By Troy Schneider
As any farmer knows, training an employee can be time-consuming and expensive. In the private sector, many employers have their employees sign an agreement requiring them to work for a certain period of time or otherwise repay the costs of the training provided to them. Farm employers should consider using such agreements.
Loan vs. penalty. Farm employers should not present or write the agreement as a repayment for a violation of contract. Rather, the employer should present the agreement as a loan to an employee for training costs.
Itemization of costs. A farm employer should include a breakdown of the costs incurred in the training. Stay away from simply labeling the training as “on-the-job training.” This will make the training sound like regular instruction that all employees receive.
Enforceability. If the reimbursement agreement is litigated, the farm employer is more likely to have the agreement ruled enforceable by the courts if the training costs are prorated by the length of employment.
In addition, an agreement should consider the different circumstances that might trigger the employee’s repayment obligation. A repayment obligation may be more enforceable for circumstances that are within the employee’s control, such quitting to work for another farm, rather than for circumstances that are not, such as being fired or quitting for medical reasons.
A training reimbursement agreement can be a valuable tool for farm employers to use to recoup training costs. However, employers should carefully craft such agreements.
A sample agreement is as follows:
Memorandum of Agreement
I (insert name) understand and agree that in consideration of my employment by XYZ Farm and the specialized training that I will receive that I will reimburse XYZ Farm for all reasonable costs and expenses relating to my training, and such costs will be treated as a loan to become a(n) (insert job title), subject to the following terms and conditions:
In the event that I voluntarily resign from XYZ Farm during the one (1) year period after my completion of the training required to become a(n) (insert job title), I agree to repay all of the costs and expenses incurred by XYZ Farm on a prorated basis as follows:
For each month I am employed after completion of the training, the amount owed to XYZ Farm will be reduced by 1/12 of the training that I have received, I understand and agree that the costs and expenses incurred by XYZ Farm for my specialized training is (insert $ amount), and that I will repay this amount pursuant to the terms and conditions set out above, and in the attached “Itemized Cost of Training.” The “Itemized Cost of Training” is attached to this Memorandum of Agreement and marked Exhibit “A” and is incorporated in this Memorandum of Agreement as if fully set out herein.
This employment shall be on an at-will basis, and not for any definite employment term., i.e. either XYZ Farm or I may terminate this employment relationship at any time, for any reason, with or without notice.
I understand and agree that this Memorandum of Agreement does not constitute a contract of employment and I understand that this Memorandum of Agreement does not grant me any rights, privileges or benefits from XYZ Farm, nor does it require XYZ Farm to offer me a regular position as a(n) (insert job title), or change my at-will status of employment.
I understand that if I successfully complete the training required to be a(n) (insert job title), that this agreement does not alter any other terms or conditions of my employment with XYZ Farm as set forth in its employee manual.
I understand that if it becomes necessary for XYZ Farm to enforce this memorandum of agreement and a decision is entered against me, I will pay all costs and expenses incurred by XYZ Farm including reasonable attorney’s fees.
Employee signature / date
Schneider is a partner in the agricultural law firm of Twohig, Rietbrock, Schneider and Halbach. Call him at 920-849-4999.