Employee Emergency Assistance Funds: Three Design ConsiderationsApril 1, 2015
Handling an Emergency That Stretches Your Employee Relief Fund to the LimitMay 19, 2015
It is an unfortunate reality that almost all employers will have problem employees. These tough cases can still pop up when your company is engaged in charitable efforts – even when these efforts are aimed at helping employees and their families. One advantage of partnering with an independent public charity like the Emergency Assistance Foundation (EAF) is that the charity is not a vendor or agent for your company. This means that if an employee with a proverbial axe to grind starts causing problems relating to your disaster relief fund, you can rest easy. EAF is an independent 501(c)(3) charity, and although it administers your fund, for tax reasons it is not a part of your company.
For example, recently an employee with one of EAF’s funds applied for aid, and unfortunately did not qualify. The employee insisted that he did qualify and should be awarded a grant. He ignored explanations as to why he did not meet the criteria, and continued to insist he was entitled to a grant.
The employer was understandably concerned about the legal implications of this dispute. However, because EAF operates disaster relief funds independently of the employer, there is no need for employers to be concerned about potential agency liability. Indeed, employers cannot have such relationships with EAF, because the IRS would then consider any grants made from the fund to be part of employee compensation (and therefore taxable to the grant recipients already experiencing a hardship).
For this reason, EAF is considered independent of your company. This diverts all employees who might otherwise give you HR and legal problems when their applications for assistance are denied away from your organization and towards the third-party fund administrator. Clearly these uncommon situations are far from ideal, but there must be a plan to address them