Employees Can Be Required to Repay Education Expenses to Employer

The Court of Appeal in USS-POSCO Industries v. Case (Cal.App. 1/26/16) recently held that an employer may require an employee to repay education expenses. In this case, the Defendant employee voluntarily enrolled in a three-year, employer-sponsored educational program. He agreed in writing that if he quit his job within 30 months of completing the program, he would reimburse his employer a prorated portion of program costs. Two months after completing the program, the employee went to work for another employer. When he refused to reimburse the employer, the company sued for breach of contract and unjust enrichment. In granting the employer’s motion for summary judgment, the Court reasoned that the employer’s voluntary, optional training program was just that – completely voluntary. The employee did not have to take the course, and the employer did not force him to do so.

The Court also held that the program did not violate Business and Professions Code 16600, which voids “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind.” Here, the Defendant employee volunteered for the program and agreed to repay the training costs if he left his employment. The agreement did not prohibit or even limit him from working elsewhere, which he in fact did. It only required him to re-pay a prorated part of the training costs.

Finally, the agreement did not violate Labor Code sections 221 to 223, which prohibit employers from recouping, withholding, or secretly paying less than agreed wages.

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