- The Michigan Supreme Court recently ruled that an employer violated the Wages and Fringe Benefits Act ("WFBA") by requiring an employee to sign a tuition contract which required reimbursement for mandatory on-the-job training if the employee failed to complete six years of employment.
- In Sands Appliance Services, Inc v Wilson (July 31, 2000), an employer sued its former employee for breach of a tuition reimbursement contract. The employer required the employee to sign the contract before beginning employment. Under the contract, each week of employment during the first three years was considered "training," and each week of continued employment by the employee after the first three years constituted payment for one week of training. If the employee worked for six years, the training would have been considered repaid in full. If the employee left before the six years, he or she would owe an amount that varied depending on how long he or she had worked for the employer. As previously reported, the Michigan Court of Appeals ruled that there was no public policy against allowing a prematurely departing employee to agree to partially reimburse an employer for specialized training.
- The Michigan Supreme Court reversed the court of appeals and decided that this contract violated the WFBA which prohibits an employer from demanding or receiving from an employee a fee, gift, tip, gratuity or other remuneration or consideration as a condition of employment or continuing employment.
- The Michigan Supreme Court distinguished this type of tuition contract from an arrangement where an employer funds an employee's education with the understanding that the employee will repay the employer unless he or she remains with the employer for a specific period. Such an arrangement does not violate the Act since it is optional and not a condition of employment.
Michigan Supreme Court Rules That Tuition Contracts for On-The-Job Training Violate Wages and Fringe Benefits Act
This article was edited and reviewed by FindLaw Attorney Writers | Last reviewed March 26, 2008
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