Companies often provide benefits and other financial incentives to encourage better performance or to heighten loyalty. Should a company recover its investment when the employee fails to perform and leaves the company?
A recent Tennessee case highlights the rare instance where an employer successfully recovered its investment in an employee. Sweetwater Hospital agreed to pay for Carpenter’s tuition to become a nurse anesthetist and to release Carpenter from repayment if she remained with the company for five years. When Carpenter finished school she applied for work elsewhere because Sweetwater did not have a nurse anesthetist position. After the company filed its lawsuit, Carpenter filed a counterclaim for breach of contract based on the hospital’s failure to provide a job.
The Court ruled in favor of the company finding that the agreement between the parties did not obligate Sweetwater to provide work, but did require Carpenter to repay the debt. Although the case might be viewed as encouragement for employers to sue employees to recover a company’s investment, the case seems more useful when viewed as a study of the risks faced by a suing employer.
The Sweetwater case highlights issues that should be considered by an employer before filing an action to recover an investment in an employee or a loss caused by a departing employee. First, a claim brought against a former employee risks a retaliatory counterclaim like discrimination, defamation, or breach of contract. Defending a frivolous lawsuit can cost an employer thousands of dollars, oftentimes more than the company’s initial investment or loss. Second, a claim against a former employee to recover an investment or a loss will [Read more...]