Forget the overdone hamburgers and warm soda. Payroll problems can arise even around the most hallowed of institutions, the annual company picnic.
Can playing softball be working time?Question: According to the company grapevine, a couple of managers are pressuring their employees to attend and play on their softball teams at the company’s annual picnic. The picnic is tentatively scheduled for a Saturday in June and, traditionally, employees and their families attend. Would these employees need to be paid for this time?
Answer: They may, indeed, need to be paid for this time. Under the Fair Labor Standards Act, employees need not be paid for attending an after-hours company meeting or function if their attendance is completely voluntary. On the other hand, employees’ presence isn’t voluntary, and they must be paid, if their managers lead them to believe that they will jeopardize their current jobs or future promotion prospects by not attending.
Suggestion: Send a memo to employees reminding them that attendance at the picnic is voluntary and that those who don’t attend won’t be penalized.
A strikeout for de minimis treatment?
Question: Instead of a picnic, the company wants to spring for tickets to a baseball game for everyone. So employees can come and go as they please, they’d like to drive their own cars. Since this is a one-time event, can we exclude the value of the tickets and the parking from their income as de minimis?
Answer: It depends. One of the hallmarks of a tax-free de minimis fringe is that it’s provided infrequently. It’s also true that the tax regulations use occasional tickets to sporting events as examples of tax-free de minimis fringes. However, the IRS has more recently concluded that even occasional tickets to professional sporting events are just too pricey to fall into the de minimis category.
Upshot: If you’re going to a minor league game, the tickets probably would qualify as de minimis fringes. The value of employees’ parking reimbursements, on the other hand, isn’t a de minimis fringe, because it’s cash and cash is always taxable.