HRM-006: Employee Recognition for Classified StaffDate: 04/30/2007 Status: Final
1. Monetary & Non-Monetary Awards
2. Recognition Leave
3. Types of Employee Recognition
4. Levels of Employee Recognition
5. Management Responsibility
6. Procuring Awards
7. Taxing of Awards
8. Fair Labor Standards Act Implications
Recognize achievements or accomplishments that contribute to the overall objectives of the University. Encourage employees to make a performance difference either individually or through teams.
University management may provide Classified Staff employees monetary and non-monetary awards and/or recognition leave to recognize achievements or accomplishments that contribute to the overall objectives of the University.
A manager, supervisor, department head or vice president approving the award.
An award granted at the sole discretion of the authorizing official. Immediate awards have no impact on non-exempt employees’ overtime rate.
Leave Plan Year:
Begins with the first day of the pay period which includes January 1 (known as Pay Period 1) and ends on the last day of the pay period preceding Pay Period 1 of the following year.
- Those paid by any negotiable instrument (cash, check, money order and direct deposit);
- Any item that can be readily converted to cash, such as savings bonds or refundable gift certificates; or
- Gift cards/certificates for any amount.
- Meals, trips, plaques, trophies, desk items, cups and mugs;
- Personal items of clothing such as caps, shirts, and sweatshirts; and
- Other items such as tools, electronics, radios, sports equipment and time pieces.
Awards announced to employees where the employer agrees or promises to reward an employee after a specified time period for greater efficiency or productivity, better attendance, or safety, to remain in the employ of the University, or to improve the quality or accuracy of work produced. Planned awards are non-discretionary and will affect a non-exempt employee’s overtime rate under the Federal Fair Labor Standards Act.
Additional day(s) of leave provided that may be used for personal purposes.
Classified employees who are:
Salaried or Wage
Restricted (positions with limited funding where funding has an expiration/stop date) or Unrestricted
Full Time Equivalency:
Full-time or Part-time
Exempt: Not subject to (i.e., they are exempt from) the federal Fair Labor Standards Act (FLSA) minimum wage and overtime provisions. Employees are typically paid on a salaried basis; or
Non-Exempt: Subject to the minimum wage and overtime pay provisions of the federal Fair Labor Standards Act (FLSA).
University management may provide staff employees monetary and non-monetary awards up to $2,000.00 per fiscal year. All such payments will be paid as a bonus (a supplemental payment) and are not considered a part of base (salaried) pay. In addition, recognition leave of up to five (5) workdays may also be provided to staff salaried employees. Wage employees are not eligible for recognition leave.
Monetary & Non-Monetary Awards:
The total of monetary and non-monetary awards shall not exceed two thousand dollars ($2,000.00) per employee per fiscal year. Monetary awards shall not be added to an employee’s base pay. Schools/departments may not increase award totals by the amount of payroll taxes normally deducted from employees’ pay.
The total awards shall not exceed up to five (5) days of recognition leave per employee per Leave Plan Year. Recognition Leave lapses within 12 months from the date it is awarded. Wage employees are not eligible for recognition leave. For staff employees “Recognition Leave” will be documented in HRMS as ”Recognition Leave Plan Balance” for leave accounting purposes.
- The staff salaried employee leaves state service by resignation, retirement, layoff, termination or death.
- The staff salaried employee is transferred, promoted or demoted from one agency to another state agency (such as from the University of Virginia to the Virginia Department of Transportation).
- The staff salaried employee is placed on Long Term Disability under the Virginia Sickness and Disability Program (VSDP).
- At the end of the 12-month period, the agency has been unable to allow the staff salaried employee to use the leave.
- The staff salaried employee moves from one organizational unit (“unit” in this statement refers to School or Department) to another within the agency (such as an employee moving from the School of Architecture to the College of Arts & Sciences).
Payment of Recognition Leave for University Academic Division staff salaried employees will be initiated automatically by University Human Resources (UHR) when at least one of the qualifying circumstances listed above is met.
Types of Employee Recognition:
To ensure both fair and consistent application within the University, a core set of recognition programs have been developed. These programs include both planned and immediate employee recognition programs.
Planned Employee Recognition:
This approach is characterized by prearranged, more frequently scheduled ways of acknowledging contributions and accomplishments of an individual or team. Examples include recognition for:
- Customer service
- Public service
- Outstanding achievements
Immediate Employee Recognition:
This approach provides employee recognition at any time for demonstration of behaviors and values of the organization, contributions to the goals and objectives of the organization or work unit and to acknowledge individual or team accomplishments. Examples include recognition for:
- Project Completion
- Suggesting a new or modified business practice
- Exemplary effort
- Employee appreciation
- Employee of the month
- Honoring separating employees
- Planned Employee Recognition:
1st Level: This is the first level to recognize a superb job on a project, task or activity including outstanding support of day-to-day business operation/process, or for suggestions leading to the improvement of a work process, workflow or in customer service.
- Up to $500 cash/non-cash
- And/or one (1) day of recognition leave
2nd Level: This is the second level intended to recognize sustained outstanding achievement and/or contribution above and beyond standard job requirements or to recognize suggestions leading to improvements in the work process, workflow or in customer service.
- Up to $1,000 cash/non-cash
- And/or up to three (3) days of recognition leave
3rd Level: This is the third and highest level that may be given to an individual or team to recognize a major extraordinary achievement and/or extraordinary contribution requiring maximum effort that significantly impacted customer service and productivity that is not likely to repeat itself.
