Washington State University
BUSINESS POLICIES AND PROCEDURES MANUAL

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Relocation Compensation

A dean or equivalent administrator may approve a lump sum payment for relocation compensation in order to recruit a qualified candidate who must move in order to accept the position. The maximum payment amount is limited by the existing resources available to the department or college. (RCW 43.03.125)

The state of Washington and WSU offer other programs for supporting domiciliary moves. See 70.61 and 70.62. In addition to relocation compensation, either or both of these programs may be used to assist an employee who relocates to accept a WSU position.

Relocation compensation may be supported by state accounts and accounts in program 17A (discretionary accounts). Sponsored accounts (programs 11-14) may support relocation compensation if funding is specifically itemized in the approved budget.

Federal law requires that employees pay taxes on the lump sum relocation compensation payment. (P.L. 103-66) The University is required to report relocation compensation on employees' W-2 forms.

If the employee terminates employment or causes termination with WSU within one year of the employment date, the employee is responsible for repaying the University for the full amount of the relocation compensation. NOTE: Repayment is not required if termination is for reasons of layoff, disability separation, or other good cause as determined by the Director of Human Resource Services.

Payroll Services processes relocation compensation as additional compensation to the employee.

The employing department processes a Relocation Compensation Request to request payment. Access the PDF form template on 55.62.3 to complete and print the form.

Income taxes, social security, and Medicare taxes are deducted from the total amount provided to the employee. The department indicates the total payment amount under Total Relocation Compensation.

Payroll Services deducts the following from all payments:

• Withholding tax (typically the 28% supplemental rate)
• Social Security (6.2% of gross)
• Medicare (1.45% of gross)

Payroll Services can calculate the compensation one of two ways, gross to net or gross up. Either way, Payroll Services makes appropriate deductions and remits and reports them to the federal government.

Unless the gross-up method is specifically requested by the department in Comments, Payroll Services assumes that the request is for calculation using the gross-to-net method.

EXAMPLE: Using the gross-to-net method, Payroll Services would generate a payment to the employee of $643.50 from a taxable gross relocation compensation payment of $1000.

If the department wants the employee to actually receive a set amount with taxes and withholding prepaid, Payroll Services would calculate the necessary gross using the gross-up method. EXAMPLE: To generate a check to the employee of $1000, the department would have to actually pay $1672, i.e., $1554 gross and $118 in contributions.

Enter the account code for the account that will support the relocation compensation and matching contributions for social security and Medicare.

A dean or equivalent administrator approves payment.

The recipient of the compensation signs the form indicating that he or she understands that a minimum employment period of one year must be served in order to avoid repayment. See above.

Route the completed and approved form to Payroll Services, mail code 1024.