Being pressured by my company to sign legal documents
February 22, 2012 8:10 PM Subscribe
Being pressured by my company to sign legal documents. This seems very not okay.
I'm an American, working on a 1.5 year project in Canada for my international company. To satisfy Canadian tax requirements, my company paid a bunch of money to the Canadian govt, above and beyond our normal salaries + US tax. I can't tell exactly, but this amount is between $10-20k. When we employees do our US taxes, we can claim a credit on all foreign-paid taxes and recover that amount. Our company then expects us to pay that tax credit money back to them, but... they never got employees to formally agree to that ahead of time.
Now that tax time is approaching, they're trying to get all employees to sign an agreement saying they'll pay the amount back. They're framing the agreement as a simple acknowledgement of the tax process, but from a legal standpoint (I think?) this signed agreement would give them the teeth to sue us if they don't get their money. It also makes employees financially liable for any costs associated with delays in tax processing. (So if you sign this document, you better fall right in line or it could cost you a bundle.)
Also, the company is requiring US employees to use their designated tax preparation firm (they'll pay for this) -- presumably, to ensure that they get their money back. The tax prep firm has its own legal agreement for us, which contains a clause whereby employees to agree to share our entire tax return with our company or any 3rd party -- an invasive overreach into our privacy. Our company is saying that only special cases, which they may or may not approve, can use their own tax preparation services. And in these cases, our company will require access to instruct our tax accountants on how to prepare our taxes.
Most employees have signed these agreements. I can only assume they either didn't read the fine print or they don't value their personal privacy.
I haven't signed anything, but I'm getting a lot of pressure from management to sign. E-mails, ambush conference calls, managers showing up at my desk... all insisting that I sign these agreements. Human Resources here appears to exist to protect the company from its employees, so no help there -- in fact, that's the source of most of the pressure. (I asked whether there was a staff lawyer that employees could use to represent our interests. No reply.) As the pressure escalates, I fully expect that they will delay my annual bonus (around $10k) and/or raises, possibly threaten to fire me, until I sign both agreements.
So a few questions, understanding that you are not my lawyer:
1. Is it legal for the company to pressure employees to sign legal agreements? Specifically, is it legal to withhold financial compensation or threaten termination unless we sign an agreement?
2. Would such an agreement signed under pressure be binding? Would this situation constitute "duress"?
3. Can companies require employees to use particular tax preparation services? Can they demand access to other tax preparation services?
4. Is this a scenario where I should immediately lawyer up and it's obvious to everybody but me?
I'm an American, working on a 1.5 year project in Canada for my international company. To satisfy Canadian tax requirements, my company paid a bunch of money to the Canadian govt, above and beyond our normal salaries + US tax. I can't tell exactly, but this amount is between $10-20k. When we employees do our US taxes, we can claim a credit on all foreign-paid taxes and recover that amount. Our company then expects us to pay that tax credit money back to them, but... they never got employees to formally agree to that ahead of time.
Now that tax time is approaching, they're trying to get all employees to sign an agreement saying they'll pay the amount back. They're framing the agreement as a simple acknowledgement of the tax process, but from a legal standpoint (I think?) this signed agreement would give them the teeth to sue us if they don't get their money. It also makes employees financially liable for any costs associated with delays in tax processing. (So if you sign this document, you better fall right in line or it could cost you a bundle.)
Also, the company is requiring US employees to use their designated tax preparation firm (they'll pay for this) -- presumably, to ensure that they get their money back. The tax prep firm has its own legal agreement for us, which contains a clause whereby employees to agree to share our entire tax return with our company or any 3rd party -- an invasive overreach into our privacy. Our company is saying that only special cases, which they may or may not approve, can use their own tax preparation services. And in these cases, our company will require access to instruct our tax accountants on how to prepare our taxes.
Most employees have signed these agreements. I can only assume they either didn't read the fine print or they don't value their personal privacy.
I haven't signed anything, but I'm getting a lot of pressure from management to sign. E-mails, ambush conference calls, managers showing up at my desk... all insisting that I sign these agreements. Human Resources here appears to exist to protect the company from its employees, so no help there -- in fact, that's the source of most of the pressure. (I asked whether there was a staff lawyer that employees could use to represent our interests. No reply.) As the pressure escalates, I fully expect that they will delay my annual bonus (around $10k) and/or raises, possibly threaten to fire me, until I sign both agreements.
So a few questions, understanding that you are not my lawyer:
1. Is it legal for the company to pressure employees to sign legal agreements? Specifically, is it legal to withhold financial compensation or threaten termination unless we sign an agreement?
