Back Premium Payment Agreement, EE Quit

Human Resources Manager · June 2002

Before I began working here, an agreement was reached with an EE who owed us over $5000 in unpaid insurance premiums. He agreed to forfit a week of vacation pay each year until the debt was repaid. As I understand the agreement, the payback was to begin at his anniversary date in Nov. of 2002. This employee quit, effective May 10, 2002. Is there any way for us to recover the amount owed? As I read the agreement, there was no provision made for termination.

Krista Denn

Gary Jiles AR · June 2002

>Before I began working here, an agreement was reached with an EE who
>owed us over $5000 in unpaid insurance premiums. He agreed to forfit
>a week of vacation pay each year until the debt was repaid. As I
>understand the agreement, the payback was to begin at his anniversary
>date in Nov. of 2002. This employee quit, effective May 10, 2002. Is
>there any way for us to recover the amount owed? As I read the
>agreement, there was no provision made for termination.
>
>
>Krista Denn

Provided you paid the premiums on his behalf and you had no agreement to pay for all or his insurance premiums, you could bring an action to recover the payments. Even though the employee terminated employment, he remains liable for any indebtedness to you.

Gary D. Jiles
Arkansas Employment Law Editor
Jack, Lyon & Jones, P.A.
3400 TCBY Tower
425 West Capitol Avenue
Little Rock, Arkansas 72201
(501) 707-5545

Peyton Irby MS · June 2002

since the initial payback was not due until november, you will have to file a collection action to recover. some debts owed by employees to employers are able to be "set off" against a fianl paycheck. however, the agreement here apparently does not provide for that option.

Susan Fentin MA · June 2002

And one more comment: Massachusetts law does not allow for a debt set off against a final paycheck unless the employee has consented to such a deduction in writing, so unless the agreement so provided, you would not be able to take any remaining debt out of his pay. As far as the remainder of the debt, you will have to sue him for breach of contract, get a final judgment and then proceed to collection. You may decide that the amount owed is not worth the legal fees. Sometimes the agreements we draft provide that, if the company needs to institute collection proceedings, the party in default will be liable for costs and reasonable attorneys fees. Just a thought. Good luck.
Susan Fentin
Associate Editor, Massachusetts Employment Law Letter
[email]sfentin@skoler-abbott.com[/email]
P.S. love your email address!

Back Premium Payment Agreement, EE Quit

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