With the new school year just about to begin, companies are actively seeking intern candidates for the semester, and some competitve fields are already planning for next summer! Intern programs -- when built correctly -- are a great way to get additional support for your company and teach your interns the ins and outs of contributing to a business.
What does all of this have to do with relocation?
As talent management and mobility work to align goals, we’re seeing a growing trend in relocation assistance built specifically for interns. Interns don’t fit the standard employee mold, so it's not practical to approach relocation the same way as you would with a traditional employee.
Companies see the opportunity in cultivating future employees by giving them jobs where they can learn the business and tie in their education. Once those interns graduate, they are better qualified for entry-level positions than their counterparts who didn’t have internships during their college years. But to what extent should a company provide relocation assistance for an intern relocating within the U.S.? And how will that assistance differ from what is provided to standard employees?
According to the National Association of Colleges and Employers (NACE) 2014 Internship & Co-op Survey*, 55% of employers planned to provide relocation assistance to interns in 2014, with a median dollar amount allotted to individuals of $1,500.
The most commonly offered components in internship relocation policies and the percentage of respondents who offer them are:
- House Hunting - 7.8%
- Housing Stipend - 53.4%
- Moving Allowance - 42.2%
- Provide Housing - 27.6%
- Set Allowance - 22.4%
While those areas of assistance certainly look familiar, there are some differences in how they are offered to interns.
Consider these four areas when developing an internship relocation policy:
1. Transportation and Temporary Housing
Roundtrip transportation to the internship location and temporary housing are common components of internship relocation policies. Lexicon recommends covering transportation to and from the college location, including mileage (airfare if the distance is further than 500 miles), meals and hotel stays if the intern drives 400 miles per day. This coverage can be provided in the form of a lump sum payment for ease in reporting and budgeting, as well as for the intern’s flexibility in managing the funds.
2. Housing Options
Companies can provide in-full or contribute to housing costs in the internship location. Housing options may include furnished corporate apartments, sublet apartments or local college dormitories. In addition, shared accommodations may be provided for two or more interns. For Lexicon clients, these costs may be direct-billed to Lexicon, removing the burden from the intern to advance the funds, or may be covered as a direct reimbursement or lump sum payment.
3. Training Programs
Some companies have an established training program with applicable assistance provided to participants whose home is at least 50 miles away from the training location. If your company has such a policy, you may wish to consider the terms of the training program when determining the relocation assistance provided to interns. For example, if participants in an off-site extended training program receive 100% coverage of the housing costs, then you may also wish to provide the same to interns.
4. Compensation Classification
Keep in mind that any relocation payments or reimbursements to interns should be included in gross income as compensation. As compensation, the reimbursements must be included in the intern’s W-2 and are subject to withholding for income and payroll taxes. Because the intern is an employee for a period of time, it is difficult to argue that travel expenses to and from the job location constitute reimbursement for job interview expenses. The expenses do not constitute business travel expenses while away from home, since it appears that the courts would find an intern’s "home" for purposes of away-from-home travel expenses to be located where the internship is, even if the intern continues to maintain a school- or other-located residence. Further, travel expenses for an intern to and from the job location would not reasonably be expected to qualify for a §217 moving expense deduction because the summer intern would fail to meet the time requirements of §217(c)(2).
* The National Association of Colleges and Employers (NACE) conducted a survey of their members’ internship policies from November 18, 2013, through January 24, 2014. The survey was sent to 1,116 NACE employer members; 264 (approximately 24%) participated.