Building Community Through Leave Sharing Programs
A leave-donation program, also known as leave-sharing, allows employees to donate PTO, sick leave, and/or vacation days to a community pool. This pool is then available to employees facing extenuating circumstance. From family emergencies to natural disaster, employees can pull from the pool to take additional time off, after having exhausted their own PTO. While the programs can be time intensive to implement, research shows that they are well worth the effort. Effectively implemented leave-donation programs promote employee well-being, increase morale and camaraderie, and decrease employee turnover.
While the benefits are undeniable, bringing a leave-donation program to your organization takes well thought-out, well-researched planning. Effective implementation means understanding your options, what they mean and how they will affect your organization. This means understanding federal, state, and local regulations, tax-codes, and creating clear policy and procedures surrounding your new program. First and foremost, you want to ensure the option you select leaves your organization protected and offers the most benefit to your employees.
There are two types of leave-donation programs: wage-based and hour-to-hour based programs. Wage-based programs allow employees to donate PTO at an hourly pay rate. For instance, an employee making $20 per hour may donate 3 hours of PTO (totaling to a dollar amount of $60). Those donated hours can be used by an employee that makes $30 per hour and will equal 2 hours of PTO (totaling to a dollar amount of $60). This system is often most effective for larger organizations, where employees donating leave may make less than those taking it. Another option is the hour-to-hour based system. In this system employees donate and pull from the PTO pool based on hours. For instance, an employee donates an hour and another employee uses that hour, regardless of pay. This system is effective, but can create a financial discrepancy for which the employer then has to compensate.
When creating a leave-donation program, it’s important to discuss your plans with your financial department and/or accountant. Understanding the financial implications the program will have on your organization is key to effective implementation and a successful leave-donation program. First, select the program that will work best for you. Whether it is wage-based or hour-for-hour, understand what this will mean for your organization’s bottom line, budget for potential discrepancies, and understand that creating the program will likely increase the use of PTO, decreasing the number of hours that expire, therefore increasing costs. In addition, familiarize yourself with the federal, state, and local tax-codes and employee management regulations that apply to leave-donation programs. Ensure you understand what compliance means and are able to communicate it to your employees.
After selecting the right program for you, it is time to set up your system and create policy and procedures for employee use. Create a tracking system, hour-for-hour or wage-based, that will allow you to track PTO donated and PTO used by employees. Set restrictions on minimums and maximums: what can be donated and what can be used. While federal regulations say an employee cannot use more than a year’s equivalent of PTO, creating clear restrictions on what is allowed within your organization will allow the system to be one that empowers employees and is not abused. In addition, set clear rules on who is allowed to use PTO from the pool, when and what for. Examples can include: natural disaster, family emergency, sick leave, etc.
The final step in creating your leave-donation program is communicating the program’s policies and procedures to your employees. Ensure clear communication on eligibility, maximums, minimums, etc. This policy should be clear and easily understood by all employees. It should outline any employee responsibility and clearly state when PTO may be used, and if/when PTO hours will expire.
Employee leave-donation programs provide a sense of community and camaraderie for employees in any organization. This can empower employees to contribute and support each other in a more personal way than is often available in a corporate environment. This can create a culture of support and understanding that will strengthen employee morale, decrease absenteeism and employee turnover, and increase employee loyalty and satisfaction.