In USS-POSCO Industries v. Case, the California Court of Appeals considered whether an employer was entitled to employee reimbursement of educational costs when the employee terminated his employment two months after he completed a voluntarily three-year employer-sponsored educational program. The program required the employee to reimburse the employer for his education, on a pro-rated basis, if he quit within thirty months of completing the program.

The employee, Case, argued that the California Labor Code, the Business and Professions Code and the National Labor Relations Act all prohibited employee reimbursement. The Court disagreed and held the agreement valid and enforceable.

As a result, Case was required to reimburse USS-POSCO Industries for the educational program on a pro-rated basis.

The Court of Appeals distinguished a similar series of cases that prohibited reimbursement of training costs to the government by government employees and placed special emphasis on the voluntary nature of the USS-POSCO’s program and on the pro-rated nature of the reimbursement.

This decision provides a road map for employers to ensure their educational investment in willing employees will be realized or reimbursed. If you offer an employee educational program for job advancement consult with your legal counsel so that you do not end up providing former employees with free educations that can only benefit your competitors.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.