PTO sharing is a generous perk, but could present tax concerns next year
Not everyone can afford to donate money to help their struggling coworkers and favorite charities; but with PTO sharing benefits, employees can donate their vacation time.
“These programs are great for employee morale because employers that have these programs demonstrate great community stewardship,” says Tiffani Greene, employee benefits attorney at Fisher Phillips, a nation-wide employment law firm. “It’s natural that people want to donate to charity, or help out one of their peers, but it’s not always possible for them to donate out of pocket. It’s often easier to donate vacation because it’s employer-sponsored.”
Greene says she’s seeing more employers approach her and her colleagues about PTO donation programs in light of the COVID-19 crisis. According to Willis Towers Watson, 42% of employers plan to alter their PTO policies out of concern employees won’t use theirs during the pandemic.
While these programs are beneficial for workforce morale, Greene warns employers to consult their legal counsel as they build them — or their employees could receive an unwelcome surprise during the next tax season.
“There's increased interest [in PTO sharing] every time we have a challenge or natural disaster because people naturally want to give — COVID-19 is no different,” Greene says. “They’re a great way for employers to support their community and employees, but they have to be done correctly to avoid problems with taxes.”
Greene shares the three different types of PTO-sharing programs and the restrictions employees should be aware of.