Former Employee Was Required To Reimburse Employer For Sponsored Training Program

In USS-POSCO Industries v. Case, the Court enforced a contract that required reimbursement for training if the employee left within 30 months of completion of the training. There, the employee entered into a voluntary  employer-sponsored educational program.  He agreed in writing that if he quit his job within 30 months of completing the program, he would reimburse his employer a prorated portion of the program costs. Two months after completing the program, Case went to work for another employer.  When he refused to reimburse the company, the company sued for breach of contract and unjust enrichment.  Case cross-complained, asserting the reimbursement agreement was unenforceable and the company I had violated the Labor Code and other statutory provisions in seeking reimbursement.

The trial court granted the company’s motion for summary judgment on both its complaint and Case’s cross-complaint, and subsequently granted its motion for attorney fees for defeating Case’s wage claims.  In granting the fee motion, the court applied the version of Labor Code section 218.5 in effect at the time of the summary judgment proceedings, rather than the version in effect at the time it awarded fees, which permits fees to a prevailing employer only when the employee’s wage claims have been brought in “bad faith.”

The Court of Appeal affirmed the summary judgment and found that the company was entitled to reimbursement. The decision details the reasons why each of the codes relied upon by the employee did not make it illegal.  However, the Court found the statutory provisions that alter the recovery of attorney fees are deemed procedural in nature and apply to pending litigation. As such, to recover the fees, the company would have to show bad faith, upon remand.

For more information, or if you need legal assistance, please contact the Wagner Legal Group at or (310) 857-5293.

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