5 ms·

I had no idea this was a practice, isn't the bonus for some deliverable? How widespread is this practice?

pxx 3y ago
The very first paragraph talks about a signing bonus. It is very common practice to claw back signing bonuses if you don't stay a predetermined amount of time. From the article: > Signing bonuses aren’t unusual in the mortgage industry, and they were particularly big during the recent boom. Neither are attempts to get them back, especially in the current bust.
- dharmab 3y ago
  The objectable part is that the employees were fired right before the clawback period ended. Depending on the legal jurisdiction, there may be a strong case that the employees should keep at least part of the bonus. https://en.wikipedia.org/wiki/Good_faith_(law) https://en.wikipedia.org/wiki/Good_faith_(law)
paulddraper 3y ago
Signing bonus. Any signing bonus stipulates a period of time (often a year) you need to stay in order to keep the bonus. Firing without cause before that period ends...not sure what the common practice is for that. tbh it's probably quite rare, as you would only offer hiring bonuses in a tight labor market.
- hyperhopper 3y ago
  Contracts I've signed stipulate that the bonus can only be owed back if fired for cause.
  - dclowd9901 3y ago
    Still seems dubious. What if the cause is “you didn’t meet our [obscenely unrealistic] expectations”?
    - nine_zeros 3y ago
      Performance is not a "for cause" reason.
    - paulddraper 3y ago
      Are you suggesting there is no reliable legal distinction between cause and without cause dismissal?
    - red-iron-pine 3y ago
      "for cause" in the US usually implies a reason that is above and beyond bad performance, such as egregious or criminal actions (theft, fraud, abuse, sexual harassment, criminal negligence, etc.). not showing up on time enough, or being kinda crappy at your job generally would not qualify
- SoftTalker 3y ago
  It was most likely spelled out in the bonus terms and conditions. It sucks for the fired employee, but the lenders are probably doing something they are allowed to do.
  - arcticbull 3y ago
    They're certainly allowed to ask. Now whether they are likely to enforce the terms in court, and whether the court would side with them, and whether they would recoup more than the cost of pursuing the claim, well, that's a different matter. [edit] Not to mention the risk of negative PR, and the consequences for their recruitment pipeline. I suspect if you just said "nope" a bunch, they would come back to you and accept a compromise. They're going to get pennies on the dollar if they send the account to collections. If this were me I'd probably start by saying "I'll give you back 33% if you sign a document disclaiming your interest in the remaining 67%" and kick off the negotiation there. IANAL of course, lol, and this kind of thing I'd want to run by a professional. This is just my gut instinct.
    - paulddraper 3y ago
      > They're going to get pennies on the dollar if they send the account to collections Collections fees are not that much FWIW. Especially since the debtor often pays fees.
      - klyrs 3y ago
        Collections will negotiate though, and settle for less than the full amount.
        paulddraper 3y ago
        For sure. Also, don't forget about your credit score.
  - naet 3y ago
    It was probably written in the contact that if they were fired for cause, they'd have to return the signing bonus. That is pretty typical for most signing bonuses, so that the employer is covered from employees trying to get the signing bonus and then not following through on their work obligations, and also for the employee to be covered that they won't be fired right before collecting and then denied the bonus. They're basically trying to reframe a large layoff to save money as a bunch of individual employees being fired for cause. When the market took a downward turn, the companies likely tried to introduce new 'cause' to fire them and attempt to legally claw back the bonus. Like this example of setting unrealistic performance goals given the market turn: "Siegel, the former banker at a Guaranteed Rate affiliate in New Jersey, said when business slowed down last year, the company introduced monthly performance goals. They hadn’t been part of the signing bonus agreement. He emailed his boss multiple times offering to leave the company and return a prorated share of the signing bonus, but it went nowhere, he said. In October 2022, and then again in December, he received letters saying he wasn’t meeting the performance goals, he said, and that he was at risk of termination and having his bonus clawed back." Unfortunately US worker protections are not great (IMO), so the employees in question will likely have to face a legal battle if they want to argue for keeping their bonuses. Mortgage companies also likely have a strong in house legal team, meaning their ex-employees will have to pay out of pocket for a good lawyer if they want a chance of winning in court. Most places in the US are also "at will employment", meaning you can be terminated at any time without warning for any reason, and that makes it much harder to argue that you were unfairly terminated. There might be a chance you could argue that the company is obviously facing financial issues and so you were let go as more of a "layoff" type termination (and then you have some more rights to things like unemployment) but it's likely to be an expensive argument that some may not be able to fund, and even then you're definitely not guaranteed to win. -- I personally was laid off a few months into a position where I had been given a signing bonus, but they were laying off the entire office and did not ask me to repay it. It was a pretty small bonus and they probably forgot about it anyways, but given that it was a large layoff they probably would have a hard time arguing that I was fired with cause. They also tried to then rehire me at a lower rate in a different region, but I didn't want to relocate so I declined.

