David B. Brushwood, BSPharm, JD
Pharmacies in some areas face challenges recruiting pharmacists to staff their practice sites. As an incentive for pharmacists to accept employment, pharmacies may offer a signing bonus. Signing bonuses can be conditional, and one common condition is that a pharmacist must complete a specified period of employment at the pharmacy following the receipt of a signing bonus. A California court recently ruled that a pharmacy was entitled to the return of a signing bonus it had paid to a pharmacist who was terminated from employment prior to completion of the specified period.
Background
A pharmacist was hired by a community pharmacy in May 2016. She was paid a signing bonus of $35,000. An agreement between the pharmacy and the pharmacist stated that “to avoid any repayment obligation with respect to the incentive payment, the pharmacist must remain continuously employed by [the pharmacy] for a period of 3 full years of service.” The pharmacist electronically signed the agreement and checked a box attesting that she “accepts and agrees to all of the terms and conditions set forth” in the agreement.
The pharmacist was terminated after 21 months of employment. The court did not explain the basis of the termination. The pharmacy sent the pharmacist an invoice requesting repayment of the signing bonus. When the pharmacist failed to pay the invoice in full, the pharmacy filed a lawsuit for breach of contract, demanding return of the bonus as specified in terms of the agreement.
The trial court ruled in favor of the pharmacy, and the pharmacist appealed.
Rationale
The pharmacist represented herself during the legal proceedings. She contended that the trial court’s ruling was in error. The appellate court noted that, despite her lack of legal representation, the pharmacist was required to “present meaningful legal analysis supported by citations to authority and citations to facts in the record that support the claim of error.” According to the court, most of the claims of error raised by the pharmacist failed to meet this requirement.
The court then evaluated the pharmacist’s claims that had been properly made. The court first noted that “written incentive payment plans that are contingent on an employee remaining with an employer for a specified amount of time are generally enforceable.”
The pharmacist contended that all contracts contain a covenant of good faith and fair dealing “which requires that neither party do anything to deprive the other of the benefits of the agreement.” The court ruled that this argument was inapplicable to the case, because “there is a presumption that employment is at will, and may be terminated by either party, at any time, for any or no reason.”
The pharmacist maintained that since the pharmacy terminated her employment, the pharmacy had caused or initiated a breach of the agreement; thus, the pharmacy should not be able to recoup the signing bonus because the agreement had been nullified. The court disagreed, citing language of the agreement stating that the pharmacist was “obligated to repay the entire incentive payment amount if she leaves for any reason.” The court concluded that “leaving because she was terminated by [the pharmacy] is ‘any reason.’ ”
Judgment in favor of the pharmacy and against the pharmacist was affirmed.
Takeaways
There are several key lessons to be learned from this case:
- Clicking through with signatures on an electronic document may not fully inform the signatory of the content of the document.
- Provisions in an employment agreement are subject to negotiation and can be modified if they seem disadvantageous or one-sided.
- The amount of money being contested in a signing bonus controversy is likely not sufficient to justify hiring legal representation.
- It may be financially advantageous to endure a challenging employment situation rather than to resign or be fired when the repayment of a signing bonus has been specified in an agreement. ■