Employee Loan Agreement
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Employee Loan Agreement
I own a small business with 7 employees and I am considering extending a $5000 tuition loan an employee that will be repaid over 1 year. I would like to form an agreement/bond that would protect my interests in case of employment termination – either by employee leaving by choice or me having to terminate the employment for repeated policy violations as described in our office disciplinary policy. I have a detailed Office Policy Manual that every employee reviews and signs. This also includes a disciplinary policy that I follow to give verbal and written warnings and to terminate employees. I would like to help the employee with the tuition loan but also need to be able to recover loan and any legal expenses associated with it in case of termination.
Asked on June 18, 2016 under Employment Labor Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
You can create an enforceable agreement which you and the employee will both sign which will provide for repayment of the loan over time (e.g. over 1 year) with accelerated repayment if the employee is fired "for cause" or voluntarily quits/resigns; the agreement can incorporate you policy manuals terms if you like, and can also provide that if you have to sue to enforce the agreement, that you will recover legal fees from the employee, too. It can even provide that if there is an unpaid balance when the employee quits or is fired for cause, that he/she consents to allowing you to withhold his/her final paycheck and apply it against the amount owed. It would be best to have an attorney draft this for you, but you are allowed to draw it up yourself if you feel up to doing so.
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