As you create workplace policies for your organization’s employee handbook, it’s important to include a section on entertainment and gifts. Corporate gifts and entertainment can be misused and misconstrued, placing your company in legal hot water. As you create the policy, it’s important to keep the following in mind:
Keep Your Gifts Legal
It might sound obvious, but we have to mention it: The gifts you give must be legal. Do not give an underage employee a bottle of wine as a gift. Employees must never accept illegal gifts from third parties, either.
Remember, Some Gifts are Taxable Income
In many instances, gifts given to employees are considered taxable income, so remember this for federal income tax withholding purposes. This includes any type of bonus and most gift cards. When a gift is fairly trivial and given to all employees equally, it is not taxable. These gifts are known as de minimis gifts, and include things like food gifts, trinkets and birthday cards. For more information on what gifts are taxable as wages and which are not, see our Simon Paschal Says video tip on Holiday Gifts.
Only Give Gifts for Legitimate Business Purposes
This might be the most important guideline to follow when you are drafting a corporate gifts and entertainment policy. When gifts are given without appropriate context, they can be misconstrued as bribes or an effort to secure preferential treatment. Instruct employees to give gifts that are in good taste, and only in appropriate venues. For example, giving a gift while the client is in an office setting is appropriate. Inviting them to your home for a gift exchange is not.
Do Not Keep Secrets
Gifts should always be given openly. This does not mean a “Secret Santa” is inappropriate for your holiday party – this type of activity is done openly and is not exclusionary, despite the gifters remaining anonymous. Giving one or more specific parties gifts without notifying others in the company, though, is inappropriate and may be construed as bribery.
Set a Value Limit for Gifts
Your gift and entertainment policy should include a clear, reasonable monetary value for gifts employees are permitted to give and receive. By implementing this type of policy, you can minimize instances in which it can appear that a gift was given or accepted as a bribe or to otherwise influence a party toward a specific action.
What to do, What Not to do When Entertaining Employees and Clients
Accepting entertainment offers is a lot like accepting gifts. Entertainment can include any expenses meant to accommodate, feed, or entertain employees or clients, such as:
- Hotel lodging;
- Meals out;
- Tickets to sporting events; and
- Tickets to any other type of cultural or entertainment event, like a concert or a play.
Just like with gifts, entertainment must not be offered in exchange for preferential treatment and must be workplace appropriate. For example, taking clients out to a rowdy nightclub is not appropriate, but taking them to a professional baseball game is.
Have a Compliant Holiday Season
Naturally, you want to show your appreciation for your hardworking employees and valued clients through gifts and entertainment. Wise organizations will draft an appropriate, effective corporate gifts and entertainment policy with the assistance of an experienced Dallas employment lawyer. Contact Simon Paschal PLLC today to get started.
