My son has worked for a company in engineering for a year. He is being considered for a job in another state (engineering) and had the final interview yesterday.
Today he got a note from the company that relocated him (a year ago) stating that they need him to sign a paper that says he agrees to pay back his relocation if he leaves in less that a year (he's been there a year) and to pay back 50% if it's between 12 and 18 months.
That's a pretty fishy thing going on since most likely the company he had the interview with has probably contacted the company he works for.
He was never told that he would need to pay back relocation and never signed anything when he was hired a year ago.
I told him don't sign anything.! This seems illegal to me that now that he is considering leaving they want him to sign something they should have given him a year ago.
What should he do?

It is not illegal for them to ask him to sign that form. However it would be illegal for them to try to enforce payback without it. At this point he should definitely not sign the form and wait to see if he gets a new offer. That new offer may or may not come but it might not be exactly what's he is looking for. In that case, its not an issue.

Not sign anything like that, obviously. It would be illegal for them to not pay him what he's owed or withhold any money unless he agreed they could do that. They are trying to get him to do that because if he did sign they get money back they aren't entitled to get otherwise from what you've stated, I would think (not a lawyer). Laws differ from place to place but it's unlikely that he's obligated to pay that back if he wasn't told it was a condition of his employment up front.

His best bet would be to contact an employment lawyer, many do free consulations. Or to contact the labor board where he is currently located to ask about the situation. He should also ask the lawyer what his rights are regarding his reference from the current employer especially if he refuses to sign.

The new job is exactly what he wants and if they make an offer, he will take it. So the company he works for obviously thinks he should pay back half of the relocation package they gave him. I imagine it was an oversight when he was hired that no one talked about relocation payback and no papers were signed pertaining to it.

Most likely they are aware he may leave and now are looking for a paper that should have been signed a year ago, but was never given to him.

I feel that since he wasn't informed and didn't sign anything, they don't have a leg to stand on, but I am not a lawyer so could be very wrong.

And that is a good point. They really like him where he works, but what would happen to them as a reference if he leaves them unhappy?

Oversight or not, thyey can not retroactively alter the hiring arrangement made last year. He owes nothing. He has no rights regarding his references, they re free to say anything as long as they believe it to be true. Most companies give little or no negative information to help avoid a chance of a law suit.

Ok, this is the issue, if he refused to sign, they can of course unless he has an employment contract, decide to fire him, So he had better get a job offer and accept it, before he finds hisself without any job.

They can not collect this unless he signs, but they can of course decide not to keep him employed if he does not.

Yes, hopefully things will turn out well for him but if he doesn't get the new job the old one might be able to either fire him or make things very uncomfortable. Many places can fire people for no reason especially if they are not protected by a contract or union.

It's also true that a lot of places don't give out a lot of info on previous employees due to the legal liability issues at least in the U.S.

Really interesting answers. Thank you.

This is a catch 22 or something like that. It is very clear that they screwed up and didn't get him to sign the form initially. Someone in his company may be in big trouble for that error and is trying to cover their tracks.
I would take into consideration: 1) How much would the relocation charge be? 2)How much would a lawyer cost? 3) What if he signed the form with the current date-he could refuse to backdate it because it would be falsifying a document? Could they charge him the fee if he could prove he didn't know before he was hired? 4) I think if he doesn't hear he got the other job soon, he has to sign the form in my opinion.
If he signs and stays with the company he only has a few months and it no longer applies.
If he gets the other job and they take the fee out his last pay, he can try small claims court based on not having been pre-advised, but is the amount of money worth the trip back, going to court, loss of pay? I realize I have more questions than answers but you'll have to look at the total package and decide. Refusing to sign and staying is not an option.

He would sign it for sure if he was staying. So his concern isn't if he should sign it if he stays.
It is how to handle this since he most likely is leaving. He did a great job for this company and is well thought of. He would have to pay them about 2500 dollars if he signs this agreement. Since he is leaving, it seems he should not sign it. He will know within a few days about the new job so it's easy to wait it out.
From what I understand from these answers is,
He isn't legally obligated to pay since he never signed anything.
It's possible the money will be deducted from his last paycheck and the only recourse would be small claims.
We advised him to not sign anything unless it takes a while for the other position to be offered to him and check with a lawyer if he can.
The scenario is that he could be offered the new job within a week and would give a two week notice, and the company he works for most likely caught wind that he applied for the other job. They must have called to verify his employment since they promised they would not contact his current employer, it seems this can't be coincidental.

I doubt that the company would try anything like deducting the $2500 from his last check. That would be an outright labor law voilation and they know most folks will not take that laying down. They would likely lose triple damages in court.