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Education assistance for employees: Making sure you get your money’s worth

Jim Giuliano
by Jim Giuliano
April 4, 2008
2 minute read
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If you decide to pay employees to learn more about and become better at their jobs, you’ll also want to make sure you don’t overlook a key factor in making sure the investment is worthwhile.

Maybe, in exchange for tuition assistance or other education aid, you have a policy where the recipient sign an agreement to pay back the money if the employee quits before a specified time. If so, ask yourself this: How will we get the money back if the employee quits early and refuses to pay?
Dock the person’s last paycheck? OK, but what if that amount doesn’t come close to covering the total aid? And docking the last pay is even illegal in some states, such as California.
Sue the individual for the money? You could find your company paying $20,000 in legal bills to collect $10,000 in tuition reimbursement.
Another way
There’s another way that’s cheaper and more effective: a promissory note. That is, setting up the agreement as a loan whose provisions will be waived if the employee works the specified amount of time. And here’s why a note is better than any other type of agreement:
It’s easier to enforce. Collecting money from a loan generally requires fewer hoops to jump through – and fewer legal fees – than other types of agreements.
There’s a psychological factor. A legally binding loan, and repaying it, gets more of the employee’s attention than just another employee/employer agreement. Employees see it as a financial obligation.
Note: Most legal experts suggest that you don’t use your company manual or handbook to lay out or even mention the details of your education-assistance program. That just sets you up for mistakes and contradictions that can be used against you in a legal battle.

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