Labor & Employment Law Daily Wrap Up, COVERAGE, LIABILITY—Bankr. E.D. Mich.: Bankruptcy trustee fails to recover tuition expenses incurred by employer in training employee to be EMT, (Aug 21, 2025)

By Nicholas Kaster, J.D.

The key distinction made by the Michigan Supreme Court with respect to tuition reimbursement programs is whether the education or training is optional.

A federal bankruptcy court in Michigan has dismissed a suit by a bankruptcy trustee to recover tuition expenses allegedly incurred by an employer in training an employee to be a certified emergency medical technician (EMT). Because the training was not optional but was a condition of employment, the court held that the bankruptcy trustee could not recover the cost of that training (Mouranie v. Cheatem, No. 23-31085-jda (Bankr. E.D. Mich. Aug. 19, 2025)).

On September 22, 2022, the employee signed an agreement with her employer, STAT Emergency Medical Services, to receive training to become a certified emergency medical technician (EMT). Under the terms of the agreement, the employer would loan the employee $5,500 for the cost of the course. Upon completion of the course and after obtaining the Michigan EMT basic license, the employee agreed to work for the employer for a period of 18 months following successfully completing the employment probationary period, at a status of part-time or full-time.

The final paragraph of the agreement, signed by the employee, states: “I agree to all of the Scholarship requirements and contents as outlined above and understand that if I leave the program for any reason, my employment with STAT EMS ends within the designated timeframe for any reason, or I do not become a licensed EMT-Basic within the designated timeframe, that I will be responsible for repaying the $5500.00 tuition fee back to STAT EMS.”

Employer ceases operations. The employee contended that she fully complied with the terms of the Agreement by finishing her training in November 2022, and timely passing the National Exam in December 2022. In December 2022, she began working as a paid employee at STAT. She further claimed that, in February 2023, STAT stopped paying her for hours worked. According to the employee, she did not resign, nor was she terminated from her job. Her employment ended in March 2023, when STAT shut down its EMT operations.

Bankruptcy petition. On July 5, 2023, STAT filed for bankruptcy. On March 10, 2025, the bankruptcy trustee sued to recover the $5,500 tuition paid by STAT for the employee’s training. The employee contended that the employer breached the contract by failing to pay her for hours worked in January and February 2023, as well as “committing financial crimes which lead to them being shut down by the State of Michigan”—meaning that she no longer “had the option to honor our agreement of employment for 12 months.”

The bankruptcy trustee moved for summary judgment. The trustee asserted that the facts were straightforward: The employer paid the employee monies for tuition reimbursement wherein the employee was to be employed with the employee for a minimum of 18 months. Her employment was terminated on February 20, 2023 causing a breach of contract.

Tuition contract. The bankruptcy trustee asserted that the agreement between STAT and the employee was valid and enforceable under Michigan law. The court disagreed and found that agreement was not enforceable against the employee. In Sands Appliance Services, Inc. v. Wilson, 463 Mich. 231 (2000), the Michigan Supreme Court held that employees cannot be required, as a condition of employment, to reimburse an employer for employer-mandated training.

In holding the contract unenforceable, the Michigan Supreme Court found that Michigan’s Payment of Wages and Fringe Benefits Act (WFBA) was designed to “prevent kickbacks or payments of any kind to an employer in return for employment or its continuation.” In Sands Appliance, the employer required that employee grant it a contractual right to financial recovery in the event he did not complete six years of employment. The Court found that this repayment arrangement represented remuneration or consideration that ran from the employee to the employer and violated the WFBA. The key distinction made by the Michigan Supreme Court with respect to tuition reimbursement programs was whether the education or training was optional.

As explained by the Court, “We note, also, that some employers offer to fund employees’ educations with the understanding that the employee will repay, unless they remain with the employer for a specific period. Such programs do not violate subsection 8(1) of the WFBA. As with reimbursement for personal phone calls and paying for employer-provided tools removed after a job ends, they are optional and not a condition of employment or continued employment. In contrast, the tuition contract was a condition of employment. Defendant could not work for plaintiff without submitting to its repayment provision.”

Non-optional condition of employment. The statute was subsequently amended to provide that where an education expense is not optional, i.e. where the tuition expense is a condition of employment, an employer may not seek reimbursement of the expense from the employee. The court read this amendment as codifying the holding of the Sands Appliance case.

The agreement in this case, the court held, was similar to the contract in Sands Appliance. The agreement made completion of the training course and passage of the EMT certification test non-optional conditions of employment.

The bankruptcy trustee contended that the training covered in the Agreement was not a condition of employment with STAT because the employee always had the option to obtain EMT training elsewhere.

But this argument missed the point, the court said. Of course, the employee had the option to obtain and pay for EMT training elsewhere or elect to pursue a different career path entirely. But her EMT training and certification was required for this job with this company, said the court, and STAT deliberately chose to offer this mandatory training program in its effort to recruit new employees. The plain language of the Agreement conditioned employment on successfully completing this training. In short, the court concluded, nothing in the agreement could reasonably be construed to make completion of training optional for individuals hired as EMTs at STAT.

Because the training covered by the agreement was not optional but was a condition of employment, the court held that the bankruptcy trustee could not recover the cost of that training. Accordingly, the trustee’s motion for summary judgment was denied and the complaint was dismissed.

The case is No. 23-31085-jda.

Judge: Applebaum, J.

Attorneys: Travis Comstock (Giarmarco, Mullins & Horton, P.C.) for Stat Emergency Medical Services, Inc. Samuel D. Sweet (Samuel D. Sweet, PLC) for Charles M. Mouranie. Timothy Graves, U.S. Department of Justice, for Andrew R. Vara.

Companies: Stat Emergency Medical Services, Inc.

Cases: EmployeeStatus ContractClaims WageHour CoverageLiability MichiganNews