Sick/Vacation Donation Programs

[Guest KM]

Does anyone out there have any expereince designing/implementing any sick and/or vacation donation programs? A program where an emp. can donate hours to another emp. due to a serios illness, etc.?

[KIP KRAUS]

KM:

I've never heard of this. I would be interested in knowing why this kind of program would be benificial to an employer and/ or employees.

[Guest Lori Senter]

I've heard of a number of companies that do this -- mostly manufacturing types although my cousin's school district allowed fellow teachers to donate time so she could be with her mom who was having cancer treatments.

The way I've seen it work is that employees who know one of their colleagues is facing significant time off with no vacation, sick pay or disability to cover it can donate some of their vacation or PTO (depending on how you're organized) to the person's "bank." I don't think there were forms for the individual to fill out to request the hours -- only a form the donor signed to allow their vacation time to be shifted.

I don't know how much the company would benefit from this -- except the goodwill generated by demonstrating this flexibility. Certainly the receiving employee benefits and the donating employee has the satisfaction of knowing they've helped someone out.

[Guest Deb]

There is a good article in Dec. 1998 HRMagazine. I also have researched the web and found a few companies that have written policies. Several universities have published leave sharing policies, including U of Colorado and U of Nebreska. (Try www.cudenver.edu and www.uneb.edu/employees/hdbkeris.htm)

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[Guest nac]

I'll be the wet blanket of the group. We've discussed putting together a vacation/sick donation program (we have about 3000 employees) and have gotten stuck on a couple of issues: 1) is the donation in the form of days or dollars? (think carefully - it's not as cut-and-dried as you think); and 2) who gets the job of administering it? It's difficult to determine when (and how) you're going to say "no" to someone. What happens if there's no donated time in the bucket and someone qualifies for it? If you have an STD policy, how would it relate to that, or would it? Would it only be for someone caring for a family member who is gravely ill? or just for the employee's personal illness? What about employee privacy?

There's a lot to think about, and whether it'll work depends largely on your corporate culture. Good luck to you - I hope you can find a workable solution.

[Guest sdussault]

We do have a program for transfer of hours - we call it "Voluntary Accrued Benefit Transfer" and it has worked very well. The criteria is as follows:

1. The employee with the potential loss of income must initiate the request (thereby, the privacy issue is moot as it is initiated by the party with the medical situation)

2. No more than 90 days of benefits may be donated to any one individual (coinsides with our LTD elimination period)

3. The donor must sign an irrevocable agreement

4. In the event that the beneficiary should die before using all time, any balance is forfeited

5. Beneficiary must exhaust all of their own sick/vacation accruals before becoming eligible for donation

6. Beneficiary must be employed for a minimum of 1 year to be eligible for this program (in line with FMLA eligibility)

The request for donation must be approved by VP-HR and must be in connection with a medical emergency defined as a condition (supported by medical excuse from MD) that is likely to require an employees absence from duty for a prolonged period of time, is expected to last more than 90 days, and to result in a substantial loss of income to the employee because of the unavailability of paid leave.

This program has been in effect since 1990 and has been used very effectively a number of times... We have no STD policy, just sick time accrual. The question as to who is approved and who is declined is a pretty cut and dried issue as it is up to the treating physician to determine the severity of the condition and whether it is expected to last more than 90 days.

The only downside that we have encountered, is the fact that the donation is a voluntary thing by the donor. In the case of an employee who is not very well liked by their co-workers, we have seen where no time has been donated. It is sad to tell the employee that nobody was willing to donate time, but it certainly is an eye opener to the rest of the population that you will reap what you sow!

It is also a benefit that does not cost the employer anything more than the payment of already accrued benefits and is regarded very highly by employees as a substantial benefit. We used to use the donation of "hours" but have changed that to "dollars" as it did not make economic sense in many cases with transfers of hours valued at greatly differing amounts.

Good luck with your project.

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[Guest gaham]

Has anyone researched the tax aspects of these programs? That is, if the donor donates his/her unused leave isn't there an assignment of income which would cause the donor to be taxed on the amount of the donated leave? It seems to me it is as if the donor has received a taxable benefit and then donated it (on a nondeductible basis presumably) to the donee or to the bank. It would certainly be a disincentive to donate if the value of the leave is taxable to the donor. How are those who have set these programs up handling this issue?

[Guest Margaret]

I am responsible for all salary continuation programs for our 6,000 employee based hospital. We have a PTO program that allows employees to accrue up to 2 times their annual accrual (thus the maximum bank for the highest level is 640 hours). Do to scheduling problems and the standard "re-structing" we have been going thru, employees are not using their PTO and some even end up losing (when they go over their max) We had to identify other ways of using PTO. We have expanded on our cash-in, allowing employees to cash in up to 128 hrs which can be cashed in at any pay period... etc. etc. Ok, I'm getting to the point.. at the same time we also developed a program in which employees are allows to donate PTO to an employee who qualifies for an FMLA and who has less that 1 weeks work of PTO in their bank... It is strictly donated by hours and the recipient is paid those hours at their pay rate (so even if a high paid person donates, the employee gets it at their own rate). We allow employees to donate a max of 80 hours and limit the receipient of up to 8 weeks of PTO based on their scheduled hours.

My benefits representatives handle this as it is part of our PTO program. We have cards that employees fill out indicating to whom they wish to donate to a and the amount. We then check to verify they qualify for the FMLA and check their current PTO bank.. If ok, we manually adjust their PTO and send the recipient a letter advising them that PTO has been donated (give the number of hours) and list the names of those who donated.

It has work out well, lowers the high PTO banks (thus liability for pay outs)

and allows people to help their co-workers in times of need.

[Guest mls]

This situation has come up in our company. We do not advertise this but from time to time, we have employees who want to help out a fellow employee in a difficult situation. We provide a form to the donor that says that he/she understands they are donating x amount of hours of paid time off to x employee and that they cannot revote the election. Then, we have the recipient sign a form stating that the pay they receive will be taxable income. Our regional vice presidents approve the request.

[Kirk Maldonado]

I suggest you read Revenue Ruling 90-29. Also, you might want to consider whether such an arrangement could present an impermissible forfeiture of vacation benefits under applicable state law. For example, California has very strict laws in that regard.