Eight months ago, I was solicited by a reputable employee search firm to become the chief executive officer of a small 8(a) corporation that had been struggling but was “going places.” It wasn’t located in an area where I wanted to live, but the offer was excellent. Also, our written agreement included a relocation bonus that more than covered my moving expenses. The catch: If I didn’t stay the full year, I needed to pay back the relocation bonus.
I did my due diligence prior to accepting the offer. I visited the corporation and met the hiring committee, three members of the board, and the two staff, who seemed nice enough. I asked why the past CEO had left and learned that the board had fired him “for cause.” Since I’d been on the job market for five months and had no other viable offers, I thought, “How bad could it be?” I figured I’d stay the year and that would give me time to secure another job in the location where I really wanted to live, plus I’d have gained valuable experience.
It’s been intolerable. The board is impossible to work with. The corporation lacks the funds needed to hire the proper staff needed to really turn the situation around. The two employees are passive-aggressive and incompetent. The corporation does have assets, which were listed on the financial statement I saw prior to accepting the position, but the board refuses to sell them to accomplish what they say they want.
If I leave before the year, will I have to repay the relocation bonus, given the board’s misrepresentation of the situation?
Although I’m not an attorney, the document you signed may contain many of the answers you seek. Does the agreement explicitly exclude any prior written or oral promises? Does it detail the circumstances you deem misrepresentations? Above your signature line, did it state that you understood the agreement and assented to it voluntarily?
In a similar 2013 case, Dresser-Rund Co. v Bolick, a relocated manager argued the agreement requiring he pay back his relocation bonus wasn’t enforceable. He alleged fraudulent misrepresentation because he’d been promised a promotion he never received. He lost.
Further, your own assertions weaken your case. You say you did “due diligence,” examined the financial statements, and were aware the corporation was “struggling.” As a CEO candidate, a third party might expect you to have accurately assessed the situation, including the warts, before you accepted the offer, warts and all.
Finally, who most misrepresented the situation at time of hire, you or the three members of the board? They may have felt they were hiring someone who had the expertise to help their corporation succeed. You continued job searching even after you accepted their offer. What results did you achieve for this 8(a) corporation in exchange for the salary they paid you? You wanted to gain valuable experience, and you may have. What did they get?
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