Donation of time off to an employee (or their dependent) with serious health condition

mbeam

Does anyone have a policy in place that addresses the donation of vacation or sick time to an associate in need (either a serious health condition for themselves or a close family member that they are caring for). Our questions are: (1) how is the differential in pay handled, (2) for the donator is it tax deductible, (3) for the donate – is there a tax consequence, (4) how hard is it to administer? (5) would you recommend offering this as an option?

Thank you for any input you can provide.

NaeNae55

We do not currently have such a plan in place and I can only give you a partial answer, but hopefully I can help some.

You can handle this type of plan anyway you want, but the easiest way (and with less repercussions) is to do a dollar for dollar exchange. For example, Employee A earns $15/hr and wants to donate 40 hours. You now have a $600 bank. Employee B who only earns $10/hr can take up to 60 hours from this bank. Employee C who earns $20/hr can only take 30 hours. If you decide on any other option, you will give your accounting department a serious grudge against you.

I can't say for sure that the employee who donates does not get a tax deduction, but I seriously doubt it (it may depend upon how your leave policy is written). After all, the IRS has a list of qualified beneficiaries of your donation dollars and your employee receiving the donation probably isn't on it.

The employee who receives the donation will be paid cash and will have to pay taxes on it the same as any vacation they earned themselves.

I have heard of this type of plan being set up so that all donations go to a general fund (perhaps when employees reach a cap then accrued time goes to this bank). Then a committee decides if an employee who has run out of their own time is worthy. You can see the problems inherent with this idea.

The other way I have heard of is for no bank to be maintained, but rather when a serious situation occurs employees are asked to 'volunteer' time to help out the employee. It makes the accounting a lot easier if you don't have to continually maintain a separate bank, and employees feel good about helping a specific person. Of course, this can have repercussions too. What if the ill employee is not well liked? What if the employee who recieved all the donations is not considered to be suitably grateful upon their return?

Think long and hard before you implement this kind of plan. Personally, I think they are worth it.

Good luck!

Tony Kessler

mbeam,
Do a search on this page for "Vacation Donation." You'll see links to a number of previous discussions on this topic. Hope this helps. tk

Tony Kessler, director of editorial
M. Lee Smith Publishers LLC
661-0249 ext. 8068

moneyman

We do not have a written policy but it has been "known" that under certain circumstances a person can donate their PTO time. It has to be approved by the donor's supervisor first (to make sure that they are not jeopardizing their own time bank) and then by the top dog himself, the Director. It has to be because the donee has used up all of their accrued time.

We notify the donee who is donating and how much time. We do not recognize any differentials in pay because that would reveal the wages of the donors (if they wanted to go through the trouble to figure it out, and believe me, all employees want to know what the others are making). We have done this only twice in about 8 years, so we feel safe not having a written policy as it doesn't occur often. We have thought about the common bank, however, no one wanted to donate because they would not have any say over who got the time. They wanted to give a day to a specific person.

mbeam

Thank you for the advice and reference to previous links. We too are finding that people want to donate to a specific individual rather than a group fund.