negotiable but he chose not to fight this.

*The bonus structure is a bit arcane. The "retention bonus" is paid annually (yes every year), such that the only way to avoid repayment with 100% certainty is to quit exactly on 1/1.

*I don't know if he could still negotiate a sign-on bonus with the new position, or if that ship has sailed.

*From my understanding, he has no real fear of burning bridges at his current employer. The money comes from and would be paid back to "corporate;" he doesn't think think any individual would hold a grudge were he to defer repayment. The biggest danger IMO would be a ding to his credit report if it's sent to a collection agency, but I imagine corporate would have to make a good faith effort to collect from him first?

cherijoh
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Re: Ethics of "bonus payback" when quitting a job

Post by cherijoh » Wed Jul 31, 2019 8:09 am

KyleAAA wrote:
Tue Jul 30, 2019 8:25 pm
dcabler wrote:
Tue Jul 30, 2019 2:05 pm
HEDGEFUNDIE wrote:
Tue Jul 30, 2019 12:44 pm
wilked wrote:
Tue Jul 30, 2019 12:39 pm
If I signed a contract I would live up to it. I am surprised at the folks above who say otherwise.

I work in Engineering, and in my industry it's a small world. I wouldn't want the reputation of someone who tries to wriggle out of an obligation
At megacorps it is not the hiring manager’s job to enforce corporate policy like bonus clawbacks. Even if the bonus is clawed back it sure doesn’t go back into the hiring manager’s budget. Likely the hiring manager won’t even know whether the bonus is repaid or not.

Why should the OP be concerned about the Megacorp’s lack of operational procedures?
Hired a guy into my team at engineering megacorp with a sign-on bonus. He left after 6 months to pursue greener pastures and the employment agreement stipulated that he would owe a portion of his sign-on bonus back (A pro-rated amount). He tried to negotiate not having to pay any of it back with HR and they brought it to me, the hiring manager, and asked my opinion. While it wasn't my job to enforce it, the signing bonus did come out of my budget and I requested that the employment agreement be enforced. It was. Funny thing is that several years later, his resume' appeared on my desk again. You can probably guess what became of it. :D As noted above, the engineering world is smaller than people realize. And memories are a lot longer than people may realized.
Wait, you tossed his resume merely because he asked if he could pay back a portion of his signing bonus??? Penalizing somebody simply for attempting to negotiate reflects a lot more on you than him.
I think you may have missed the section of dcabler's post I highlighted. This guy was already only being asked to payback a portion of a sign-on bonus. (Total fair IMO). He didn't want to payback anything even though he agreed to do so when he accepted the sign-on bonus.

If they had wanted the whole thing back and he tried to negotiate a partial payback that would have been one thing. But he obviously didn't care about burning bridges at his old company, so why give him a second chance to do the same thing or similar again? Sign-on bonuses stipulate that you stay how long - a year? 18 months? Who needs a job-hopper like that? Fool me once, shame on you....

I wouldn't have considered his resume a second time either. If he wanted to negotiate, it should have been with the new company to get them to make him whole since they were getting what they wanted. He may have already used it in salary negotiations and then tried to double dip. Karma.

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8foot7
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Re: Ethics of "bonus payback" when quitting a job

Post by 8foot7 » Wed Jul 31, 2019 8:10 am

coalcracker wrote:
Wed Jul 31, 2019 7:40 am


*From my understanding, he has no real fear of burning bridges at his current employer. The money comes from and would be paid back to "corporate;" he doesn't think think any individual would hold a grudge were he to defer repayment. The biggest danger IMO would be a ding to his credit report if it's sent to a collection agency, but I imagine corporate would have to make a good faith effort to collect from him first?
If he is really only worried about a ding on his report, then I might weigh the value of the bonus against the cost of a ding which devalues every year that passes. If he has no real need to borrow money in the next couple of years, I think a collection entry is probably worth holding on to a five-figure amount, especially if his credit is good otherwise. I wouldn't mess up my credit over a few hundred or even a grand, but there is a line and >10k is there for me.

Plus if push did come to shove he can always make an arrangement to pay in exchange for deletion. Usually if it comes to that, non-banks want the money more than they want to punish via bad credit history.

(This is all ethics aside -- I did post above that if this is truly a retention bonus and he's leaving, I think he has to cough it up.)

Is there a risk of a lawsuit? I mean, there is always a risk, but have these folks been litigious with previous employees?

johnubc
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Re: Ethics of "bonus payback" when quitting a job

Post by johnubc » Wed Jul 31, 2019 8:14 am

What was signed when the Retention Bonus was distributed? What does that wording say.

Coming after the fact and saying, oh, you are leaving you need to pay it back it not valid. Maybe the HR Rep is saying, do not pay it back - as they know there is no legal recourse for the firm to come after you to get it.

GrowthSeeker
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Re: Ethics of "bonus payback" when quitting a job

Post by GrowthSeeker » Wed Jul 31, 2019 8:17 am

Don't involve the new employer.
There are no longer any ethics between hospital administrations and employed physicians.

