In today's dynamic work environment, employers are continually seeking innovative ways to support their employees during challenging times. One such solution gaining traction is the implementation of leave-sharing programs.
Leave-sharing programs offer a tax-efficient means for organizations to assist employees facing medical emergencies or natural disasters financially. However, setting up and managing these programs can be daunting, especially for larger enterprises with numerous employees.
Understanding Leave-Sharing Programs
Leave-sharing programs are tailored to support employees impacted by emergencies, whether it's a medical crisis affecting them or their family members, or a federally declared disaster:
- Medical emergency: Individual/ family member of the individual requiring an extended leave of absence. To meet the IRS criteria, the request must be in writing and administered to the employer. Additionally, it must specify that the leave is only for medical emergencies, such as illness or death.
- Federal disaster or national emergency: The President declares a disaster and can exist for 18 months from the date of designation. Like a medical emergency, these requests must also be in writing. Leave is granted based on the severity of the event and only for employees directly affected by the disaster.
There are no rules for who can participate in leave-sharing programs, so long as the employee follows the tax implications outlined above.
An employer-sponsored leave-sharing program allows an employee to donate accrued hours of paid vacation or personal leave to benefit other employees who need to take more leave than they have available.
How it Works
Employers can establish an internal leave-sharing pool, allowing employees to voluntarily donate accrued leave for the benefit of colleagues facing hardships.
Any eligible employee can donate their unused vacation or PTO but must donate to the established “sharing pool” not to an individual colleague. Companies can also make one-time or ongoing monetary donations to the leave-sharing pool.
This arrangement ensures that donated time goes to those in genuine need, while also offering tax benefits for the donating employees.
The requesting employee of the donated time must make a written request for the time off. Then, the employer is required to make a reasonable determination (based on need) as to the amount of leave an approved recipient may receive from the leave bank.
Benefits and Considerations
Launching a leave-sharing program offers numerous advantages, including boosting employee engagement and morale, demonstrating care and empathy, reducing balance sheet liabilities, and offering a flexible benefit to attract and retain talent.
However, careful considerations must be made when setting up the program, such as what type of program an organization can set up, budget, recipient selection criteria, donation procedures, and program administration to ensure fairness, compliance, and efficiency.
Launch a Leave-Sharing Program with PTO Exchange
For organizations looking to expedite the implementation process, PTO Exchange provides a flexible benefits platform that simplifies the giving and sharing of paid time off. With the capability to activate within 24 hours, organizations can swiftly customize eligibility criteria and seamlessly manage requests, approvals, and allocation of leave.
Download our Ultimate Guide to Launching a Leave-Sharing Program to learn how you can implement one in your organization.
Published on Apr 16, 2024 by Marketing
