5 Things to Consider When Setting Up a Leave-Sharing Program


Leave sharing programs are a unique, non-traditional benefit employers can set up for their employees. Not only do they offer employees much-needed assistance considering a medical emergency or financial disaster, but they can also boost morale and show employees you care.  

However, there are a few considerations you need to keep in mind when you set up a leave-sharing program, like budget, recipients, and who will administer the program.  

We break it down for you here.  

5 considerations for setting up a leave-sharing program  

There are five major considerations for setting up leave-sharing programs: type, budget, recipients, donation procedure, and administration.  

Let’s get into each one.  

Which type of leave-sharing program?  

Leave-sharing programs allow employees to voluntarily deposit accrued leave in an employer-sponsored bank for use by other employees adversely affected by a personal hardship or natural disaster, resulting in the employee being absent from work.   

When you set up the program, you’ll have to decide whether you’ll set up a leave-sharing program for hardships, natural disasters, or both.  

What is the budget?  

Employers will want to establish a budget for the program and consider limiting the amount of time that can be donated, if any.  

Remember that the donated time may negatively impact the recipient’s ability to obtain state disability benefits, the enhanced unemployment benefits established under state and federal laws, and/or company-sponsored short-term or long-term disability benefits.    

Who are the recipients?  

Employers will want to establish the criteria for determining which employees are eligible to receive the donated time. Employers should develop fair and neutral eligibility and selection criteria for selecting donors and recipients.  

If the program favors one group or excludes employees in protected categories, the employer may leave itself open to discrimination charges and employee relations problems. In the case of a significant disaster program, the employer may need to establish criteria to determine which employees need the benefits more than others.  

What is the donation procedure?  

Employers need to establish detailed procedures for the donors and recipients. In the eyes of the IRS, to establish a valid policy, employers must adopt a written donation policy and establish a process for donors to use when designating how much time they wish to donate.   

In this regard, employers may consider the following factors when drafting a policy: length of service of the donors and recipients, salaries of the recipients and donors, exempt or non-exempt status of the donors and recipients, etc.  

Documenting the voluntary nature of a donation by the donor is highly recommended. Likewise, the recipient should verify that they are using the time for the intended purpose. The employers should document both with a consent form.  

Employers should be aware of privacy issues under the Americans with Disabilities Act, the Health Insurance Portability and Accountability Act, and the California Confidentiality of Medical Information Act. Under these laws, employers are prohibited from announcing to the workforce why an employee needs the donated time.    

Who will administer the program?  

Lastly, employers will want to designate an employee or group to administer the leave-sharing program. Namely, the employer must decide who will be the point of contact for donors and recipients.  

While the human resources department may seem natural, it may not have the staffing and systems to administer the program. Similarly, the payroll department may have the systems but lack the employee relations expertise to administer the program.  

For these and other reasons, external third parties can also provide plan administration and adjudication, which follow written established criteria. Often, this is the most practical solution that reinforces objectivity and transparency to the entire process.  

Launch a leave-sharing program in a day  

PTO Exchange’s flexible benefits platform form facilitates the giving and sharing of PTO for employees who need it the most.   

If the need arises at your organization, you can turn on this capability within 24 hours. Once turned on, your company can customize qualifications or circumstances for employee eligibility. It is a simple four-step process:  

  1. Request: An employee fills out a request form, which employers can customize for specific circumstances. 
  1. Review: An adjudication process accepts or declines the request based on defined criteria. PTO Exchange or internal HR can act as adjudicator.  
  1. Notification: The employer notifies the requesting employee if their request has been approved or declined.
  1. Dispense and decrement. If approved, hours are automatically added to the employee’s leave balance and reflected on the pay stub. PTO Exchange integrates with your payroll system and simplifies the allocation of time based on the hourly earning rate of each employee.

Download our Ultimate Guide to Launching a Leave-Sharing Program to learn how you can implement one in your organization. 

Published on May 08, 2024 by Josh Reinhard

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