OP's father has a contract, and this should be read. But the "retention bonus" may or may not be discussed in the contract which was signed when he first took the job, not sometime later when the retention bonus came up.
So read what is in the contract. OP's dad should research how the bonus was taxed: was it on a 1099 or W-2?

If the retention bonus is not discussed in the contract, then what written contract occurred at the time of the retention bonus? Usually these things, from what I've seen, are loans that you don't have to pay back. If so, there is a written document signed by your father. Do what that says. If there is no written documentation that specifically addresses the retention bonus, that how is this enforceable? Paying out a bonus and simply "calling it" a retention bonus doesn't "make it" a retention bonus. Time for a lawyer.

Perhaps there is reason the OP's father could leave "for cause". Re-read the contract. If so, maybe that would have some impact on the responsibility to pay back the "retention bonus". Time for a lawyer.

The verbal comment of the HR employee is worthless legally, but useful as an insight into the potential weakness of management's case.

Finally, if it is clear the bonus must be paid back, I would anticipate a tax nightmare because the hospital will find a way to not send the correct documentation to the IRS, and state and local equivalents. I guess that would be an amended 1099 or W-2. But what I would do if I decided to pay this back would be to start a dialogue in writing with the employer stating you will pay the money back once these details have been worked out and explained to your satisfaction. e.g. Bonus was say $20k, dad paid $6k in fed, state, local taxes. Dad sends employer a check for $20k. 1099/W2 never corrected. End of story, no go getting the tax money back.

In particular: suppose this was really just a bonus and they merely "called it" a retention bonus. There might not even be a mechanism to correct the taxation if "out the goodness of his heart" the OP's dad sends them a check simply because they asked nicely. It would be as if he gave the employer a gift, not that the employer was refunded salary.
Last edited by GrowthSeeker on Wed Jul 31, 2019 8:22 am, edited 1 time in total.
Just because you're paranoid doesn't mean they're NOT out to get you.

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coalcracker
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Re: Ethics of "bonus payback" when quitting a job

Post by coalcracker » Wed Jul 31, 2019 8:19 am

8foot7 wrote:
Wed Jul 31, 2019 8:10 am
Is there a risk of a lawsuit? I mean, there is always a risk, but have these folks been litigious with previous employees?
This is an important consideration, thanks for bringing it up.

He is attempting to contact other individuals who have left in recent years. Their experiences may go a long way to inform his ultimate decision.

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8foot7
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Re: Ethics of "bonus payback" when quitting a job

Post by 8foot7 » Wed Jul 31, 2019 8:20 am

I do still think that once you start saying that you're happy to pay back the amount of money you received as a net benefit once they have adjusted your taxes and other costs to reflect you did not receive the bonus, this will go away. That's a lot of work.

My wife was overpaid for several pay periods from a very large employer after she quite (think one of the places you go to get supplies for weekend house projects). She attempted to make it right several times, especially in the same year when it would have been easy to enter reverse payroll records and square everything up. Their HR department simply refused to do anything about it other than stopping continued payments. We took the position that we would permit them to debit our account only to the extent they also reversed everything else so that it was like the overpayment never happened.

These attempts to fix went on for months and then a couple of times before tax time the next year. (Even the W2 the following year reflected getting this money.) I recall getting on the horn with her with a senior HR guy and saying to him that we are filing on April 15 and at that time we consider these payments final because you all showed no concern for updating your tax records, benefit information, 401k information, or anything and now we have documents that you filed with the government showing you paid us this amount and our taxes are now due based on that. He hemmed and hawed and ultimately said he didn't see a path forward to fixing those entries at that time. So the money became ours.

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coalcracker
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Re: Ethics of "bonus payback" when quitting a job

Post by coalcracker » Wed Jul 31, 2019 8:21 am

johnubc wrote:
Wed Jul 31, 2019 8:14 am
What was signed when the Retention Bonus was distributed? What does that wording say.

Coming after the fact and saying, oh, you are leaving you need to pay it back it not valid. Maybe the HR Rep is saying, do not pay it back - as they know there is no legal recourse for the firm to come after you to get it.
I don't know the exact wording, but it's something like: "if employee leaves voluntarily, they are required to pay back most recent retention bonus."

The comments of the HR rep are what threw him for a loop. I think otherwise he would have assumed he just had to pay back the bonus.

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Re: Ethics of "bonus payback" when quitting a job

Post by carolinaman » Wed Jul 31, 2019 8:22 am

HomerJ wrote:
Tue Jul 30, 2019 12:26 pm
greg24 wrote:
Tue Jul 30, 2019 12:22 pm
If his contract stipulates repayment if he leaves, it would be unethical to attempt to avoid repayment.
Yep. He needs to pay it. He took the other job. He should have asked the other job to make him whole.

If he made the decision that the new job was worth it to lose the bonus, then he should live with that decision.
+1. I totally agree with HomerJ. He could have told new employer that either they make him whole or he will report 1/1/20 or thereafter. Why didn't he do this?

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