Payment for Not Giving Long Notice
Hello,
I'm an foreign national working in the US currently with H1B. I have worked in the US for around 5 years. I was working for a multinational company for 10 years, majority of which is in the US. I've recently changed my job and currently working with a different employer. Last year, after a 10 months of company given Canadian assignment when I returned to the US , my former employer made me sign a new agreement which said if I quit the company without providing a 3 months notice, I'll have to pay $10,000 USD. But because of several reasons, I left that company and joined the new company(present). I was only able to provide 3 weeks of notice. To my understanding from the DOL website, an H1B employer is prohibited from collecting money if an employee voluntarily separates from the employer without providing the agreed notice. My question is would it be lawful for my former employer to collect the $10,000 from me for failing to provide agreed 3 months notice before leaving them?
I found below from DOL website
Early Cessation Penalty/Liquidated Damage
An H-1B employer is prohibited from seeking or collecting a penalty, even if agreed upon with you, as a result of you terminating your employment before the stipulated end of an employment contract, usually the length of the visa.
Some characteristics of a penalty may include:
A fixed termination payment regardless of the term of the contract and the length of time during which the contract was in effect before termination;
An unexplained or unjustified amount of money which is not attributed to any particular cost or loss;
An amount of money which appears unreasonable in comparison to your earnings; or
An agreement that is the result of fraud or where it cloaks oppression.
Re: Payment for Not Serving Long Notice
The amount is likely improper - you haven't shared any factual context or justification for the charge, although as you've already noted a fixed amount based solely on the amount of notice you give without any relation to actual expenses the employer could ostensibly charge is not going to fly - so if your employer attempts to enforce it you can complain to the DOL.
Re: Payment for Not Serving Long Notice
it depends on whether they can substantiate the fee as damages or not.
If the payment represents payment of actual damages, then it is different than it being simply a penalty for breaching the contract.
the fact it is a fixed payment with no reference to the basis of the amount tends to suggest it is intended as a penalty but without all of the facts involved, it is impossible to determine with any certainty. You should take your contract to a lawyer who can read it and discover the facts of the situation and give you an opinion.