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 You get a phone call from a recruiter and a new job opportunity is presented to you. You go on the interview, wow the potential employer with your work experience and credentials, and land a job offer. In fact, this company wants you so badly and thinks so highly of you, they offer a sign-on bonus to ensure your complete satisfaction in choosing to work with them. You accept the terms, skim over the contract and throw down your John Hancock on the offer letter or employment agreement. Both parties are ecstatic and everyone is happy. Congratulations!
A few months go by and things simply are not working out between you and the employer. Let's face it, there are plenty of occupational therapy jobs out there right now and you are thinking, "this is too stressful, I think I'll resign." There's only one problem-you would have to repay that sizable sign-on bonus because you have not worked there long enough. As a result, you quit and one week later you get a letter from the former employer indicating that you must repay the full amount of the sign-on bonus. What a nightmare, right!?
Most offer letters or employment agreements that are used in this industry specifying how long a therapist must work for an employer before an obligation arises to repay the sign-on bonus. (Do not confuse these agreements with a traditional employment contract, which actually outlines a specific time frame an employee must work for the employer, taking out the "at-will' aspect of an employer-employee relationship-this is common in the C-Suite positions.) Typically, the arranged time of employment is 18-24 months, but it can vary and the term can be negotiated, along with the amount (some companies have a proration formula based on the amount of time remaining in one's obligated employment term). However, my experience is that most OTs fail to negotiate this aspect of the agreement, partly because of lack of experience, but many times because the OT signing the agreement cease to pay attention to the time period he or she is obligating themselves to.
Now, let's change the scenario. Suppose the agreement contains language which states that the employee must repay the sign-on bonus if employment does not last for 24 months. The language is simple and does not provide any further clarification or exceptions in that clause. Here is where the problem lies-it gives the employer too much discretion and makes the performance of the agreement optional. In this scenario, the language of the agreement allows the employer to terminate the employee one day (yes, literally one day) before the employee fully satisfies the 24 month threshold, leaving the employee powerless because based on the terms of the agreement the sign-on bonus must be repaid. These types of contracts are considered illusory and many courts have held that illusory contracts are unenforceable because it defeats the very nature of equitable contracting, coupled with being adverse to sound public policy.
In Vandeventer v. All American Life & Casualty Company, a promise or agreement is illusory if it makes performance entirely optional with the promisor or when it fails to bind the promisor, who retains the option of discontinuing. The employer would assume the role of the promisor and the mere fact that the language contained in an agreement allows an employer to discharge an employee, forcing the employee to pay back the full amount of the sign-on bonus, absent exceptions, contingencies or a pro-rated formula would be illusory, thus, unjust. This is because there is a lack of mutuality of obligation between the employer and employee. However, if the agreement contains language stating that an employee would not be obligated to repay the sign-on bonus if employment is ended by the employer, then mutuality of obligation would exist, making the contact non-illusory and valid.
In case you suspect the employer is trying to "push you out" in order to recover the sign-on bonus, here are a few tips to mitigate potential problems:
Read The Agreement: Agreements regarding employees' obligations to repay bonuses (and such other things as relocation and tuition payments) usually provide that repayment is required under specific conditions.
Review The Employee Handbook or Policy Book: Look out for any required procedures that either (a) your company must follow to terminate an employee, or (b) you must use to file a complaint or grievance. If the employer is not following a required process or procedure, raise an objection about that.
Make a "Record of Good Performance and Good Conduct": I suggest a therapist consider sending the employer an email - very respectfully written, perhaps to your manager's manager - outlining that (a) you are performing and behaving admirably, but that (b) you are concerned a false record is being made that you are performing poorly in order to justify your termination, forcing you to repay the sign on bonus. You might, too, ask that your concerns be investigated. I suggest the email to be sent to your manager's manager, and to the Director of Human Resources.
These three steps may very possibly get you that extra month to avoid repayment. Also, these steps might help prevent a lawsuit, because few lawsuits end happily, especially for employees.
Richard Cheng, JD,OTR/L is the general counsel and a senior executive member at Senior Care Centers, based in Dallas, TX. Previously, he was the general counsel and VP of medical appeals at Century Rehabilitation and an associate attorney at Pearson Randall & Schumacher & LaBore, P.A. where he practiced civil litigation and worked as a staff attorney for Thomson Reuters, Inc. Cheng has successfully conducted multiple trials and was recognized as a finalist in both the Dallas Business Journal and D CEO Magazine/ACC for best corporate counsel. In addition, he was recognized by Texas Tech Health Sciences Center for the 2010 distinguished alumni award and received the 2011 Texas Occupational Therapy Association distinguished service award. Prior to his legal career, Cheng worked as a licensed occupational therapist in rehabilitation, acute care, long term care, outpatient and home health care. He has served as an adjunct faculty at The College of Saint Catherine and Nova Southeastern University and has lobbied in Washington D.C. through AOTA.
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