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How does everyone handle bringing an employee in from out of town? Our labor pool is such that we can't find the experience we need locally.

We're looking at a young technical person. We'd be asking him to move about 250 miles. Of course we should pay moving expenses.

1. If he quits, does he pay us moving expenses back?
2. If he doesn't work out and let him go, do we request refunding moving expenses?
3. Should we offer to bring him up for a month and put him up somewhere while we check each other out?

Any thoughts?

pmoriarty's picture

Most companies that I have worked for that have paid for relocation have typically had a "claw-back" clause that says that if the employee leaves during the first year then the employee has to reimburse the employer for the relo costs. Typically, if you terminate the employee, you eat the costs.

bflynn's picture

The "claw-back" is the normal situation, but I recommend that you consider it carefully. If the clause is in place, you get some pretty perverse incentives going on if the employee isn't working out.

What I mean is that if the job isn't working out, the employee might be trapped. They don't have the money to pay you back, so leaving isn't an option for them. Meanwhile, they could be demoralized and a drag on your organization. All for the sake of "fairness" if the employee leaves.

One alternate that I've suggested elsewhere puts some of the risk on you. Make the moving pay a pay advance. Take it back out of the first 6-12 months pay. If the employee leaves, count the remaining unpaid amount as a cost of hiring a bad employee and be more careful next time. I've never seen that used, so I don't have any thoughts legally - run it through your legal dept and see what they think. I also can't tell you the tax implications either for the business or the individual. However, I mention it because I like it much better for the positive attitude it maintains.

Brian

juliahhavener's picture

When I accepted this position with the same company in another state, they put me up in a hotel during the week for the first month or so while I made moving arrangements. They also paid mileage for me to go home each Friday evening and return each Sunday evening. They did not pay full relocation costs, but they did give me a small bonus to help defray the costs.

If you pay for them to stay in a hotel for 4-6 weeks while you figure out if your hiring is sound, you're paying $1800-2670 for the hotel (conservative figure) 5 days a week, not counting mileage for trips home. I think either way you will be spending the money. If you aren't sure, don't hire him.

asteriskrntt1's picture

Hi Will

How much do you trust your hiring process? If your process has shown to be robust, how many people do you hire that do not work out? That is the risk you are mitigating. And really, how much is the cost of relocation? I moved pretty barebones to Toronto from Winnipeg (about 1800 miles I think) for like $1000.

I can't see any junior person who isn't making a ton of $$$ wanting to take the risk of having to repay moving expenses. They likely would not have the money to pay it anyhow. Then you get into the whole termination pay and witholdings etc. Messy stuff.

Maybe move the person barebones like I did, and if they get to a certain point where you are sure it is a fit, you can offer to pick up the tab on the remaining stuff too.

*RNTT