Help Me Get Out of a Relocation Contract

by Evil HR Lady on July 27, 2020

I recently left a company that had given me a tax-assisted relocation package. Totaling at $19k. I needed to stay employed with that company for 24 months per the contract. I left the company for a few reasons after 21 months. I was furloughed twice while there. I left just before they did another furlough

All salaried employees received the furlough to make up for lost revenue. Hourly employees remained working.  

I tried to negotiate a repayment plan, or pro-rate the balance. I have to pay back the full amount and need help getting around that. 

I’m not a lawyer, and you need one. This will hinge on how the relocation contract is written and state laws, so you really need a lawyer.

But, there may be hope, and if there’s not, here’s a warning for everyone else. Don’t sign a relocation contract that doesn’t have a pro-rated repayment plan. Them asking you to pay back the full amount when they’ve furloughed you twice and you’re three months from the deadline is ridiculous.

It may be legal and allowable within the contract, though. i honestly don’t know (remember: not a lawyer and I haven’t read the contract). I suspect that the unpaid furloughs may be key here–after all, they didn’t provide you with a job.

For future reference, here’s what you’re looking for in terms of repayment for relocation contracts.

  1. No repayment required if you are laid off or terminated, unless for cause. Remember, for cause is doing something really bad, not just sucking at your job.
  2. Pro-rated repayment. Ideally, it should be the total amount, divided by the number of months.

If you do have to repay, you’re not double-taxed on the money. It will get straightened out when you file your taxes.

So many people don’t think about the burden repaying relocation will cause when they take the new job. Moving is expensive! And international moving costs can run in the six figures. You really need to make sure you’re not screwed over when the company doesn’t live up to your expectations.

But, hire a lawyer. They may be able to help you.

Photo by Ketut Subiyanto

{ 2 comments… read them below or add one }

Dorothy Young July 27, 2020 at 4:10 pm

It’s unfortunate she left before writing the letter.

Why did she leave?

What are the “few reasons”?

Couldn’t she have stuck it out for three more months, and used the present furlough for job hunting?

And did the furlough periods count toward the 24 months?

Why does she assume she doesn’t have to fulfill a contract she signed? What did she think the contract was for? Spoiler: it was to protect the company from exactly what she’s done.

Unanswered questions here.

Reply

jdgalt July 27, 2020 at 8:26 pm

For moves in 2018 and later, under the Tax Cuts & Jobs Act moving expenses were not deductible (except for active duty military with permanent change of station orders), and relocation assistance became taxable. Thus if you have to repay it, you have a deduction coming.

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