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Joseph
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 4893
Experience:  Extensive experience representing employees and management
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I am currently in US on my H1B. I was in contract with my previous

Customer Question

I am currently in US on my H1B. I was in contract with my previous employer for 1 year. But I came of the contract and joined new company. When I informed my old employer about it, they are asking me to pay back the below charges as per contract. The amount is roughly around 25k, which includes the salary they paid me during non billable hours.


Below is the brief of agreement.

If Employee terminates this employment contract with Company before completion of the initial term (1 year of billing) and he/she is not performing any client assignment at the time, Employee will repay Company for initial expenses incurred by Company for Employee’s foreign relocation, which will include airfares, visa processing expenses, and interviewing expenses, as well as the total amount of bench (non-billable hours) payment and any tuition or training fee reimbursement made to him from the beginning of this contract till the date of termination. The reimbursement of initial expense will be $5,000 for single status employment, $10,000 for married status employment, and $12,000 for family status employment. The reimbursement of non-billable expense payment will be equal to the non-billable time payment made to Employee, which is equal to the rate of salary at which Company paid to Employee during Employee’s non-billable time multiplied by the total non-billable hours.

Company may, at its option, depending on the severity of the damage, elect to waive the provisions in exchange for payment of liquidated damages of $10,000 to recover lost profits and costs that may be associated with Employee’s premature termination. The liquidated damages may be reduced if the client approves a premature termination of Employee’s assignment with an adequate notice period (generally one month), and the work is properly completed or handed over during the notice period to the satisfaction of the client.



Here are few of my points.

1) I am leaving the company after 3 months of billing i.e., within 1 year of contract

2) Is this contract valid? Can they file a lawsuit against me? If yes what will be my liabilities from the above money?

3) Do I need to pay back the money what they paid during bench time?

4) What are liquidation charges? I was in bench when I resigned, do I need to pay the liquidation charges?

Please let me know if you charge for this sir. I just need the answer to above queries.
Submitted: 11 months ago.
Category: California Employment Law
Expert:  Joseph replied 11 months ago.
Hello and welcome to Justanswer.

I'm sorry to hear about your situation and hope I can help.

My goal is to provide you with excellent service.

I need a bit more information before I can provide you with a complete and thorough answer.

At the beginning of your question, you stated that you were 'in contract' with them for a year, but then you mentioned that you left after 3 months of billing. Could you clarify whether or not you were with them for an entire year before leaving?

Also, I assume that you meant that you were 'in breach' of your contract when you left is that correct?

Finally, can you tell me what portion of the money they want back is salary that has already been paid to you?
Customer: replied 11 months ago.

HI Joseph,


Thanks for reply. My employer is based in PA. I was a full time employee with my employer with signed agreement as above. If you want I can mail the agreement. I did not finish the 1 year term. I resigned after 3 months of billing, which will become breach. I spend almost 5 months in the company out of which 3 months I was in billing and 2 months I was non billable for which they paid me minimum wages according to LCA. They are asking me to pay back 12000 +wages they paid me in non-billable time.

Expert:  Joseph replied 11 months ago.
Hello,

The contract would be considered valid, however, an employer cannot require that you repay money that you were already paid as salary, so you wouldn't be required to repay that money, just the amount that they spent for your relocation plus the liquidated damages provision, which depending on the status you obtained, could be $5k, $10k, or $12k in liquidated damages.

So your liability would be those relocation costs plus the liquidated damages or the amount in 'true damages' that your former employer can prove that was created as a result of your premature breach of the agreement.

As I mentioned before, you need not pay back the money that you received during bench time, as long as you were still an employee of the company at that time.

Liquidation damages enable a company to obtain a specific set amount of damages instead of having to prove the consequential loses of a premature breach. They will generally be upheld by a court as long as they are considered reasonable. It would depend in your situation on how much they are going after and what the actual cost of your departure was.

If they were able to find a replacement in fairly short order, you could definitely contest the reasonableness of the liquidated damages provision, and perhaps be only required to pay a lesser amount.

I hope the above information is helpful.

Please let me know if you have any follow up questions.

Thanks and best of luck.
Customer: replied 11 months ago.

