Vacation/PTO donation program

The purpose of this program is to replace pay lost when an extended disability causes an employee's absence from work.

The extended disability may be that of the employee, their spouse, child, parent or person regularly residing in their immediate household.

How it works

  • Employees voluntarily donate a portion of their unused vacation/PTO hours to an employee(s) absent from work due to an extended disability.
  • Recipients must exhaust their own paid leave balances before receiving donations. Donated hours are converted to cash and paid to the recipient.
  • If the disability is related to pregnancy, the employee (female or male) will normally be eligible to receive donations only through the six-week period following delivery. A physician's note is needed if the disability begins before delivery or extends beyond this six-week period.
  • If the absence is due to the death of a family member, donations will be processed for two pay periods following the death.
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Donating vacation/PTO hours to another employee

Guidelines for donors

  • Donors' names/hours donated are not given to recipients.
  • Only vacation/PTO hours may be donated.
  • The IRS has ruled that the donating employee realizes no income and incurs no tax deductible expenses loss upon donation or payment to recipient.
  • Once processed, neither the donor nor the recipient may revoke the donation, even if it has not been paid.
  • Recipient eligibility is verified and a written consent to receive donations is required.
  • Donations are valid for 1 year. Unused donations expire 1 year from the date donated and will no longer be available for use by the recipient.
  • Donations are deducted from the donor's balance at the time they are used. Donors will not be notified when the donated hours are processed.
  • Unused donated hours will not be subtracted from the donor's paid leave balance.
  • Donors should not use this program to manage their vacation/PTO balance as the timing of the deduction cannot be controlled.

To donate hours, complete an online form - you must be logged into the county network to access the donation form.

Donors must

  • Specify the employee who should receive your vacation/PTO donation.
  • Make donations in whole hours — minimum of one hour per donation.

This is not an APEX self-service portal transaction.

Guidelines for recipients

Donation usage

Donations will not be used until needed and will be used in order of the date the donation form was received by the Benefits Division. Donations will be applied beginning with the pay period that all accrued time is exhausted and the consent form is received.

  • If the disability is related to pregnancy, the employee (female or male) will normally be eligible to receive donations only through the six-week period following delivery. A physician's note is needed if the disability begins before delivery or extends beyond this six-week period.
  • If the absence is due to the death of a family member, donations will be processed for two pay periods following the death.
  • The identities of all donors are confidential. No thank you notes will be sent.
  • The consent to receive donations can only be rescinded in writing. Email hr.lam.office@hennepin.us.
  • Once a donation has been processed, neither the donating employee nor the recipient may revoke the transaction, even if it has not yet been paid.
  • Donations are valid for 1 year. Unused donations expire 1 year from the date donated and will no longer be available for use.

Payments

Payments are limited to the recipient's regular gross earnings per pay period. If donations exceed this limit, they will be held until the following pay period(s) and processed at that time.

There will be no retroactive payment of any work missed in pay periods before the consent form was signed and received by the Benefits Division, before donations were received or before all paid leave was exhausted.

Donated hours are converted to cash by using the following formula

  • Payment = (Donated hours X donor's hourly base pay rate*) - Mandatory Withholding and applicable insurance premiums.

*at the time of processing

Hours are paid at the donor’s rate of pay. Therefore, the donation check may not exactly match the loss in regular pay caused by the absence from work.

Vacation/PTO donation checks are issued on the same schedule and method as payroll checks (direct deposit or mail).

Taxes

The IRS has determined that vacation/PTO donation payments are considered wages and subject to:

  • State and federal income tax
  • FICA/Medicare tax (if deducted from earnings as an active employee)

Taxes are based on the withholding allowances indicated on the recipient's W-4.

The recipient's annual Form W-2 will reflect the payments as income.

Supplemental retirement plan

If a participant, your 1% contribution will be deducted and matched by the county.

Court order

Court-ordered wage attachment or payroll deduction for child/medical support will be withheld from any donations processed.

Impact on benefits for recipients

Insurance premiums

Insurance premiums will be withheld from these payments unless:

  • There are insufficient funds.
  • You are on an unpaid medical leave of absence or medical layoff during the entire pay period.

Public Employees Retirement Association (PERA)

Deductions will not be withheld, since PERA has indicated that it will not recognize these payments as wages on which pension contributions must or may be taken.

PERA disability benefit

Receipt of vacation/PTO donations will have no impact on any PERA disability benefit for which the recipient is currently eligible or may become eligible in the future.

If you are a member of the Minneapolis Employees Retirement Fund (MERF), it is probably not to your advantage to participate in the vacation/PTO donation program, since participation would disqualify you from receiving MERF disability or retirement benefits concurrent with vacation/PTO donations.

Short-term and long-term disability

Receipt of vacation/PTO donations will have no impact on any disability benefit for which the recipient is currently eligible or may become eligible in the future. You can receive disability and vacation/PTO donations concurrently.

The receipt of vacation/PTO donations will not affect:

  • The payroll status in which you are placed upon exhausting your paid leave benefits
  • Your benefit accrual (e.g., sick leave and vacation or PTO)
  • Your benefit eligibility

Social Security benefits

These payments will not impact any Social Security disability benefits the recipient may receive.

Recipients should check with the SSA to determine whether these payments should be described in his/her file so there is no confusion when these payments are reported as wages by the county on the annual Form W-2 (implying they are payment for hours worked).

Payments received under this program could impact any Supplemental Security Income (SSI) benefit recipient receives from Social Security.

If you receive SSI benefits, you should determine how they would be affected by these payments before agreeing to accept them. Finally, the Social Security Administration has advised that, if the recipient accepts donations, the recipient should retain copies of all correspondence pertaining to this program and check stubs for the payments you receive, in the event Social Security questions arise in the future.

Impact on other insurance or social service benefits

The decision regarding the impact of donations on any other insurance or social service benefits for which the recipient may be entitled must be made by the sponsoring organization or underwriter.

The county will respond to any request for information from another program or plan in which the recipient is a participant.

Receiving vacation/PTO donations from other employees

Step 1

Read the recipient guidelines outlined above to understand payment calculations and their impact on taxes and other benefits.

Step 2

Submit the consent to receive vacation/PTO donations form.

Your paid leave balances (e.g., vacation and sick leave, PTO, compensatory time, deferred holiday) must be exhausted before you can receive vacation and PTO donation payments.

Step 3

Advertise your need for donations.

  • Advertising (e.g., email) is your responsibility. A co-worker can assist.
  • Check with your supervisor for your department's policy.
  • This avoids putting the county in a situation in which it could be perceived as confirming the legitimacy of the employee's situation or showing favoritism to one employee over the other.

Step 4

Email hr.lam.office@hennepin.us when you return to work, to minimize potential payroll processing problems.

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