Employee Rewards and Recognition Policy

Purpose

The University's Rewards and Recognition Policy is designed to encourage classified employees and University Staff to make a performance difference either individually or through teams. The policy recognizes achievements or accomplishments that contribute to the overall objectives of the University. The policy also provides both monetary and non-monetary awards.

University management under the policy may provide classified salaried employees and University Staff monetary and non-monetary awards up to a total of $2,000 per fiscal year. All such payments will be paid as a bonus (wage 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.

UVA's policy adheres to the state's Department of Human Resource Management's Policy 1.20 -- Employee Recognition Programs.

Eligibility

This policy is applicable to salaried full-time and part-time classified, University Staff, restricted, "at-will," and wage employees. Wage employees are not eligible for recognition leave.

Objectives

The objectives of UVA's Rewards and Recognition Policy are:

• to recognize and promote positive behaviors that support individual, work group, unit, team, department, school and/or institutional mission and business goals and objectives;
• to provide timely recognition to employees either as planned or immediate recognition;
• to provide multiple-levels of monetary and non-monetary recognition based on the significance of the contribution;
• to provide both individual and team recognition and rewards;
• to provide for both manager and employee initiated recognition and rewards;
• to improve employee productivity and quality of work; and
• to improve customer service.

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Award Amount

The total of monetary and non-monetary awards shall not exceed two thousand dollars ($2,000) per employee per fiscal year and/or up to five (5) days of recognition leave per employee per calendar (leave) year (January 10-January 9).

Monetary Awards

Monetary awards are:

• those paid by any negotiable instrument (cash, check, money order, and direct deposit); or
• any item that can be readily converted to cash, such as savings bonds; or
• gift cards/certificates (for any amount).

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.

Non-monetary Awards

Non-monetary recognition awards include the following examples: 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 timepieces.

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Recognition Leave

Recognition Leave lapses within 12 months from the date it is awarded. For salaried classified employees and University Staff, "Recognition Leave" will be treated as compensatory leave for leave accounting purposes. A classified salaried employee and University Staff shall be paid in a lump sum for any recognition leave balance:

1. When the classified salaried employee or University Staff leaves state service by resignation, retirement, layoff, termination, or death.
2. When the classified salaried employee or University Staff is transferred, promoted or demoted from one agency to another.
3. When the classified salaried employee or University Staff is placed on Long Term Disability under the Virginia Sickness and Disability Program (VSDP).

In addition, schools/departments may pay classified salaried employees or University Staff for their recognition leave balances if:

• at the end of the 12-month period, the agency has been unable to allow the classified salaried employee or University Staff to use the leave, or
• the classified salaried employee or University Staff moves from one organizational unit to another within the agency.

Payment of Recognition Leave for University Academic Division classified salaried employees or University Staff must be coordinated through the UHR Compensation & Rewards Division.

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Types of Employee Recognition

To insure both fair and consistent application within the University, a core set of rewards and recognition programs has been developed. These programs are described below. They are typical of recognition programs identified as best practices in the private sector and include both planned and immediate employee recognition programs. Additional recognition programs may be added as the University becomes more accustomed to their use.

Planned Employee Recognition

This approach is characterized by pre-arranged, more frequently scheduled ways of acknowledging contributions and accomplishments of an individual or team. Examples include rewards and recognition for:

• Attendance
• Safety
• Customer service
• Public service
• Productivity
• Outstanding achievements

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Immediate Employee Recognition

This approach provides employee rewards and 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 rewards and recognition for:

• Teamwork
• Project completion
• Suggesting a new or modified business practice
• Exemplary effort
• Employee appreciation
• Employee of the month
• Honoring separating employees

Levels of Employee Rewards and Recognition

The University's program has three levels of rewards and recognition:

1st Level: This is the first level of award 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 of award 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 of award 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

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Management Responsibility

Each Vice President will determine how the policy is to be administered within their respective areas. A written plan will be developed that indicates the type of reward and 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 will be reviewed by UHR for adherence to the state's policy and the University Reward and Recognition policy and approved at the Vice President level prior to implementation.

Procuring Awards

Schools and departments may procure monetary and non-monetary awards and items to be used for employee recognition in accordance with policies and procedures of the University of Virginia Department of Procurement Services, the state's Department of General Services' Division of Purchases and Supply and the state's Department of Accounts. Use of the contract with the state's Division of Purchases and Supply is not mandatory; however, the contract includes multiple vendors and suppliers who provide a wide range of items economically.