Hi Sir,


Thanks for the mail. First of all i was not on any assignment when I resigned. I was just searching for the projects. My employer is a pure consulting firm who place the employees in different client locations. That too these projects we have to search in DANGEROUS URL REMOVED or any other websites. They will come into picture only for rate finalization. As I told earlier I was not under any assignment when I resigned. So I dont think replacement would be necessary.


 


One more thing is I have given them 3 months billing with one client in US for which they paid be half of the billable amount. They have also earned enough from me. Still I would be liable for 5,10,12k?


 


This 5k, 10k and 12k is the discrimination done by them for single, marred and family status. Is the discrimination valid in US? As far I know in US all the employees should be treated same right?


 


And do they no need to show how did they arrive at the figures? means if they would have mentioned as 100k in the document, should I be liable for that? There should be some proof of documents right as how did they arrive at that figure.


 


Please advice.

Expert:  Joseph replied 11 months ago.
You could still be held liable for the liquidated damages provision, but only if the following two conditions are met:

First, the amount of the damages identified must roughly approximate the damages likely to fall upon the party seeking the benefit of the term.
Second, the damages must be sufficiently uncertain at the time the contract is made that such a clause will likely save both parties the future difficulty of estimating damages.

Since the amount expended on you whether as a single, married, or family visa would have been known at the time, it's unlikely that the liquidated damages provision would be held up in court, but you would still be liable for whatever actual cost was spent.

I am sure that these values, however, reflect somewhat on the different cost taken on by the company in getting visas approved. It would not be discrimination for them to demand a larger amount of money because a larger amount of money was expended on you (and your spouse and/or other family members).

That is not a form of protected discrimination. (That would only occur if you had been denied the job because you were married, had children, etc.)

Like I mentioned above, the liquidated damages provisions are due to the amount being uncertain, so there wouldn't be a requirement for the employer to demonstrate how they got to those figures.
Customer: replied 11 months ago.

One last question. What do yiu suggest me to do? To negotiate with them and come to common agreement and get release instead of allowing them to file law suit?


 


One more thing I came here alone and processed my family visa and tickets at my own cost. So can I negotiate with them for 5k by telling this and settle it for 5k anyway?


 


I just want some points of argument to reduce the amount I need to pay.


 


 


Need valuable above in that front

Expert:  Joseph replied 11 months ago.
Hello,

Yes, I think it would be best to arrange for a settlement. The liquidated damages provision would definitely not be roughly approximate to actual damages if you paid for your family visas yourself, so at most you would be liable for $5 plus the relocation (moving expenses).

So, if your employer is willing to go for it, it would probably be worthwhile to settle for anything less than $8k (hopefully even less, maybe just five), although that may be difficult given their desire for $24k, but they are definitely going to need to substantially lower that figure, since even if they do sue you, they're not going to be awarded such an extravagant and inaccurate amount by a judge or (certainly not by) a jury.

Joseph, Lawyer
Satisfied Customers: 4893
Experience: Extensive experience representing employees and management
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 11 months ago.

Hi Joseph,


I am sorry for bothering you again, couple of last queries.


 


1) I read somewhere that claim of liquidation charges can be done in California and Texas. My employer is in PA. But my last project is in TX. Will this still apply for me?


 


2) And my company as I told earlier is a pure outsourcing company, who do not have any projects of self. They simple bring people to US and outsource in the market. As far as my situation is concerned, they did not had any projects in hand for me to go and start working. So how could be they prove the amount of damages occured from me as they do not have any projects for me to prove?

Expert:  Joseph replied 11 months ago.
1) Liquidated damages provisions are included in contracts and can be enforced in all 50 states as part of employment (or other) contracts. I'm not sure what you were reading, but they are definitely not only enforceable in California and Texas.

2) The purpose of liquidated damages provisions is to not have to prove a certain amount of damages. However, if there weren't any or it is not considered an accurate approximation of actual damages, the liquidated damages provision will not be enforced against you.

Customer: replied 11 months ago.

Thanks sir

Expert:  Joseph replied 11 months ago.
Thanks again; happy to help and best of luck!

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