Overview: A method for attracting new employees is to provide relocation expenses to new hires. Employers have an incentive to provide relocation expenses because there may be tax benefits. Relocation expenses can encompass a number of things, such as travel expenses for the employee and his or her family, transportation costs, or temporary storage or housing costs.
If an employer is reimbursing a new hire for the relocation costs, the manner in which the employee will be compensated for the costs must be set forth in the offer letter, i.e. paying the employee's expenses directly versus reimbursing the employee for money spent on relocating. Employers should be aware that reimbursements provided for temporary housing for a recently relocated employee while the employee searches for permanent housing are taxable to employees.
There are times when an employer must withdraw an employment offer - for instance, if there is a downturn in the economy and the position is eliminated or there are layoffs prior to the new employee starting work. In certain states, employers may be required to pay an at-will employee damages if the employee relocated in reliance on the job offer. Should this situation occur, employers should be aware of their state laws in order to limit exposure to such damages.
Trends: In light of the global marketplace, multinational companies are increasingly relocating their employees overseas and/or are hiring foreign workers. As a result, there is a growing trend towards employers retaining "relocation counselors" to assist with the relocation process. These counselors can be an invaluable resource to employees seeking guidance during the moving process.
Author: Melissa A. Silver, JD, Legal Editor
HR guidance on considerations in relocating employees.