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46 Lab. & Emp. L. 1 (2017-2018)

handle is hein.journals/laboemplo46 and id is 1 raw text is: loyment FALL 2017 VOLUME 46, NUMBER 1 Section of Labor and Employment Law American Bar Association Section of Labor and Employment Law isaster Relief i the Workplae By Virginia E. McGarrity and Alisha N. Sullivan hi the aftermath of multiple natu- ral disasters that have given rise to a humanitarian crisis, employ- ers are taking stock of the damage and looking for ways to assist employees affected by Hurricanes Harvey, Irma and Maria. Human resource management plays an integral role in the workplace by responding to these disasters and assisting affected employees, beginning with the benefits and resources made available to them. Retirement Plan Relief Recent guidance issued by the IRS provides employers who offer qualified retirement benefits with several avenues of support. See IRS Announcement 2017-11, IRS Announcement 2017-13, IRS Announcement 2017-160. By relax- ing procedural and administrative rules that would normally apply, plan sponsors of 401(k) plans, 403(b) plans, and 457(b) deferred- compensation plans can make loans and hardship distributions to affected employees and family members who live or work in a disaster area identified for indi- vidual assistance by FEMA. Spe- cifically, hardship distributions can be used toward food and shelter, and employers may defer until a later date verification steps employees would otherwise need to satisfy to receive a hardship distribution from their retirement plan. In addition, employers may waive any provision in the plan that prohibits the employee from making contributions for at least six months after the hardship dis- tribution. Although not required to adopt this relief, an employer may immediately begin making loans or hardship distributions before the retirement plan is for- mally amended to provide these relief features (plan amendments must be adopted by December 31, 2018, for calendar year plans.) The result is that affected employ- ees are able to access their money more quickly and easily. Leave-Sharing and Donation Programs Leave-sharing programs provide employees with the opportunity to donate their accrued PTO, vacation or sick leave for the ben- efit of other employees adversely affected by a presidentially declared major disaster. Gener- ally, the recipient employee must use the donated leave for purposes related to the disaster and cannot convert the leave to cash. If more time is donated by employees than is requested from affected employees by the end of the disaster period, the donated time must be returned to the donor employees (with excep- tions for small amounts that may prove administratively impracti- cable to reallocate). If the plan is in writing and carefully struc- tured to meet certain IRS require- ments, the donor employee is not taxed and only the recipient employee is taxed on the value of amounts received. Employers looking for ways to answer the call of employees who wish to support relief efforts may also consider adopting a leave-donation program. Such programs permit employees to donate their unused vacation, sick or personal leave time in exchange for the employer mak- ing a cash donation of equivalent value to a charitable organization providing relief to victims of the disaster. See IRS Notice 2017-48, IRS Notice 2017-52, IRS Announcement 2017-160. While donations of paid time off by an employee do not allow the employee to claim a charitable deduction, if the employer makes the cash payment to a charitable continued on page 10

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