Employee relocation incentive
Lump sum relocation incentive payment
As authorized by Administrative Policy Statement 34.2, the administrative official with delegated authority may approve a lump sum relocation incentive payment when necessary to recruit a new employee or to retain a current employee who will have to make a domiciliary move in order to accept a University position. Lump sum relocation incentive payments must be made from the organization’s existing resources.
Authority to approve lump sum relocation incentive payments is as follows:
- For faculty and academic appointees: the dean;
- For professional staff and classified staff: the dean, vice president, medical center chief executive officer, or other administrator with equivalent administrative authority;
- For classified non-union staff: the University president has final approval authority (WAC 357-28-310);
Appointing authorities may establish procedures that their units must follow to obtain approval for relocation incentive payments.
Payment limit and exceptions
Relocation incentive payment in excess of 25% of the employee’s annual salary requires advance approval of the provost for faculty, academic appointees, and librarians, or the vice president for Human Resources for staff.
Relocation of current employees
UW employees who must relocate to another geographic location (either in the US or internationally) as part of their University employment are eligible to receive a lump sum relocation incentive payment under the following conditions:
- The employee will establish residence at the new location.
- The relocation will last for a minimum of six months.
- An employee who has a position that requires living in another geographic location, with periodic return stays to the campus where the regular position is held can only receive one lump sum relocation incentive payment.
- An employee who has received a lump sum relocation incentive payment may become eligible to receive another lump sum relocation incentive payment if the employee must make a domiciliary relocation to move to a different geographic location for a minimum of six months.
- An employee who has received a lump sum relocation incentive payment upon initial position to a University position may not receive an additional lump sum relocation incentive payment due for relocating to a different geographic location within 12 months of the initial position if the need to relocate was known at the time of the initial University position.
The full amount of the relocation incentive payment must be repaid to the University if within one year of the date of position the employee voluntarily terminates employment or engages in behavior that makes termination of employment necessary. Termination of employment as a result of layoff, disability separation, or other good cause as determined by the provost or vice president for Human Resources (or their respective designees) does not require repayment of the relocation compensation.
Relocation incentive payment is not a substitute for or an alternative to the payment of moving expenses incurred by new or transferred employees authorized by Administrative Policy Statement 34.1. As determined by the employing official and approved by the designated authority, a prospective employee may:
- be reimbursed for moving expenses only; or,
- receive a relocation incentive payment only; or,
- receive a relocation incentive payment and be reimbursed for moving expenses; or,
- receive no moving expense reimbursement or relocation incentive payment.
Federal law requires that employees pay income tax on lump sum relocation incentive payments. UW reports lump sum relocation incentive payments on the W-2 form. Employees may be eligible to deduct moving expenses on year-end tax returns. Employees may wish to seek advice from a tax professional.
The Integrated Service Center deducts the following from all lump sum relocation incentive payments:
- Withholding tax (25% of gross)
- Social Security (6.2% of gross)
- Medicare (1.45% of gross up to $200K, 2.35% of gross over $200K)
- As the employing official, you may discuss the relocation incentive payment with the successful job candidate, but you must inform the candidate that payment is contingent on approval by the authorized official and that payment can only be made after the individual is appointed and on the payroll. Under no circumstances can payment be made in advance of the individual’s position and placement on the payroll.
- Upon receiving final approval, you may present the relocation incentive offer to the candidate.
- Prepare the draft job offer letter which must include the following statement:
“This offer includes a relocation incentive payment in the amount of $______. Acceptance of this offer confirms your understanding that the full amount of the relocation incentive payment must be repaid to the University, if within one year of the date of your position you voluntarily terminate University employment, or if you engage in behavior that makes termination of employment necessary. In addition, acceptance of this offer may have tax consequences for you, and necessary payroll deductions will be taken from the relocation incentive payment. If you have questions about the tax implications of the relocation incentive payment, you may wish to consult a tax professional for advice.”
- Complete the Relocation Payment Approval Request (MS Word) and forward it for approval according to the form’s instructions.
- To initiate payment, follow the Request One Time Payment – Staff Campus or Request One Time Payment – Medical Centers user guides and contact the Integrated Service Center if you need assistance.
Frequently Asked Questions
Does occasional travel with extended stays in another location, like teaching a quarter abroad, qualify for lump sum relocation incentive payment?
Can a lump sum relocation incentive payment be used for an employee who is taking professional leave or on sabbatical?
Is there a minimum distance for a domiciliary move that would make an employee eligible for a relocation incentive payment?
The law does not establish a minimum distance. However the University does not approve relocation incentive payments where changing residences is a matter of employee choice or preference, but is not required by the acceptance of an position.
Can a lump sum relocation incentive payment be used instead of paying moving expenses?
There can be no advance payment of a lump sum relocation incentive payment. The payment is only made after the individual is on the payroll. In addition, lump sum relocation incentive payments are treated as salary and are fully taxable.
Can a lump sum relocation incentive payment be paid out over time, for example to reduce tax consequences to the employee?
Can a person receive multiple lump sum relocation incentive payments for a situation like the following: The employee received a lump sum relocation incentive payment to relocate to another geographic location, but the employee must return periodically to the Seattle area for work stays of several weeks or months, after which the employee goes back to the site of the original relocation?
No. A lump sum relocation incentive payment may only be paid upon position to a position and cannot be used as described in the preceding example.
When does an employee who has received one lump sum relocation incentive payment again become eligible to receive another relocation incentive payment?
An employee who has received a lump sum relocation incentive payment becomes eligible to again receive a lump sum relocation incentive payment when that employee must make a work-related move to another geographic location and establish a new residence for a period of at least six months.
Related policy links
- Administrative Policy Statement 34.2 – Lump Sum Relocation Payment
- Administrative Policy Statement 34.1 – Payment of Moving Expenses Incurred by New or Transferred Employees