2. Would such an agreement signed under pressure be binding? Would this situation constitute "duress"?
3. Can companies require employees to use particular tax preparation services? Can they demand access to other tax preparation services?
4. Is this a scenario where I should immediately lawyer up and it's obvious to everybody but me?
Lawyer, lawyer, lawyer.
posted by iamabot at 8:17 PM on February 22, 2012 [3 favorites]
posted by iamabot at 8:17 PM on February 22, 2012 [3 favorites]
Go to a lawyer through lawyer referral. however, it sounds like you have not been paying taxes to the Canadian government and that you've only been paying US taxes. I would explore this in more detail, because you don't want to get stuck paying both US and Canadian taxes. You don't want to get stuck with an audit where you still owe the Canadian government taxes. But, aside from that, the above situation sounds like you should definitely lawyer up ASAP, because what the employer is doing sounds very....odd. IANAL
posted by Chaussette and the Pussy Cats at 8:17 PM on February 22, 2012
posted by Chaussette and the Pussy Cats at 8:17 PM on February 22, 2012
Sounds like they may be trying to pass on liability for their tax situation onto their employees. I'm not sure you have a case against them, but as others have suggested, it's not an altogether bad idea to have a legal six shooter cocked and ready just in case they tried to shoot you in the back. Call yourself a lawyer.
posted by deathpanels at 8:20 PM on February 22, 2012
posted by deathpanels at 8:20 PM on February 22, 2012
That sounds like it could potentially be operationalized tax fraud. ...but what do either of us know? I can't imagine a consultation with a lawyer would be more expensive than either a trial or peace of mind.
posted by smirkette at 8:21 PM on February 22, 2012
posted by smirkette at 8:21 PM on February 22, 2012
I'm not sure what province you're in, but you should contact employment standards, as well as CRA. If you don't know who to talk to at CRA, ask an accountant. An accountant might be cheaper than a lawyer.
posted by KokuRyu at 8:37 PM on February 22, 2012 [3 favorites]
posted by KokuRyu at 8:37 PM on February 22, 2012 [3 favorites]
There's nothing about this that seems even slightly ok... Aside from protecting yourself legally, which should be obvious, I'd look for new work with a less sketchy company and share the details with the world when and if its ever possible - they sound like a company nobody would/should ever deal with.
posted by blaneyphoto at 9:02 PM on February 22, 2012 [1 favorite]
posted by blaneyphoto at 9:02 PM on February 22, 2012 [1 favorite]
that's incredibly sketchy behavior. i would get a lawyer yesterday.
posted by facetious at 9:21 PM on February 22, 2012
posted by facetious at 9:21 PM on February 22, 2012
I don't know what province you are in but, in BC, you can get 30 min with a lawyer for $25 through Lawyer Referral Service. It's a volunteer thing, but some great lawyers take part in it.
posted by Chaussette and the Pussy Cats at 9:53 PM on February 22, 2012 [1 favorite]
posted by Chaussette and the Pussy Cats at 9:53 PM on February 22, 2012 [1 favorite]
I'm not a lawyer, but I'm a Canadian who worked in the US on a one-year project, and the arrangement was very similar to what you're describing--I don't see anything particularly suspicious.
In particular, it sounds like you're paying US tax rates, while your employer is responsible for covering the additional foreign tax liability, since Canadian tax rates are higher than US tax rates. So they're paying the foreign tax, and then expecting to receive the foreign tax credit.
Our company then expects us to pay that tax credit money back to them, but... they never got employees to formally agree to that ahead of time.
Are you thinking of trying to keep the foreign tax credit instead of giving it back to the employer? (It seems to me that you would be on extremely shaky ground if you tried to do this--basically, you'd be trying to screw your employer.) Or do you just object to signing an agreement saying that you will do so?
Regarding the privacy issue: in my case, my employer paid for an accounting firm to file both a US and Canadian tax return, and had access to my returns. That also doesn't seem unusual.
Of course, if you're still suspicious, you may want to consult a lawyer.
posted by russilwvong at 9:56 PM on February 22, 2012 [4 favorites]
In particular, it sounds like you're paying US tax rates, while your employer is responsible for covering the additional foreign tax liability, since Canadian tax rates are higher than US tax rates. So they're paying the foreign tax, and then expecting to receive the foreign tax credit.
Our company then expects us to pay that tax credit money back to them, but... they never got employees to formally agree to that ahead of time.
