Collection of sign on bonus

[boxalin]

What is the name of your state? South Carolina

Hi,

I originally signed onto a company and agreed to a sign on bonus of $5,000. I was given the bonus and they paid the taxes. The company wanted me to work for two years. After one year I left the company. They took $2,500 out of my last paycheck. They have then gotten a collection agency involved saying that the balance is $8,500.

I never signed an agreement that I would pay the taxes that they paid, and they clearly are not including the $2,500 that they already took from my pay.

Should I start with basic verification letters to the CA, or is this something I should get an attorney involved for?

Thank you for your time.

 

[LdiJ]

What is the name of your state? South Carolina

Hi,

I originally signed onto a company and agreed to a sign on bonus of $5,000. I was given the bonus and they paid the taxes. The company wanted me to work for two years. After one year I left the company. They took $2,500 out of my last paycheck. They have then gotten a collection agency involved saying that the balance is $8,500.

I never signed an agreement that I would pay the taxes that they paid, and they clearly are not including the $2,500 that they already took from my pay.

Should I start with basic verification letters to the CA, or is this something I should get an attorney involved for?

Thank you for your time.

Because they have sent it to collection, you are not going to be able to resolve the issue without suing them. Its really unfortunate but they are going to have to be forced to pull it back from the collection agency. Its questionable whether you even owed them more than the 2500.00 they already took from you.

 

[boxalin]

Hi LdiJ,

That is my worry, my spouse is a full-time student and we use my credit to cosign for the student loans (the school is expensive) and I worry that the collections will cause us problems acquiring those loans.

This is the terminology on the offer letter:
"You will be provided a sign-on bonus of five thousand dollars ($5000) payable in the first pay period following completion of
thirty (30) days of employment. This payment will be less applicable tax withholdings and is 401(k) eligible. Please review
and sign the attached Sign-on Bonus Agreement, which reflects you understand that this bonus is subject to a 2 year
payback agreement."


The repayment agreement that the offer letter is referencing states the following bullet points:

"If my employment with *company* is terminated for cause or voluntarily by me within the first two years of active, full-time employment, I will repay *company* the sign-on bonus."

"This payment shall not be considered earned by me until I have completed two years of active, full-time employment with *company*."


The repayment agreement doesn't even mention the amount, only the offer letter does. After they took my last check I requested a copy of their contract and an estimate of the amount that may still be owed. I assumed that since I was employed for 1 year then 50% of my obligation was also met, so holding my last check would cover that cost. They never sent me any paperwork for months, and I just now received this letter.

I feel like I am being taken advantage of at this point and hope to find an attorney soon.

Do you think I should bother even communicating with the agency? Or is going to an attorney my best bet?

Thank you for your input!

 

[LdiJ]

Hi LdiJ,

That is my worry, my spouse is a full-time student and we use my credit to cosign for the student loans (the school is expensive) and I worry that the collections will cause us problems acquiring those loans.

This is the terminology on the offer letter:
"You will be provided a sign-on bonus of five thousand dollars ($5000) payable in the first pay period following completion of
thirty (30) days of employment. This payment will be less applicable tax withholdings and is 401(k) eligible. Please review
and sign the attached Sign-on Bonus Agreement, which reflects you understand that this bonus is subject to a 2 year
payback agreement."


The repayment agreement that the offer letter is referencing states the following bullet points:

"If my employment with *company* is terminated for cause or voluntarily by me within the first two years of active, full-time employment, I will repay *company* the sign-on bonus."

"This payment shall not be considered earned by me until I have completed two years of active, full-time employment with *company*."


The repayment agreement doesn't even mention the amount, only the offer letter does. After they took my last check I requested a copy of their contract and an estimate of the amount that may still be owed. I assumed that since I was employed for 1 year then 50% of my obligation was also met, so holding my last check would cover that cost. They never sent me any paperwork for months, and I just now received this letter.

I feel like I am being taken advantage of at this point and hope to find an attorney soon.

Do you think I should bother even communicating with the agency? Or is going to an attorney my best bet?

Thank you for your input!

Did they give you the 5k without taking any taxes out of it? That is not the way that the contract reads...but it is what you hinted at in your first post.

 

[boxalin]

Yes, the amount given to me was $5,000 post taxes. So I assume their total cost was about $8,500. But my agreement was for $5,000.

 

[LdiJ]

Yes, the amount given to me was $5,000 post taxes. So I assume their total cost was about $8,500. But my agreement was for $5,000.

Even with employer taxes added in it would be a serious reach for it to get to $8500.00...and it would be highly questionable as to whether or not they could recover employer taxes from you. If you were in the 28% tax bracket, in a state with higher income taxes its highly unlikely that even with employer taxes in the mix that it would top 7500.00. On top of that they already took 2500.00 from you.

You really need to sue them to force a court decision as to what you actually owe, if anything at all.

 

[boxalin]

LdiJ, thank you so much for all the help... my spouse and I agree with you, the amounts are outrageous and the contract doesn't even bind us to that amount in any way (that we see).

Do you know which type of attorney is the best to contact in regards to this? One specializing in Employment?

Thank you so much.

 

[LdiJ]

LdiJ, thank you so much for all the help... my spouse and I agree with you, the amounts are outrageous and the contract doesn't even bind us to that amount in any way (that we see).

Do you know which type of attorney is the best to contact in regards to this? One specializing in Employment?

Thank you so much.

Most likely an attorney specializing in employment is going to have the most familiarity with these types of issues.

 

[boxalin]

Thank you LdiJ, we have reached out to an attorney tonight and hope to hear from them tomorrow.

 

[HRZ]

The sign on bonus may very well be all or nothing if you don't stay 2 full years, pro rata is not required unless contract says so. In general employer cannot just dock your paycheck unless there is written advance agreement to do so
..the math seems questionable but owing it ALL back seems likely .