By Chron Contributor Updated October 06, 2020
Employer tuition reimbursem*nt programs are helpful tools for improving your skills and advancing your career, but can be a double-edged sword, depending on your employer’s policies. Depending on the wording of your agreement, you might need to reimburse the company for the tuition they paid for a seminar, certification study course or college classes. Knowing what to look for in your agreement before you sign it will help you prevent unwanted surprises.
Know your Reimbursem*nt Rules
Employers require tuition reimbursem*nt payback agreements to avoid training employees who use their education to get a new job working elsewhere. Companies legally protect themselves by making employees pay back reimbursem*nts if the employee leaves the company within a specific time frame of completing the education.
Because employees leave companies for different reasons, not all companies require employees to pay back a tuition reimbursem*nt in every instance. Check the wording of your agreement to see if you need to pay back tuition in the event of a layoff, termination for cause, voluntary separation or other specific situation.
Layoffs vs. Quitting
Some tuition reimbursem*nt agreements do not penalize the employee if the company terminates the employee’s work contract through no fault of the employee’s. If you are laid off, an employer will often not require you to repay training and education costs, since you did not breach the contract. By not requiring repayment, the company keeps the tax deduction it took for your tuition reimbursem*nt.
Termination for Cause
If you are fired for cause, such as insubordination, failure to perform your duties, harassment, discrimination, theft or some other serious reason, you might be required to pay back your tuition. Employers rely on tuition reimbursem*nt laws to help prevent employees from purposely getting fired so they don’t have to repay the cost of a master’s degree, for example. If you’re terminated for cause, remind your employer that making you repay your tuition will carry tax consequences for the company if it’s taken all or part of the reimbursem*nt as a tax deduction.
Verify Payback Reasons
The most common scenario that triggers a tuition reimbursem*nt repayment agreement is an employee voluntary leaving a company. Even if the reason is retirement, pregnancy, disability or other reason that does not include going to work for another company, the employee is not providing the employer the benefit the company had in mind when it agreed to pay for the employee’s education.
If you think you’ve been harassed into voluntarily leaving, contact an attorney, who might be able to arrange for you not to have to repay the tuition. You might have to sign an agreement that you won’t sue your employer for harassment to get them to agree.
Negotiate Your Own Terms
You might be able to negotiate the terms of your tuition reimbursem*nt, especially if you work at a small company. Have your agreement define the stipulations under which you must repay the tuition, and how you’ll make those payments. For example, stipulate that you will only have to repay your tuition if you voluntarily separate, not if you’re laid off or fired, even for cause.
Set up a payment schedule so you don’t get stuck with a large bill all at once. Put a specific date in the clause that ends it; for example, if you stay longer than three years after completing your education, you won’t need to pay the tuition back.
In addition to college tuition, you can negotiate reimbursem*nts for seminars, workshops, online courses and certification training. You can ask a new employer to pay for your tuition or split it with you as part of your compensation package or signing bonus, since the company will reap the benefit of your increased knowledge.
