California Employment Law
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Hello and thank you for entrusting me to answer your question. I am very sorry to hear about your employer's insistence that your repay these bonus amounts in their entirety.Although California law zealously guards an employee's right to earned wages, courts have expressly held that an agreement to repay an incentive bonus or moving expenses is permissible and that such bonus does not constitute a wage "earned" until the time frame specified for compulsory repayment has lapsed. Thus, an agreement such as yours in which repayment in full is mandated if you quit within 24 months does not constitute an unlawful forfeiture of wages and is otherwise legal. There is no requirement that repayment be pro rated--whatever the contract dictates is what controls.So that you are not paying tax on the bonus money you are paying back, you will want to file an amended tax return with both the State of CA and the IRS. For information on filing an amended 1040, see here: http://www.irs.gov/uac/Nine-Facts-on-filing-an-Amended-Return See here for the CA equivalent form: https://www.ftb.ca.gov/forms/2012/12_540x.pdfPlease do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.
Sean,See here for more information about amending your returns: http://www.calcpa.org/content/consumers/ask/tax/mm0418.aspxAgain, please feel free to let me know if you have any further concerns. If I have answered your question, I would be very grateful for a positive rating of my service so that I may receive credit for assisting you.Kindest regards.
I appreciate for your answer. I have further questions on this issue.
1. what would happen if I refuse to pay back and just leave the current employer. While I understand that they can sue me in civil court, what's the worst case scenario if I lose in court before arbitration? In that case, does it affect my credit history? If I pay back after their sue, does it still affect my credit?
2. If I pay back as the contract dictates, is there due date related rule? The job offer (contract) didn't specify how soon I have to pay back.
3. Regarding my tax returns, is filing amended tax return only way to recover overpaid tax? Or deduction in the following year tax return (http://www.irs.gov/publications/p17/ch12.html#en_US_2012_publink1000172015) is also possible way?
Thank you for your answer in advance.
I appreciate for your answer.
I pasted an exact copy of contract concerning sign-on bonus and relocation assistance below.
It seems it states repay of "relocation assistance" not sign-on bonus. Would you please check this details of contract, please? I strongly believe that I need to pay back only relocation assistance.
Other than sign-on bonus and relocation, company also want me to repay green card process legal fees. My green card process was not finished. The contract didn't specify repay of immigration support cost repay. Is it legal to ask repayment?
You will receive a sign-on bonus in the amount of 10000 USD, subject to applicable withholding taxes, which will be paid after thirty (30) days of your date of hire The sign-on bonus, though paid in advance, is earned over the first twenty-four (24) months of your employment, and is paid in consideration of your provision of services over the twenty-four month period. If, within twenty-four (24) months of your date of hire, you voluntarily terminate your employment with the Company or the Company terminate your employment for breach of Company policy or for performance related reasons. You will be required to repay the Company the full amount of the relocation assistance.
The Company will also provide you with relocation assistance of 12500 USD, subject to applicable withholding taxes. Relocation assistance; though paid in advance, is earned over the first twenty-four (24) months of your employment, and is paid in consideration of your provision of services over the twenty-four month period" ff, within twenty-four 24 months of your date of hire, you voluntarily terminate your, employment with the Company or the Company terminates your employment for breach of Company policy or for performance related reasons, you will be required to repay the Company the full amount of the relocation assistance.
Thank you very much!
Thanks. It's lots of help.
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