Jeff’s On Call!: Relocation Reimbursements

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Aug 1, 2011

This week’s inquiry comes from Marc Stevens:

Hi Jeff,

I’ve been recruiting now for about 11 years and as you would imagine, I’ve seen a lot of different things happen in this sometimes crazy but very rewarding business. I’ve attended the Fordyce meetings and really have benefited from your presence there. In your articles, you always share unique solutions we can’t get anywhere else…thanks!

Recently, I’ve been exposed to a situation that one of my candidates is facing and because of it seems a bit unfair, I wanted to share it with you to see what ideas or thoughts you have.

I have a candidate who has accepted an offer from our client and learned on his exit interview from his current company they wanted him to reimburse ½ of his relocation costs. Apparently the agreement is that 100% of the relocation costs are refundable to the company if the candidate leaves in the first year and 50% if within the second year. To me this seems a bit harsh — think of it this way:

Let’s say the candidate left on the 23rd month, well technically the company is looking for 50% of the relocation costs reimbursed? Huh?! I know I’m going to be biased about this but I can’t see why the company wouldn’t be amenable to at least working out a prorated schedule, which brings me to my question.

Is this typically something a company will enforce? Have you found that they would be willing to work something out, i.e. prorated schedule &/or does the candidate need to get an attorney involved?



Hi Marc,

We’re pleased to hear from you, and are here to help recruiters close as many placements as possible. Your JOC inquiry will help us show how to handle the matter of candidate reimbursements. Or rather – unhandle them, since there’s no need for the candidate to pay anything – or for you to blow a placement — if you set up the countermove properly.

We call these pre-employment gems Employee Payback Agreements (EPA’s). Typically, they’re a “condition of employment,” and the candidate has no choice other than to decline the job. That makes them disfavored agreements legally. So a court will look for reasons not to enforce them. But bringing up those reasons are the candidate’s burden of proof. And your “burden of placement.”

That’s where good recruiting comes in. You can coach the candidate to:

  1. Attack the agreement itself. Employer lawyers generally overwrite these agreements to impress their clients. That means ambiguous, inconsistent and overbearing terms. Things that would work in a business-to-business deal don’t work when a court construes a disfavored agreement.
  2. My favorite way to break relo paybacks is to show there was no consideration (something given in exchange) for the payback. It’s usually missed – even by experienced lawyers — and is the ultimate legal challenge. Here’s why:

    The employer agreed to reimburse the relo expenses so the candidate would accept. Most defense lawyers stop there. But where is the payment for the payback condition (upon the candidate leaving)?

    None. No consideration ergo no contract.

  3. Use the reasons for leaving to counterbalance the terms of the agreement. There are always misrepresentations in the hiring process. Candidates make them, and employers make them. Now’s the time to bring up the ones the employer made. It’s a safe bet that there were around a dozen.
  4. Was the job exactly as represented? Is it ever? By whom? When? What was said? How about the work area? The reporting relationships? The experience of the supervisor? The product? The product line? New products being developed? The company culture?  Since it’s a relo, what about employer statements as to job opportunities for the spouse? The schools?

    See what I mean? The whole process is replete with representations and they become misrepresentations. Some intentional, others unintentional. No matter. Just blame the employer for everything that went wrong!

    Do a candidate debrief with a plunger in one hand and a pen in the other. As the sewer backs up, step aside and take copious notes. O-o-o-h what yuk spews out! Who, what, where, when, and how.  It won’t be a brief debrief, but it’s worth your fee to document.

  5. Bring up the employer’s failure to orient, train, and supervise the candidate properly. Every working wounded has a story. Take notes on this too. Dates and places are critical. The candidate can be wrong on just about everything, as long as he’s exact. It’s just some biased person’s view of the world. That’s good enough for us.
  6. Once you’ve documented these three items, prepare a letter for the candidate to give to his ex. Threats aren’t necessary – just laying out the “facts.” Employer lawyers cave, or they get nailed in court with a lot more than the relo expense. Even worse – their clients ask why they paid for an agreement that was wrapped around their neck in the public square.

    As I stated in The Employee Termination Handbook (probably on the employer lawyer’s desk):

    The public has the impression that a court is like a giant automated teller machine. Just plug in the right facts and law, and the cash will appear. Trial lawyers who think otherwise are disabused of this impression rather violently during their first court appearance. This is the difference between art and science in the practice of law. The proof and interpretation of the law are critical.

There you have it, Marc. Once you know how to break EPA’s, you can let candidates know they should never stand in the way of taking a job.

No placement should ever be blown over an EPA. Half back? I don’t think so! Get an attorney? I don’t know so! Just a good recruiter like yourself — and off he goes to pursue his dream.

Best wishes for success with this and many more placements!


If you have a legal question you’d like to have Jeff answer here on The Fordyce Letter, check out Jeff’s On Call! and submit your question.