Article

I'm loaning an employee money, do I need a promissory note?

Provided by:  Jennifer Kirschenbaum, Esq.

September 17, 2019

 

Question:

Hi Jennifer,

I am loaning an employee money (not an insignificant amount ($25,000)).  

Thanks, 
Dr. L

Answer:


Yes, if you want to be secured, you need a promissory note and some type of security, which depending on how you pay the employee may or may not be a right to offset from compensation.  The question gets trickier when we factor in the human component - you may be asking but then not willing to present the employee with a promissory note - which is not recommended.  A person asking for a favor doesn't mean its not a business transaction and should not be treated as such.  If need be, kick it over to counsel and blame us that you are papering the exchange.  If the loan is towards student loans or even a current program, we can work in a requirement the employee pay down over time, and potentially a forgiveness will be worked out if the person stays long enough.  This concept is commonly known as a "sweat equity" arrangement.   

There is the short answer - treat this as a business arrangement and protect yourself.  The Worst Case scenario is the employee passes away and you would like to receive a repayment from the employee's family (or maybe even a refund from a paid-for program).  With no paper, you are likely out of luck.  




Looking for the KK Healthcare Exchange?  Click Here. 

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Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
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I'm loaning an employee money, do I need a promissory note?-September 17th, Jennifer Kirschenbaum

Article

I'm loaning an employee money, do I need a promissory note?

Provided by:  Jennifer Kirschenbaum, Esq.

September 17, 2019

 

Question:

Hi Jennifer,

I am loaning an employee money (not an insignificant amount ($25,000)).  

Thanks, 
Dr. L

Answer:


Yes, if you want to be secured, you need a promissory note and some type of security, which depending on how you pay the employee may or may not be a right to offset from compensation.  The question gets trickier when we factor in the human component - you may be asking but then not willing to present the employee with a promissory note - which is not recommended.  A person asking for a favor doesn't mean its not a business transaction and should not be treated as such.  If need be, kick it over to counsel and blame us that you are papering the exchange.  If the loan is towards student loans or even a current program, we can work in a requirement the employee pay down over time, and potentially a forgiveness will be worked out if the person stays long enough.  This concept is commonly known as a "sweat equity" arrangement.   

There is the short answer - treat this as a business arrangement and protect yourself.  The Worst Case scenario is the employee passes away and you would like to receive a repayment from the employee's family (or maybe even a refund from a paid-for program).  With no paper, you are likely out of luck.  




Looking for the KK Healthcare Exchange?  Click Here. 

MISSED OUR RECENT WEBINARS?  CLICK HERE ANYTIME!
Looking for HIPAA and compliance forms?  
Click here to visit our website.
Have a question or comment for Jennifer?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or  at (516) 747-6700 x. 302.
Interested in having Jennifer speak at an event or
at a residency/fellowship program?
Contact Jennifer directly at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com
Click here to learn about
K&K's Prepaid Legal Audit/Investigation Defense Now!