Are you thinking of trying to keep the foreign tax credit instead of giving it back to the employer? (It seems to me that you would be on extremely shaky ground if you tried to do this--basically, you'd be trying to screw your employer.) Or do you just object to signing an agreement saying that you will do so?
Regarding the privacy issue: in my case, my employer paid for an accounting firm to file both a US and Canadian tax return, and had access to my returns. That also doesn't seem unusual.
Of course, if you're still suspicious, you may want to consult a lawyer.
posted by russilwvong at 9:56 PM on February 22, 2012 [4 favorites]
Why look at this as binary? Sign or not? How about deleting some of the clauses that make you uncomfortable such as using their tax prep person or having to make your return available to them and just agree to pay them the credit? I would talk to a lawyer and an accountant familiar with the issue(s).
To get the pressure off, I would talk to HR or your boss or whomever is in charge and tell them that in principal you agree to repay them their money, but want to talk to an attorney about the details of the contact and about the privacy issues. Ask if your lawyer can contact their attorney to iron out any details or issues. Then tell them that this has become a distraction and you want your attorney to handle the details for you. Then, if anyone asks again, give them your lawyer's phone number.
posted by JohnnyGunn at 10:33 PM on February 22, 2012 [6 favorites]
To get the pressure off, I would talk to HR or your boss or whomever is in charge and tell them that in principal you agree to repay them their money, but want to talk to an attorney about the details of the contact and about the privacy issues. Ask if your lawyer can contact their attorney to iron out any details or issues. Then tell them that this has become a distraction and you want your attorney to handle the details for you. Then, if anyone asks again, give them your lawyer's phone number.
posted by JohnnyGunn at 10:33 PM on February 22, 2012 [6 favorites]
JohnnyGunn has given you your answer.
I will say though that it almost sounds from your question (especially because you did not state otherwise) that you are angling to keep the refund. Is this true? Because your employer may have picked up the same idea as I did.
Was your original idea to keep this money as part of your compensation? Because I can see where you are coming from, that you think the burden of this should be on your employer and that they have no right to stipulate what you do with any personal tax refund that is yours and sent to you personally.
I think it is a pretty big mistake they did not include this "requirement" (to them, not to you) in their initial contract. If you factored this refund into your hiring considerations - man, I see your problem. In a way, they are billing you to keep your job. It would not seem that way at all if you had known up front.
You kinda gotta decide what you want out of this. Maybe it's just an acknowledgment that they dropped the ball? Or compensation for the lawyer you must now hire to tweak their proposed agreement to protect your rights and privacy? Or maybe you want them to split the difference with you, since you were under the original impression that extra money was part of your compensation package??
Decide. Get a plan. Proceed.
posted by jbenben at 11:22 PM on February 22, 2012
I will say though that it almost sounds from your question (especially because you did not state otherwise) that you are angling to keep the refund. Is this true? Because your employer may have picked up the same idea as I did.
Was your original idea to keep this money as part of your compensation? Because I can see where you are coming from, that you think the burden of this should be on your employer and that they have no right to stipulate what you do with any personal tax refund that is yours and sent to you personally.
I think it is a pretty big mistake they did not include this "requirement" (to them, not to you) in their initial contract. If you factored this refund into your hiring considerations - man, I see your problem. In a way, they are billing you to keep your job. It would not seem that way at all if you had known up front.
You kinda gotta decide what you want out of this. Maybe it's just an acknowledgment that they dropped the ball? Or compensation for the lawyer you must now hire to tweak their proposed agreement to protect your rights and privacy? Or maybe you want them to split the difference with you, since you were under the original impression that extra money was part of your compensation package??
Decide. Get a plan. Proceed.
posted by jbenben at 11:22 PM on February 22, 2012
You need professional advice, yes. But this kind of stuff cannot be handled by a Lawyer Referral Service lawyer.
I am sending you by memail the contact information for an accountant who specializes in cross-border issues. He may recommend legal consultation as well.
posted by yclipse at 4:29 AM on February 23, 2012 [1 favorite]
I am sending you by memail the contact information for an accountant who specializes in cross-border issues. He may recommend legal consultation as well.
posted by yclipse at 4:29 AM on February 23, 2012 [1 favorite]
Yclipse, I think the lawyers you get through Lawyer Referral in Canada are different than in the US.
posted by Chaussette and the Pussy Cats at 9:39 AM on February 23, 2012
posted by Chaussette and the Pussy Cats at 9:39 AM on February 23, 2012
Did not see the anonymous sign line. Memail me if you would like the contact.
posted by yclipse at 6:14 PM on February 23, 2012
posted by yclipse at 6:14 PM on February 23, 2012
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