I received this reader question a few months ago and it’s had me stumped. While I know that employee leave donation programs do exist, I’m not aware of many companies that promote it. According to the Society for Human Resource Management (SHRM), 11 percent of organizations permit vacation donations and seven percent permit sick leave donations.
Hey there. I’ve spent some time reading your blog while researching a program I would like to implement. Very informative, thank you! I have a question that I could use advice on how to move forward with. I own an Irish Pub in Iowa. We have a very close-knit family among our staff. A lot of them have come to us while on hard times. We take care of each other, and I am immensely proud of that fact. My wife and I have given loans to deserving staff who have fallen on hard times. We ask for nothing in return and they can work it off. These kids are always thinking about one another.
What I would like to start is a program where staff could contribute say a dollar a shift to a fund. My wife and I will also either match or 50 percent match it. We would have an anonymous submission system where a staff member can nominate another for assistance of some form. Financial or otherwise. A board of directors made of employees and (possibly) either my wife or I will then vote and approve payments for whatever. Rent assistance, child care, medical, etc. in times of need where the staff member is trying their best and just needs a little more bump of help. I’d like to keep assistance secret, so nobody feels bad for accepting help or jealous that someone else was aided.
Do you see any possible pitfalls to this program or have advice on how to best handle it while not setting us up for legal reprisals?
In my experience, the idea of employee donation programs comes up often. Examples are after natural disasters like a hurricane or when an employee falls on unexpectedly hard times. In doing some research, I found some articles that might be helpful.
Let me add that I believe this is one of those times when it would be helpful to reach out to your labor attorney. They can get you guidance on how to set up the program, the tax implications, and what do consider if a challenge to the distribution of funds is made.
The law firm of Morgan Lewis wrote an article on “Establishing a Charitable Leave Donation Program” after Hurricane Harvey last year.
Sullivan Benefits has a compliance overview on “Employee Leave-sharing and Donation Programs”.
OnePoint Human Capital Management outlines the steps for creating a paid time off (PTO) or leave donation policy.
It might also be helpful to look at other company policies to get some creative inspiration. Here are a few from:
Finally, here’s an article of caution from a law firm on the potential for discrimination and tax issues when employees donate PTO.
Bottom-line. Employee donation programs can be done. And they’re a nice thing to do. But organizations need to get their facts to make sure the program is constructed appropriately and administered fairly.
Image captured by Sharlyn Lauby after speaking at the SHRM Annual Conference in Washington, DC14