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Taxing of Awards

1. 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.
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.
3. Non-monetary awards. The UHR Payroll Division is responsible for determining whether or not non-monetary awards are taxable, in accordance with IRS guidelines. While non-monetary awards having a value equal to or greater than $100.00 (includes single or multiple awards) are not subject to federal, state, or FICA withholding, the value of such awards will be added to the employee’s gross wages and reported on the employee’s W-2. Non-monetary awards with a value less than $100.00 are not taxable or reportable (unless the total non-monetary award(s) and monetary award(s) to the employee equal $100.00 or more within the fiscal year). Single non-monetary awards with a value of up to $400 recognizing long-term service or safety are not taxable or reportable.

If you have a question as to taxing of awards, you should contact the University Human Resources (UHR) Payroll Division at 924-4350. UHR Payroll reserves the right to determine appropriate taxation pursuant to Internal Revenue Code.

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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, to improve attendance, to remain with the employer, and to improve the quality and accuracy of the work. If the "planned" (non-discretionary) 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, $20,800 per year (2080 x $10.00). 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 the Federal Fair Labor Standards Act. For example, an otherwise salaried exempt employee who is paid on an hourly basis would have to be treated as nonexempt.

Questions regarding the proper calculation of overtime pay should be directed to the UHR Compensation & Rewards Division at 924-4747/924-4366/243-2204/243-2206. Violations of FLSA could result in severe fines and penalties to the University.

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Procedures

A Recognition Award Request Form (RARF) must be submitted to the UHR Compensation & Rewards Division documenting an 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 Compensation and Rewards Division detailing the dates and amounts of the awards. Payments will only be approved on a prospective basis. Payments will not be approved retroactively.

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.

Policy Interpretation

The Chief Human Resources Officer is responsible for official interpretation of this policy. Questions regarding the application of this policy should be directed to the UHR Compensation & Rewards Division at 924-4747/924-4366/243-2204/243-2206. The University of Virginia reserves the right to revise or eliminate this policy.

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Categories of Planned Employee Recognition (See Table 1)

Recognition of Sustained or Improved Attendance/Safety Award
Purpose: Reduce the department's number of unplanned sick days or lost days due to injury and to reduce the level of overtime required to backfill absent employees.

*Note: A single gift of up to $400 is nontaxable to recognize safety.

Customer Service Recognition Award
Purpose: To promote and recognize employees for outstanding customer service.

Public Service Recognition Award
Purpose: To promote and recognize classified employees and University Staff for public service.

Improved Sales/Revenue Margin Award
Purpose: Provide an incentive for employees to increase the sales margin over the previous fiscal year, such as in the Bookstore.

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Categories of Immediate Employee Recognition (See Table 2)

Individual/Team Completion Award
Purpose: Award an individual and/or team for completing a major project in an outstanding manner -- on time and/or under budget.

Recognition of Outstanding Performance Award
Purpose: Create an understanding of what behaviors add significant value to the organization and to promote such behaviors.

Ideas that Make a Difference - Employee Suggestions Award
Purpose: To foster employee suggestions to improve a work process, which results in dollar savings.

Employee-of-the-Month Award
Purpose: To promote and sustain a long-term program to recognize an outstanding employee each month for his/her contributions to the organization.

Honoring Separating/Retiring Employees
Purpose: To provide recognition to employees for years of service to the University and/or the Commonwealth.

*Note: A single gift of up to $400 is nontaxable to recognize long-term service.

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TABLE 1: PLANNED AWARDS

Definition of Levels:

1st Level: This is the first level of award 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.

2nd Level: This is the second level of award 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.

3rd Level: This is the third and highest level of award 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.

*Note: A single gift of up to $400 is nontaxable to recognize long-term service or safety.

See Section on Taxing of Awards and Section on Fair Labor Standards Act Implications.

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TABLE 2: IMMEDIATE AWARDS

Definition of Levels:

1st Level: This is the first level of award 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.

2nd Level: This is the second level of award 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.

3rd Level: This is the third and highest level of award 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.

*Note: A single gift of up to $400 is nontaxable to recognize long-term service or safety.

See Section on Taxing of Awards and Section on Fair Labor Standards Act Implications.

Effective Date: July 1, 2005

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