Provided by: Jennifer Kirschenbaum, Esq.
November 30, 2023
Question:
Jennifer,
I want to pay for school from my front desk person to get her certification. I also want to make sure that she comes back to work for at least two years after she finishes. Is there a way to have her sign something to secure this type of benefit?
Thanks,
Dr. G
Answer:
Absolutely, and, paying for school is a fairly common practice for an employer, whether that’s payment directly or reimbursement in exchange for retained services. We can lock this down proactively where you pay for the school as bills come due, and the employee is obligated to repay you over a period of time, or the obligation is forgiven if the employee stays for certain prescribed period of time. In the alternative you could reimburse the employee after a proscribed period of time elapses, which may defeat the purpose, because the employee may not have the funds to go out of pocket for the education in the first place...
There are two factors that come in to play that stop employers from going down this road. The first is complicating the employment relationship with legal documents to secure the indebtedness - which is an occupational hazard when entering into an indebtedness with an employee. Complexity can kill the deal and the relationship (those who have chased a pre-nup understand...). The second complication is taxes. You’re looking at taxable income with this type of educational benefit - how to treat the taxes (who realizes) can become a point of contention. You’re running into the Oprah giving away free cars problem.
Both issues can be worked out if the juice is worth the squeeze, and any deal reached should be properly papered, with the input of legal counsel and your accountant.
I want to pay for school from my front desk person to get her certification. I also want to make sure that she comes back to work for at least two years after she finishes. Is there a way to have her sign something to secure this type of benefit?
Thanks,
Dr. G
Answer:
Absolutely, and, paying for school is a fairly common practice for an employer, whether that’s payment directly or reimbursement in exchange for retained services. We can lock this down proactively where you pay for the school as bills come due, and the employee is obligated to repay you over a period of time, or the obligation is forgiven if the employee stays for certain prescribed period of time. In the alternative you could reimburse the employee after a proscribed period of time elapses, which may defeat the purpose, because the employee may not have the funds to go out of pocket for the education in the first place...
There are two factors that come in to play that stop employers from going down this road. The first is complicating the employment relationship with legal documents to secure the indebtedness - which is an occupational hazard when entering into an indebtedness with an employee. Complexity can kill the deal and the relationship (those who have chased a pre-nup understand...). The second complication is taxes. You’re looking at taxable income with this type of educational benefit - how to treat the taxes (who realizes) can become a point of contention. You’re running into the Oprah giving away free cars problem.
Both issues can be worked out if the juice is worth the squeeze, and any deal reached should be properly papered, with the input of legal counsel and your accountant.
