I was just presented a corporate relocation package for my employer to move me across the country. Included in the package was a clause stating that if I was to quit or be fired for cause within one year of the move, I would have to pay back all of the moving expenses paid by the company (if within 2 years, 50% would have to be paid back). I have a couple questions:
Does anyone have experience with this? Is this common practice now? (I assume corporate legal has reviewed and given thumbs up.)
This seems a little like indentured servitude. I assume the total cost of the relocation will be ~$50-100K. In the event I decided that I wanted to change employers, it would be difficult for me (and most other people) to pay this type of money. I’m not so comfortable with possibility of being forced to work a job because the employer has manipulated me into a place where I don’t have any other option. Does anyone have advice or opinions on this issue?
This is a bog standard practice, and has been for some time. Much like tuition reimbursement, the company wants to ensure that they are getting a positive return on their investment in moving you to a new location. I would disagree somewhat with Mr. Chance that you even have an option to refuse it, IME refusing to sign it would probably lead to the job offer being retracted, or will at the least will have a chilling effect on your career.
It’s absolutely not, and I find that comparison offensive. The biggest difference is that You’re getting paid cash money for your labour, which indentured servants did not. Furthermore, your contract cannot be sold to a third party, you don’t need your master’s permission to marry, and if you breach this contract, the police will not round you up as a runaway and put you back to work. That is fundamentally different than than the small loss of freedom that this contract would impose.
If the amount of money that you are being offered is not enough to compensate you for the loss of your freedom, than you should not sign that contract. As for whether it is worth it, no one can answer that but you.
$50-$100k? That seems very high. Does that include some housing or house selling / buying subsidies?
This clause is pretty standard. Our two corporate moves had it. But we were talking < $12k, which was more than enough for our expenses with quite a bit left over.
I’d feel some hesitation about taking on an obligation that I would have difficulty meeting in case of leaving the company. Do you actually have to spend that much? If possible maybe just spend the minimum you need and make sure your savings can cover repaying that, and consider it “free money” once the two year period runs out
This has been standard practice since my first corporate job in 1982. Since my most recent relocation (two years ago) would have cost me ~$80K between real estate closing costs, moving household goods, house hunting, temporary living, etc. it is perfectly reasonable for my company to require reimbursement if I left soon after they had shelled out that cash to move me. I had the same arrangement with my signing bonus.
I did have another company try to hire me shortly after I relocated, they were willing to cover me for the amount I would have to reimburse my current company (relo and bonus). So I am certainly not an indentured servant.
Mr. Athena and I are not super wealthy, but we’re far from poor. When we moved from Colorado to Michigan (granted, 15 years ago), I recall it was around $8K to have a moving company pack our 3500 square foot house, put it in a moving van, store it for a few weeks, then move our stuff into our new house.
House-hunting, etc, couldn’t have been more than another few thousand $$, including air fare back and forth and a place to stay while house hunting.
Closing costs, I guess that’s a factor. So throw in a few more thousand there.
Altogether, I don’t think it reached $15K tops. Even considering it was 15 years ago, the only way I can think of it getting up to even $50K is if you were moving from one very high-cost-of-living place to another very high-cost-of-living place, and you had very large real estate costs ($1 million+ houses or something). Am I missing something? What brings the costs up so high?
Real estate fees are the biggie. In my case, 6% commission plus 1% transfer tax alone would have been $42K out of pocket on the selling side if I did this on my own (the company has deals with relocation firms so they get a substantial discount on this). On the buying side mortgage fees, appraisals, title insurance, plus a bunch of miscellaneous expenses probably came to at least $5K. House hunting trip (round trip airfare for two, a weeks worth of car rental, food, and lodging) about $2.5K. Reporting in trip (driving cross country - mileage, hotels, food, tolls) $2K. Temporary living $1.5K. Packing and moving cross-country: about $25K.
I worked with a guy about 20 years ago who quit after one year and one day, so that he wouldn’t have to pay back his moving expenses. It’s just as well that he left, nobody liked him anyway, he was kind of a douche.
I’ve done it. Received $3000 to execute a DITY move (U-Haul truck from Alabama to Maryland). Left after about 6 months. Asked for and received a $3000 signing bonus from the new company to cover the reimbursement.
My relocation from China to the USA in 2016 was about $22,000. That was packing my stuff, a 650 kg air shipment, a 40’ container, ocean passage, truck to my house, unpacking, and a cash allowance for repatriation. I have to believe (but don’t have the figures) that the cost in 2011 to move from the USA to China was similar.
And, yes, I was subject to a repayment clause on my way to China. Return to USA was guaranteed, though; I could have quit the first day back.
When my new company moved me from Massachusetts to Florida, they covered the moving , housebuying and travel expenses, but I don’t have the amounts since those were direct reimbursements. They also gave me money for miscellaneous expenses related to the move, a pretty significant amount too, with a pro-rated payback requirement for just that amount that expired after 1 year. I thought at the time it was pretty generous, and I still think so, so it was worth putting up with those bastards for just over a year.
I’ve moved 4 times now with relocation packages and they all some kind of time clause. My last move was from LA to Denver and it was $9k but that didn’t include a corporate housing stint or storage of our stuff since we already had a place. My most expensive most included 2 months in a corporate rental storage of my stuff for 3 months and paying off my underwater mortgage. I’m sure it was close to 40k all in. That company also paid for part of my masters degree and i left them after 18 months but since it was due to some sideways actions on their part we negotiated a deal that i didn’t have to pay them anything…
It makes sense for a company to want to get their money back on paying for a move so i don’t have a problem with it. Generally you shouldn’t take a job if you’re not willing to stay their for two years. My best jobs were the ones i could see myself doing forever when i took them and the worst ones were just a step on the ladder.
Thanks for the input. It sounds like repayment clauses are very common these days.
Responding to a few comments:
The move is being done at the request of and for the benefit of my employer. However, I’m glad to go. I think the changes will be an improvement.
I didn’t mean to offend anyone when I said “This SEEMS a LITTLE like indentured servitude.” I wasn’t intending to make a direct comparison or imply that I was being forced into anything.
Marvin the Martian’s description is very close to the package I am being offered, so assuming $50K-$100 still seems realistic. There is also a salary bump which is listed as a part of the package, so I assume that would have to be repaid.
