Perot’s Employee Training Paybacks Later Ruled Illegal
Ross Perot required employees to promise to pay back any training costs up to $9,000 if they resigned or were fired, a practice Michigan officials say was illegal in that state, a newspaper reported Sunday.
State officials investigated the practice after receiving dozens of complaints about it in 1988 and 1989. The attorney general’s office pressured Electronic Data Systems to change its policies in 1990 and says now the program was illegal.
Michigan was the only state to look into the hiring practice used worldwide by EDS.
Perot, poised to run for President as an independent, founded EDS in 1962 and sold it to General Motors Corp. in 1984. He remained on GM’s board of directors until 1986.
Beginning in the late 1960s, new hires at EDS in Michigan and elsewhere had to sign promissory notes, agreeing to pay the company up to $9,000 if they quit or were fired within several years of their training.
“They used this as a sword of Damocles hanging over these very young kids in their 20s who couldn’t easily come up with $9,000,” Robert Janover, a lawyer who represented one fired employee, told the Detroit News.
The policy was needed because of the company’s reputation for top-level technical training, said Mark Fox, EDS spokesman.
“Other companies and headhunters realized this was a world-class training program, and we found ourselves essentially being raided,” Fox said.