Repayment of Signing Bonus

carolathey · August 2004

Employee was paid a $5000 signing bonus contingent upon staying for 1 year. Check she received was for less than $5000 because taxes had been withheld by our payroll company that cut the check. She is leaving after 5 months. Does she write us a check for $5000 or for the actual amount of the check she received? Accounting says they have no idea; seems to me like she owes us $5000 and somehow the tax situation has be be handled by adjustments in payroll, but II'm not an accountant. Any thoughts are welcome.

pork1 · August 2004

[font size="1" color="#FF0000"]LAST EDITED ON 08-04-04 AT 01:26PM (CST)[/font][br][br]Your company did not plus it up to pay the taxes, she paid them through the company and you past them on to IRS on her behalf; however, the company is out the original $5000.00 to which she is indebited to the company for payment. Your company paid her $5000.00 the taxes she paid as a result is a matter for her tax accountant and the IRS. To make the company whole she writes the company a check for $5000.00 and the company inserts it back into the same account from which the $5000.00 was paid, accounting action closed. Hope you are better than we at getting these kinds of incentive bonuses back in whole or part. we have three that I'm sure we will write off as bad debt this winter at "year end close". just make sure you index your files to bring the issues up or else accounting will close things out and never take the loss that would be appropriate.

PORK

pollypop · August 2004

Pork is absolutely correct. If/when she repays, you will need to run it back through payroll as negative earnings to insure her W-2 is correct at year end. She will get the tax "refund" when she files her 2004 tax return with the IRS early next year.

HRGirl · August 2004

I do the payroll here at my little side of the HR world. If any employee is given a $5000 signing bonus, I always make sure and ask if that amount is gross or net. From what you are saying, she received a gross amount of $5000 dollars leaving her with say around $3300 in her pocket. The employee should pay back $5000, not what she would net after taxes, healthcare, etc are taken out.

Don D · August 2004

I wouldn't pay a damned thing back! I'd be sharp enough to come up with a constructive discharge claim or your violation of our agreement and youre lawyer would advise you not to pursue the matter. I cannot imagine getting stuck with one of these legal requirements.

dchr9203 · August 2004

The employee pays the $5,000 back and we write that "caveat" into their offer letter, including authorization to deduct from final pay and their obligation to repay balance due within a specified period of time. Had a few try to renege and all I did was show them their signed consent and we didn't have any further problems. One bonus was for $20,000, the guy balked, even went to an attorney, but guess what. Came back with a check for the full amount. You'll win some and you'll lose some, but so far, we've gotten our money back.

Crout · August 2004

If my final pay comes to $2,000 I think I'd let you keep the final pay and hang onto the $5,000, then send you a letter stating that since you kept my final pay as per the agreement letter our business was concluded and my debt satisfied.

dchr9203 · August 2004

As I said, there are those who will and those who won't. We as the employer knowingly take the risk that there will be those who don't have the personal integrity to honor their commitments.

Rockie · August 2004

Carol: I agree with the others - the employee owes the total $5,000 back.

I am not a big fan of signing bonuses. When I worked at a hospital, we had nothing but trouble from people not wanting to pay them back, even though they signed the agreement on the front end and couldn't wait until they had the check in their hot little hands.

We had people quit and walk out when they realized their final checks could be held. We had people try to say it wasn't their signature on the form - it had been forged, etc. These are supposed to be professional people, but it's amazing what money will do to people's good sense and judgment.

Repayment of Signing Bonus

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