By Mark Soycher
CBIA HR Counsel
Q: Some employees have asked if they can donate paid time off (PTO) to a coworker who’s exhausted his time but needs more due to a personal crisis? Is allowing this advisable?
A: It’s an admirable request, but in this case, it’s best not to proceed by the seat of one’s pants. One option is to establish guidelines and recordkeeping procedures for a PTO bank into which donated time is deposited. Doing so may aid in avoiding certain problems, including:
- Uncomfortable situations arising from inappropriate solicitations or pressure to donate or grant PTO
- Perceptions of favoritism or discrimination
- Disagreements over the monetary value of time donated or granted. It’s best to value time off in terms of hours or days rather than dollars.
- Establishing limits on use, which is best done through a neutral policy rather than in response to individual circumstances
- Coordinating with FMLA leave. If FMLA applies, you may need to track FMLA job-protected leave time (unpaid) separately from donated PTO (paid).
- Clarifying tax consequences. Donated PTO is not an IRS-recognized “charitable” donation or reportable/taxable income to the donor, but it is taxable income to the recipient.
If you are considering setting up a PTO bank, we suggest checking with your legal counsel or tax advisor. If you would like more information, including a sample policy, email mark.soycher@cbia or call our HR Hotline at 860.244.1900.