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"Giving" someone another person's vacation Tennessee

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  • "Giving" someone another person's vacation Tennessee

    I have been requested by hourly employees to allow other employees to donate vacation to those that have a special circumstance. "ie death not covered by funeral leave, etc."

    We do not have a policy allowing that currently. Actually, a salaried person asked me today if she could "donate" her vacation to an hourly employee who has used all of her vacation. The hourly employee has a friend that is in hospice.

    I like the idea but see problems with it concerning the fact vacation is accumulated based on your pay rate which is vastly different in this case.

    What do you think?

  • #2
    If you want to do this based on business necessity, create a policy first, then apply it fairly. Such policies can be a royal pain to administer. I've been there and am not a fan personally, but if that is what your workplace wants and you can come up with a policy that works for all, go for it. Some things to keep in mind:

    1. Limit the number of days one person can donate to another.
    2. Donations must be voluntary and I would even go so far as to make who donates anonymous. No one should feel pressured to donate, nor should favor be granted based on having donated. Make it clear to those requesting days that they are not guaranteed to receive any.
    3. Limit how many days someone can receive per incident/year/lifetime. Trust me, you will end up with that one person who seems to have some sort of reason to make a request every year.
    4. Set clear guidelines for the sorts of situations which are eligible for donated days. Maybe just immediate family members health, or just the employee's own health.
    5. Have some way of soliciting days that is unobtrusive and is respectful of the employee making the request. No one wants to be pestered with a bunch of requests or guilted into giving.
    6. Set guidelines for the type of leave which may be donated (only sick, vacation, etc.).
    7. Make it clear that any donated leave may only be used for the reason intended. The surest way to build ill will is to have employees donate days and have the person use the extra time for a vacation.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

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    • #3
      Agree - I have heard that they can be a pain/not always easy to administer.

      Elle gave you some very good things to consider before setting up such a program/policy.
      Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

      Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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      • #4
        I see DAW hasn't responded, but you might also get into some taxability issues unless the person donating is willing to pay income tax on the donated amount. Or the employer could gross it up and pay the difference. I don't think this could be a non-taxable transaction. Unfortunately the PTO does have a $ value to the IRS.

        I went onto another board and came up with Revenue Ruling 90-29 which lead me to this article:
        http://www.aicpa.org/publications/ta...-story-06.aspx (underlining mine)

        "... Standard Leave-Sharing Banks to Benefit Fellow Employees

        Another type of program that an employer may establish is a standard leave-sharing bank for use by employees. With a leave-sharing bank, an employee surrenders a certain amount of unused accrued PTO, which the employer places in the leave-sharing bank. Other employees who have run out of PTO can then use the leave-sharing bank for reasons specified by the employer.

        Employers that implement a leave-sharing bank should consider using a process that requires the employee to provide an application to the employer specifying the reason for his or her extended absence from work and the need for additional PTO. After the employer approves the application, it can provide additional PTO to the recipient employee, which may include payments for time off while the application was being approved. Employers may consider limiting the amount of additional PTO that the recipient employee may receive so that the leave-sharing bank is not exhausted and is available for other employees.

        As with the standard PTO charitable donation program, the employee who surrenders the PTO is required to recognize compensation income under the assignment-of-income doctrine equal to the value of the surrendered PTO. The employer is required to report this compensation on the donor employee’s Form W-2 and withhold the appropriate income taxes and FICA tax. A leave-sharing bank poses the same issues concerning the method of withholding the applicable taxes as the standard PTO charitable donation program.

        Unlike the standard PTO charitable donation program discussed above, the standard leave-sharing bank does not entitle the donating employee to a charitable contribution deduction because the employee does not make a contribution to a charitable organization."

        The article does go on to talk about major disasters and medical emergencies and different rules, so review the whole thing.
        Last edited by hr for me; 12-19-2013, 07:24 AM.

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        • #5
          What the last answer said. IRS Revenue Ruling 90-29 is IRS's opinion only, not federal DOL, and not any state opinion. IRS basically says that the taxable transaction occurs normally at time of payment. Follow the wording of the ruling, because it takes care of any "constructive receipt" issues. If you are in states like CA which has vested vacation/PTO I would went to be very formal in my handling of this.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

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          • #6
            Great reply/post hr for me (& thanks DAW for your post).
            Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

            Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

            Comment


            • #7
              In case anyone does not under my previous "constructive receipt" comment, we normally consider wages taxable and reportable for payroll purposes when paid. However lets say Boib would normally get a bonus this week (along with everyone else) but asks to hold off the payment until next year for tax purposes. Per IRS, constructive receipt has occured in 2013 even if the payment occures in 2014. Whoops. No good deed goes unpunished as far as the employer is concerned.We potentially have the same issue here. If Karen can choose to give her vacation to Jim now, does that mean that constructive receipt has occured? The answer is maybe yes, UNLESS 90-29 rules are followed. Now this is IRS only. Federal DOL (mostly) does not care about vacation/PTO at all, and most states mostly follow the IRS rules in this matter. But most is not the same thing as all, and some states can have rules such CA vesting of vacation which is completely unrelated to taxes but still impact this issue.
              "Reality is that which, when you stop believing in it, doesn't go away".
              Philip K. **** (1928-1982)

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