As a 22-year-old computer science major at the University of Maryland, Keith Wood, says he was dazzled by the recruiters from Electronic Data Systems Corp. who came to visit him on the campus. So when they offered him a job, he didn’t think twice about signing the promissory note pledging to pay back the cost of a company-training course if he quit the job before a specified time.
That was almost five years ago. Today, Wood and EDS are about to square off in a Montgomery County, Md., court over what some employment experts believe will become an increasing trend: companies trying to force workers to pay training costs if they leave the company.
At issue is a “promissory note” Wood signed in January, 1985, in which he promised to repay the computer information company $9,000 if he left the firm either voluntarily or was fired for good cause within 24 months of starting a special Systems Engineering Development program.
Wood, a computer science major in college, quit EDS in Dallas after 18 months on the job and went to work for a computer firm in Maryland. Last year, with the statute of limitations about to expire, EDS sued Wood to recover the $9,000 training costs. His is one of nearly 30 similar cases pending against former EDS employees in Montgomery County, where EDS formerly conducted training.
As he prepares to go to trial next month, Wood insists that the only training covered by the promissory note was a 10-week course in which he was taught a computer program he already knew from college plus a computer style used by the company. “I didn’t learn anything I didn’t know,” Wood claims. “I’m saying I did not receive benefits.”
Wood called the EDS arrangement “indentured servitude” and said he intended to fight it through the courts. “Win big or lose big, I intend to fight it,” he said.
EDS sees Wood’s case quite differently. “We take the promissory note very seriously,” said EDS spokeswoman Cathy Hargett. “We hope the students take it seriously as well.”
Hargett claimed that the promissory note covered more than just a 10-week course. She said the Systems Engineering Development program was very selective and lasted for two years. “It’s an ongoing program, and our program is considered the best in the industry,” she said. “We’ve developed this program to fill our specific needs.”
The training, according to Hargett, costs EDS more than $9,000, but she wouldn’t say how much.
Whatever the facts of the case between Wood and EDS, Hargett said the EDS promissory note--which the company introduced in 1981--is “very commonplace” in industry today.
Herb Rubenstein disagrees. Rubenstein, a Washington attorney for another former EDS employee, said the type of contract EDS requires its employees to sign is fairly unusual. “It’s not real common among companies that require the education as a condition of employment,” he said.
William Kilberg, a former U.S. solicitor of labor and now an employment specialist in the Washington office of Gibson, Dunn & Crutcher, also questions whether the EDS approach is a typical one. Kilberg said it was more common for a company that pays to send an employee to a university for a special degree such as a master’s of business administration to require that employee to pay the company back if he or she doesn’t return to the job after completing the course.
He said courts generally are not overly sympathetic to employment contracts, particularly if they appear to be punitive.