With the holidays fast approaching, exchanging gifts in the workplace can be a good way to celebrate the spirit of the season and show appreciation, gratitude and goodwill towards supervisors, employees and co-workers. However, it may be helpful for employers to set gift-giving guidelines for supervisors and employees, and also be aware of their own duties and obligations. Here are seven things to keep in mind when considering gift giving in the workplace:
1. Establish Parameters
Employers may wish to provide clarity by establishing a clear policy on gift giving and making it part of the employee handbook. Such a policy should clearly state if the employer will allow gifts to be given or received by managers and/or co-workers and define the parameters.
It may be a good idea to prohibit gifts to be given by subordinates to managers and vice versa as it could be viewed as attempting to garner favoritism or lead to claims of unequal treatment. It could also be interpreted as potentially harassing and may be taken the wrong way.
Employers also should stress that gift giving is entirely voluntary for religious, personal and/or financial reasons. Along those lines, it may be helpful to set a nominal limit ($15 to $20) for any gifts that may be given or received.
2. Make Sure Gifts are Professional and Appropriate
Avoid gifts at work that are overly expensive, or that may be taken the wrong way, such as clothing, jewelry, perfumes and objects with more personal meaning. The same goes for gag gifts or jokes that may be offensive. A better choice may be less personal objects like picture frames, albums, books, mugs, calendars, or gift cards to Dunkin Donuts or Starbucks. Religious and cultural items should be avoided and alcohol should only be provided if it is appropriate and will not insult employees.
3. Work Environment Matters
Consider the work environment of the office. Is it a laid back and causal environment or a more professional and structured one? This could also influence gift giving etiquette and personal interactions in the workplace.
4. Secret Santa Can Be Festive and Fun
Consider playing Secret Santa in the office and setting a small and appropriate budget for it. This can make employees feel festive and giving without imposing too much of a financial obligation or making employees feel personally uncomfortable. It may be a good idea to organize it as a grab bag or Yankee Swap so employees do not feel obligated to purchase a gift for a specific individual. Participation should be voluntary and employees should not feel pressured to take part.
5. Consider Group Gifts Everyone Can Share
Group gifts may be a great way for employees to thank a supervisor or for the employer to thank a team, and therefore a safe and appropriate choice. Items such as chocolates, a cookie tin or a fruit basket can be appreciated and enjoyed by everyone and shared among the group and will not be offensive in any way. However, keep in mind that some employees may have dietary restrictions based on their religious and/or cultural beliefs. Be sensitive to this. With that being said, employees should not feel pressured to participate in any group gifts.
6. IRS Implications for Gifts to Employees
Employers should be particularly careful when giving gifts to their employees and stay within IRS permissible guidelines. Holiday gifts, bonuses and awards to employees have important tax implications and are considered additional W-2 wages, subject to payroll tax and income tax.
Certain non-cash gifts to employees can be treated as tax-free and do not need to be reported. According to the IRS, tangible gifts of a de minimis value such as turkeys, gift baskets, wine and entertainment tickets do not need to be reported as taxable income. However, intangible gifts or cash equivalents such as gift cards of more than $25 are required to be reported as taxable income on a W-2 form. Additionally, an employer should be cautious about the gifts it chooses to provide to employees and make sure that the gifts are neutral and of equal value.
7. Be Cautious About Gifts from Third Parties
Be careful about gifts from clients, customers and outside vendors and make sure to avoid any conflicts of interest. Supervisors and employees should not accept a gift from an individual or company that does business with the employer unless it is a nominal gift. And, if a vendor provides a basket of fruit or a tray of cookies, it should be shared with the entire department.