Yesterday’s Advisor showed how one company handles tiered recognition. Today we’ll look at legal issues and other considerations for award policies, and take a look at a unique program for developing all the policies you need.
As with most HR endeavors, employee recognition and award programs come with legal baggage. Here are the three issues most employers need to consider:
- Discrimination. Any recognition programs should be monitored for indications that members of protected groups are being omitted. It doesn’t matter whether this discrimination is intentional or not.
- Wage & Hour. Nondiscretionary bonuses for hourly employees may have an impact on the regular rate of pay for the week in which the bonus is paid. In this situation, you will have to go back and recalculate the overtime pay for that week, counting the bonus as part of the regular rate of pay.
- Taxes. You will have to decide whether you will “gross up” monetary awards or deduct taxes from the stated amount. (If you don’t gross up, you’ll be saying, “We really appreciate your service. You’ve won a $500 reward, so here’s your check for $425.” Also consider that your non-monetary awards might be subject to taxes.
Developing Your Policy
Here are the critical points to consider in developing your rewards policy:
- Goal. What is the goal of the program? Improve morale? Improve employee retention? Generate suggestions?
- Eligibility. Who is eligible for the recognition? Any employee? Executives? Only full-time employees?
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- Basis for choices. What factors are considered in choosing recipients? Subjective? Objective? A Combination? Sales? Profits? Savings?
- Frequency. How often are the awards made? If there are different levels of recognition are there different levels of awards?
- Nominations. Who nominates employees for recognition?
- Decision maker. Who decides who receives the awards?
- Levels. How many levels of awards are there? Are there different decision makers for different levels?
- Spontaneity. Will there be awards that can be given on the spot?
Unfortunately, your recognition policy isn’t the only one to worry about. We’ve just seen major FMLA, ADA, military leave, and accommodation rules changes—the list of new policy requirements seems endless. But you can’t backburner work on your policies—they’re your only hope for consistent management that avoids lawsuits.
You need policies that are carefully crafted, legally reviewed, and regularly updated. But it’s no small task to write and update the dozens of policies that any organization requires.
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