pxx 3y ago

The very first paragraph talks about a signing bonus. It is very common practice to claw back signing bonuses if you don't stay a predetermined amount of time. From the article: > Signing bonuses aren’t unusual in the mortgage industry, and they were particularly big during the recent boom. Neither are attempts to get them back, especially in the current bust.

dharmab 3y ago
The objectable part is that the employees were fired right before the clawback period ended. Depending on the legal jurisdiction, there may be a strong case that the employees should keep at least part of the bonus. https://en.wikipedia.org/wiki/Good_faith_(law) https://en.wikipedia.org/wiki/Good_faith_(law)

paulddraper 3y ago

Signing bonus. Any signing bonus stipulates a period of time (often a year) you need to stay in order to keep the bonus. Firing without cause before that period ends...not sure what the common practice is for that. tbh it's probably quite rare, as you would only offer hiring bonuses in a tight labor market.

hyperhopper 3y ago
Contracts I've signed stipulate that the bonus can only be owed back if fired for cause.
- dclowd9901 3y ago
  Still seems dubious. What if the cause is “you didn’t meet our [obscenely unrealistic] expectations”?
  - nine_zeros 3y ago
    Performance is not a "for cause" reason.
  - paulddraper 3y ago
    Are you suggesting there is no reliable legal distinction between cause and without cause dismissal?
  - red-iron-pine 3y ago
    "for cause" in the US usually implies a reason that is above and beyond bad performance, such as egregious or criminal actions (theft, fraud, abuse, sexual harassment, criminal negligence, etc.). not showing up on time enough, or being kinda crappy at your job generally would not qualify
SoftTalker 3y ago
It was most likely spelled out in the bonus terms and conditions. It sucks for the fired employee, but the lenders are probably doing something they are allowed to do.
- arcticbull 3y ago
  They're certainly allowed to ask. Now whether they are likely to enforce the terms in court, and whether the court would side with them, and whether they would recoup more than the cost of pursuing the claim, well, that's a different matter. [edit] Not to mention the risk of negative PR, and the consequences for their recruitment pipeline. I suspect if you just said "nope" a bunch, they would come back to you and accept a compromise. They're going to get pennies on the dollar if they send the account to collections. If this were me I'd probably start by saying "I'll give you back 33% if you sign a document disclaiming your interest in the remaining 67%" and kick off the negotiation there. IANAL of course, lol, and this kind of thing I'd want to run by a professional. This is just my gut instinct.
  - paulddraper 3y ago
    > They're going to get pennies on the dollar if they send the account to collections Collections fees are not that much FWIW. Especially since the debtor often pays fees.
    - klyrs 3y ago
      Collections will negotiate though, and settle for less than the full amount.
      - paulddraper 3y ago
        For sure. Also, don't forget about your credit score.
- naet 3y ago
  It was probably written in the contact that if they were fired for cause, they'd have to return the signing bonus. That is pretty typical for most signing bonuses, so that the employer is covered from employees trying to get the signing bonus and then not following through on their work obligations, and also for the employee to be covered that they won't be fired right before collecting and then denied the bonus. They're basically trying to reframe a large layoff to save money as a bunch of individual employees being fired for cause. When the market took a downward turn, the companies likely tried to introduce new 'cause' to fire them and attempt to legally claw back the bonus. Like this example of setting unrealistic performance goals given the market turn: "Siegel, the former banker at a Guaranteed Rate affiliate in New Jersey, said when business slowed down last year, the company introduced monthly performance goals. They hadn’t been part of the signing bonus agreement. He emailed his boss multiple times offering to leave the company and return a prorated share of the signing bonus, but it went nowhere, he said. In October 2022, and then again in December, he received letters saying he wasn’t meeting the performance goals, he said, and that he was at risk of termination and having his bonus clawed back." Unfortunately US worker protections are not great (IMO), so the employees in question will likely have to face a legal battle if they want to argue for keeping their bonuses. Mortgage companies also likely have a strong in house legal team, meaning their ex-employees will have to pay out of pocket for a good lawyer if they want a chance of winning in court. Most places in the US are also "at will employment", meaning you can be terminated at any time without warning for any reason, and that makes it much harder to argue that you were unfairly terminated. There might be a chance you could argue that the company is obviously facing financial issues and so you were let go as more of a "layoff" type termination (and then you have some more rights to things like unemployment) but it's likely to be an expensive argument that some may not be able to fund, and even then you're definitely not guaranteed to win. -- I personally was laid off a few months into a position where I had been given a signing bonus, but they were laying off the entire office and did not ask me to repay it. It was a pretty small bonus and they probably forgot about it anyways, but given that it was a large layoff they probably would have a hard time arguing that I was fired with cause. They also tried to then rehire me at a lower rate in a different region, but I didn't want to relocate so I declined.