Donating the PTO
If my employees wanted to use their PTO as a paid donation under their name to a 501c3 program, could they do that instead of “losing it”
What a nice question. The answer depends on what your PTO accruals include (for instance is it just time off and vacation, or does it encompass sick leave time also), and what state you’re in. But here’s how it could work — even if you’re in a state that requires you to pay out unused sick time at year end, employees could (per policy and signed agreement) donate the cash value of their unused (non-sick leave) PTO to a cause. That’s no different than if you paid the unused portion of their PTO to them in cash at year-end, and they turned around and donated it themselves.
The only downside I see is administration. And if they would have lost unused, unrolled over PTO it anyhow, then it has no value to be donated.
To accomplish a program like this, you’d need to verify your sick pay policy isn’t state mandated.
You’d then revise your PTO policy so that it has two options – donate the cash value of unused PTO or cash out.
Then you’d need to determine the value of the unused time (based on each employee’s hourly wages), and make a contribution to 501c3.
And you’d have to track all that somewhere, such as in your HR, payroll or benefits software.
What some companies do instead is allow employees to donate their unused PTO to a time bank for use by any employee who needs to take time off unpaid for a catastrophic event, such as to care for a sick family member,
Your heart is in the right place. I’ve attached sample policies below. Be sure to review your program with both your attorney and your tax advisor to make sure it doesn’t have any unforeseen consequences and employees don’t end up having to pay taxes on the donated amounts.
Laura, HR Writer