- Up to $2,000 cash/non-cash
- And/or up to five (5) days of recognition leave
Each vice president will determine how the policy is to be administered within his/her respective area. Written plans are maintained that indicate the type(s) of recognition programs to be used, the nomination process/goal objective, the criteria for determining the level of the award, the approval process and the communication plan. The written plan, and any subsequent revisions, are reviewed by the UHR for adherence to the state’s policy and the University Employee Recognition policy and approved at the vice president level prior to implementation.
[NOTE: For administrative convenience, the vice president may include University Staff Employees in its written plan. However, the total annual maximum reward available for University Staff shall be governed by the limit included in the policy HRM-024, Compensation Program for University Staff Employees.]
Schools and departments may procure monetary and non-monetary awards and items to be used for employee recognition in accordance with policies and procedures maintained by Procurement and Supplier Diversity Services.
Taxing of Awards:
- Monetary Awards: All monetary awards, including gift cards and gift certificates, for any amount, shall be subject to federal, state and FICA withholding, and as taxable income, shall be reported on an employee’s Form W-2.
- Recognition Leave: Any recognition leave awarded to an employee is considered income and will be subject to federal, state and FICA taxes when used by the employee or paid as a lump sum.
Non-monetary Awards: The UHR Payroll Division is responsible for determining whether or not non-monetary awards are taxable, in accordance with IRS guidelines.
- Non-monetary awards with a value less than $100 are not taxable or reportable (unless the total non-monetary award(s) and monetary award(s) to the employee equal $100 or more within the fiscal year).
- Non-monetary awards with a value equal to or greater than $100 (includes single or multiple awards) are not subject to federal or state withholding, but are subject to FICA withholding. The value of such awards will be added to the employee’s gross (taxable) wages and reported on the employee’s W-2.
- Non-monetary awards of tangible personal property (not cash or gift certificates) given to an employee for length of service (5 years or more see IRC § 274(j)) or safety is not taxable up to $1600 if the award is given as part of a meaningful presentation and is not awarded under conditions or circumstances indicating disguised pay.
Questions pertaining to taxing of awards should be directed to the University Human Resources Payroll Division at 924-4350. The Payroll Division reserves the right to determine appropriate taxation pursuant to Internal Revenue Code.
Fair Labor Standards Act (FLSA) Implications:
Bonus payments (as monetary awards or awards that have a dollar value) paid to non-exempt employees may potentially increase the University’s overtime liability. The Federal Fair Labor Standards Act (FLSA) divides bonuses into two categories: discretionary and non-discretionary.
“Immediate” (discretionary) bonuses are not included in the employee’s regular rate of pay (includes hourly rate, on-call pays, shift differentials, certain bonuses, contest prizes and certain other items specified by FLSA). To qualify as a discretionary bonus the timing and amount to be paid must be at the sole discretion of the manager representing the employer. Further, the payment cannot be made pursuant to any prior contract, agreement or promise causing the employee to expect such payment.
“Planned” (non-discretionary) bonuses must be included in the employee’s regular rate of pay. A bonus is considered non-discretionary if the employer contracts, agrees or makes promise to pay an employee. Examples would include potential payments announced to an employee to: induce greater efficiency or productivity; improve attendance; remain with the employer; and improve the quality and accuracy of the work. If the “planned” bonus is paid to cover a particular length of time, the employer must examine every workweek within that period and calculate the additional overtime pay owed the employee.
Bonuses paid to nonexempt employees in the Planned Recognition category are non-discretionary. Such bonuses will increase the employee’s regular rate of pay and therefore affect the overtime rate of any overtime earned within the time period of the Planned Recognition program.
Example: A planned recognition program awards a $2,000 bonus to a nonexempt employee for improving attendance over an entire year. The employee’s hourly pay is $10.00 per hour or $20,800 per year (2080 hours x $10 per hour). Without the bonus, the employee’s overtime rate would be $15.00 ($10.00 x 1.5). With the bonus, any overtime earned during the entire year would need to be recomputed and paid at $16.44 ($20,800 + $2,000 = $22,800/2080 = $10.96 x 1.5 = $16.44).
Note: All employees subject to this policy who are paid on an “hourly” (hour-by-hour) basis are considered nonexempt under Federal FLSA.
Questions regarding the proper calculation of overtime pay should be directed to UHR Office of Consulting Services. Violations of FLSA could result in severe fines and penalties to the University.
Processing an Award:
A Recognition Award Request Form (RARF) must be submitted to UHR Office of Consulting Services with the appropriate justification for all monetary awards, gift cards/certificates for any amount; non-monetary awards equal to or exceeding $100.00; and recognition leave. Each organization is responsible for keeping auditable records of non-monetary awards under $100.00.
If multiple non-monetary awards provided to individual employees throughout the fiscal year equal $100.00 or more, the school or department must submit a RARF to UHR Office of Consulting Services detailing the dates and amounts of the awards. Payment will only be approved on a prospective basis. Payment will not be approved retroactively.
School and department managers are responsible for providing accurate information on the Recognition Award Request Form to be submitted to UHR Office of Consulting Services. They are also responsible for confirming that the Award does not exceed the limitations outlined in the Employee Recognition Policy.
It is the responsibility of the school/department to ensure that the submission is in compliance with their internal written plan. When the authorizing official signs the Recognition Award Request Form, they are certifying that the Reward has been recommended and approved in compliance with their school/department’s internal written plan. The role of the UHR Office of Consulting Services is in assuring compliance with University policy.
Payroll checks will be provided at the next appropriate pay date. Special checks will not be produced. Employees must receive payment as a direct deposit.
Processing Recognition Leave Payable as a Lump Sum:
Payment of Recognition Leave for University Academic Division staff salaried employees will be initiated automatically by University Human Resources for specific qualifying circumstances as noted in the section on Recognition Leave.
Payment for recognition leave will be prospective and must be received as a direct deposit.