Legal Question in Employment Law in California

I was presented with an offer of employment, with all the usual details. At the end, however, they have a rider that states that "as a result of the hiring process, will incur significant expenses. Therefore, should you voluntarily terminate your employment within one year... you will reimburse in the amount of $5000." It goes on to specify a $2500 penalty for leaving within 18 months.

As there is no signing bonus or other additional compensation above my salary, is this clause enforceable in California?


Asked on 10/22/10, 12:49 pm

2 Answers from Attorneys
Terry A. Nelson Nelson & Lawless

Probably. Written contracts define the agreement of the parties, penalties and all. You don't like the term, don't sign. It is an unusual term outside of an employment agency contract.

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Answered on 10/27/10, 4:11 pm

No. An employer cannot retroactively reduce compensation in California. They can, however, "reverse engineer" the same result. The way it is normally done in California is to create a retention bonus, and pay less salary. So the way they should be structuring it to comply with the law is to pay you $416.67 less per month and then pay you a $5,000 bonus at one year and an additional $2,500 bonus at 18 months.

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Answered on 10/27/10, 4:17 pm


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