As children and adults across the country are organizing book bags and packing lunch boxes now that the back-to-school season is in full swing, education is certainly a priority. In fact, in addition to all the kids going back to school, many employers are also considering offering some sort of employee education assistance program to employees.
Many employers provide these training opportunities not only for the benefit of their workers, but also to facilitate recruitment and retention efforts. Last year, Amazon announced plans to fund tuition for its operational employees as part of a new initiative launched earlier this year. While Amazon’s program involves paying tuition and fees up front, many such programs involve the use of tuition reimbursement, scholarships, or even student loan repayment assistance. .
When establishing an employee education assistance program, there are a number of legal and practical considerations to keep in mind. With each type of education benefit, employers should consider what limits will apply. For example, employers should carefully consider whether all employees will be eligible for the benefit offered, or whether the opportunity will be limited to certain groups of employees, such as management or supervisory personnel.
Companies should also be aware of the intended tax structure and legal compliance requirements in conjunction with consideration of which employees to offer the benefits to, as some tax benefits are not available to employers who only offer these types of benefits. to their highly paid employees. employees. While it is certainly permissible to limit the opportunity for employer-sponsored educational advancement to certain groups, other tax laws offer favorable tax consequences to certain programs that do not favor high earners, provided that the The employer structures the program in a manner consistent with applicable federal regulations. .
Tax laws can be complicated, and a thoughtful discussion with a trusted legal or tax advisor can help ensure that the plan will result in the desired tax consequences.
Employers should also consider in advance what to do if an employee terminates employment, whether voluntarily or through termination for cause. An employer who offers tuition advances or student loans should be aware that in Oklahoma, these amounts cannot be recovered by payroll deduction unless the parties have entered into a written, signed and dated authorizing as much. Without a legally enforceable payroll deduction agreement, an employer seeking to collect a loan or advance will be stuck trying to recover the funds from the former employee personally or through legal proceedings.
Employers should also plan for what will happen if the employee stops participating in an educational program before earning a degree or certificate, or stays in the class but receives a failing grade. Obviously, with all these moving parts, it is imperative to distill all terms and conditions into a comprehensive tuition support and reimbursement agreement. This type of document is best done with input from internal or external legal counsel.
In a world where recruiting and retaining employees is becoming increasingly difficult, a well-thought-out employee education assistance program could help attract talent or improve the skills of current employees.
Katie Campbell is an attorney at Crowe & Dunlevy, crowdedunlevy.com, and a member of the Labor & Employment Practice Group.