The following summary is based on a decision of the Superior Court. Please note that Superior Court opinions are not binding on the New Hampshire Supreme Court, and at the time this summary went to print, it was still possible for this decision to be appealed to the New Hampshire Supreme Court.
Many police departments around the state have "training agreements" with their officers. Under these agreements, a municipality agrees to pay to train an officer and the officer agrees to repay some or all of these costs if he or she voluntarily leaves employment within a certain number of years after training has ended. Although they are common, these agreements have not been the subject of much litigation. A recent Superior Court opinion helps shed some light on their enforceability.
This case involved an officer in the town of New Boston. Once hired, the new officer attended the New Hampshire Police Standards and Training Council academy and additional homeland security training and was also given on-the-job training by the town. Although the state paid for the academy training, the town paid the officer his salary during training and provided staff to train him on the job. The officer was asked to sign a training agreement stating that if he voluntarily left employment within three years of the completion of his training, he would reimburse the town for the costs of his training. The amount of required reimbursement would be reduced for every month he remained employed during that three-year period. The officer left employment before the three years had ended, but challenged the enforceability of the agreement.
The court upheld the agreement. The first issue was whether the agreement was supported by adequate "consideration." The officer agreed to reimburse the town in certain circumstances, but what had the town promised in return? The court found that the officer was an employee at will and could have been terminated at any time, even, conceivably, as a result of refusing to sign the agreement. Therefore, by continuing to employ him, the town was providing a benefit to the officer, which was the "consideration" needed to support the agreement.
The second major issue was whether the dollar amount of reimbursement (the "liquidated damages") was unreasonable. When a contract includes a liquidated damages provision, the parties agree ahead of time how much the breaching party will owe the other party. In this case, the officer breached the contract when he left before the end of the three-year period. The court found that the amount of damage to the town was difficult to determine because the breach resulted in a need to pay other officers at overtime rates to fill the officer's shifts, and incur other costs to train a replacement. Therefore, the amount of liquidated damages called for in the contract was reasonable because it was based on the projected cost of training an otherwise unqualified officer, prorated in fairness based on how long the officer had remained in the job.