For H1B’s IBM is asking to serve 90days resign notice period or pay $10000, is this legal in USA(TX)?

I am on H1B visa , brought from IBM India to work in USA(Tx) for IBM clients here in US.

I now want to switch to some other employer, however IBM gave me an offer letter with conditions like I will have to serve 3 months notice period or pay $10000 in case i switch. I wanted to know if such conditions are legally valid here in US?

Wanted to know if there is anyway I could avoid paying this money ? 


Following is the extract from the letter they initially sent me:


-In the event you voluntarily terminate your assignment without providing IBMI with 90 days written

notice, or if your assignment is terminated for cause by IBMI, you agree to pay IBMI the amount of

Ten Thousand Dollars and no/100 cents ($10,000.00), which sum represents IBMIs cost of

customer service continuation, recruiting, assigning, training, educating, marketing, and your

replacement. You may decide to satisfy this requirement in Lieu of, as per the following :

- If your notification period is 0 to 60 days, the payment is $10,000

- If your notification period is 61 to 90 days, the payment is $5,500

- IBMI can and will engage the services of a collection agency if payment is not received by the

employees resignation date. By signing this letter, you also consent to IBMI or its affiliates

recovering all or part of this amount from any amounts owed to you, including salary and leave

encashment, to the extent permitted by applicable law. Any such recovery does not prejudice any

of IBMIs other rights to recover remaining amounts owed by you.

- In addition, in the event you terminate your assignment or if your assignment is terminated for

cause by IBM India, IBMI US or its affiliates within twelve (12) months of the later of relocating to

and starting work at a new job site for which IBMI US provided any relocation expense

reimbursement to you or paid any relocation expense on your behalf (including, but not limited to,

expenses associated with relocating your possessions and/or your family and/or dependents), you

agree that you shall pay to IBMI US the amount of any such relocation expense reimbursement

and/or any relocation expense paid by IBMI US on your behalf. You hereby agree that this amount

may be deducted from any monies owed to you by IBMI US at the time of your separation. Cause

includes, but is not limited to, breach of the Business Conduct Guidelines, neglect of duties, failure

to act in the best interests of IBMI US or violation of rules, regulations or procedures established

by IBMI US and its affiliates

The cash bond part or the 90-day notice requirements are not enforceable in any court of law in the United States. A company can hire a collection agency but you can send any such agency a written letter stating that the debt is not owed. Fact remains though that you must try your best not to hurt the company that spent some time and effort in recruiting you. If there are options, either plan to serve the 90-day notice period or if that is impossible, please help the company find a replacement for yourself. These are industry best practices that help everyone.

Best wishes

Dr. Sandeep Shankar

Hello Sandeep,

I’m in a similar situation. Was working for IBM India in L1 visa (for 2 years 11 months out of 3 years validity period and they told me in January that they won’t extend my visa and wound send be back) and in May this year, moved to a different company through H1. I had responded to the collection that I donot owe the money. So they had sent the xerox copy of the signed offer letter. Could you please help me what would be my response to the collection agency?

Thanks in Advance,


Your termination from IBM was not your fault. Even otherwise, signed offer letters may not be upheld in court of law. You can write to the collection agency that the employer and not you ended the relationship and therefore the company in reality owes you restitution and not the other way around. If you can send me a copy of the letter, I will send back a draft response. You can find my email id in the post above.

Dr. Sandeep Shankar, Colorado Heights University,

Hi Suman,

I am also in a very similar situation as described by you. So, I would like to know whether you had paid the dollar amount or not ? If you have not paid then what exact response did you give in reply to the mail from the collection agency? I am giving them a notice period of 45 days and still they are not negotiating on the amount ( 10K usd)


I’m in similar situation… I was on H1B visa sponsored by IBM India came to US on Dec 2016 and visa was valid until June 14 2019… My manager held up my extension process and decided to send me back to India while i got new offer i accepted the offer for June 10 and resigned on May last week last date was June 7. My resignation was accepted and i left IBM on June 7th. Then i received an Email from the IBM India Separation Desk saying i’m due 85k Rupees as part of Full and Final Settlement as part of Recovery amount.
I was employed with IBM India for 7+yrs and i asked for Separation Desk for negotiation of the amount since i was part of IBM for 7+yrs and i did complete the H1B period of 2yrs 7Months that i had on H1B, and was told to contact my Manager for negotiation and i contacted him and dropped mail stating the same.
I haven’t heard anything from my manager. What am i to do now. Since they are holding my PF and Gratuity amount along with my experience letters.

I paid a cashier check I don’t have a way to find out if IBM encashed it else I could pursue the best course of action.Secondly why Indian companies don’t enforce this and let tech companies in bay area lure coders for 10-20 k extra.