Rules & Frequent Questions
UW policy governs use of food and beverages associated with recognition awards and events and addresses tax issues related to the receipt of gift certificates for employee recognition.
Washington State Policy
The Revised Code of Washington chapter 41.60 outlines the requirements for administration of employee suggestion programs and teamwork incentive programs, and offers general guidance for administering recognition awards which may not exceed two hundred dollars in value per award per year.
Effective May 2, 2012, the Washington legislature loosened the restrictions on cash and cash equivalent awards for employees that have been in place since July 1, 2010. UW departments may now expend funds from discretionary budgets alone to pay for cash and cash equivalent awards.
All other cash and cash equivalent awards (including gift cards and gift certificates) funded from designated operating funds, general operating funds, and all other sources remain prohibited through June 30, 2013. View Planning & Budgeting’s amended cash award policy. Please direct questions to Planning & Budgeting at 206-543-6277.
Definitions & General Information
- What is the difference between recognition and reward?
- Recognition is an action – it reinforces behaviors you want repeated. A reward or an award is an item that is a tangible reminder of achievement. You can incorporate awards into a recognition program. How you present an award can increase its value to the recipient.
- What is informal recognition?
- Informal recognition is simply what you do regularly to let employees know when you notice and appreciate their work. Informal recognition includes saying thank you when you notice an employee’s contribution or effort; writing a note to express appreciation; mentioning excellence in daily tasks; and sending an email to team members praising completion of a project. Informal recognition can come from anywhere in the organization -- from coworkers, managers, subordinates, clients. Informal recognition should be timely, specific, and sincere.
- What is formal recognition?
- Formal recognition is a set of established programs or practices that a department adopts to foster recognition.
Formal recognition has:
Formal recognition typically involves a planned event or presentation where employees are recognized for their achievements. Examples of formal recognition are awards for length of service, an awards banquet, luncheon or reception, and employee of the month.
- a clear purpose
- established criteria for award eligibility
- a specified selection process
- program components that are well communicated
- What parameters should a department place around recognition activities so they do not appear preferential and subjective?
- When recognition is tied to specific behaviors or outcomes, it reduces the appearance of favoritism. Meaningful recognition is timely, specific, tailored to the person, and connected to the goals and values of the department.
- Are there any University-wide recognition programs for staff?
- Yes, these include the Distinguished Staff Award, the David B. Thorud Leadership Award, and the Service Recognition Program.
- Is there a UW policy that states how recognition rewards and activities can be funded?
- No, however, the UW follows state requirements outlined in RCW 41.60.150.
- I’ve been told that recognition rewards and activities aren’t allowed on our budget. Is this accurate?
- It depends on your budget type, but even state budgets allow for some recognition activities. RCW 41.60.150 gives state agencies the authority to recognize employees, either individually or as a group, for accomplishments like outstanding achievements, safety performance, length of service, outstanding public service, etc. Recognition awards may not exceed $200 in value per award, and effective July 1, 2010, may not include cash or cash equivalents like gift certificates and gift cards, regardless of funding source. Award costs must be paid by the department giving the award.
- What is the limit that can be spent on a recognition gift? Where is that published?
- State agencies are allowed to provide recognition awards of up to $200 per employee per award to state employees (see RCW 41.60.150). This limit also includes teams. So if you are recognizing a team, both the gift(s) to the team, as well as the food and related event costs, would all need to cost no more than $200.
- Does the $200 spending limit for recognition include the food for the event or is it just for the gift?
- The $200 spending limit includes both the gift as well as light refreshments. Food must be restricted to light refreshments and beverages.
- We would like to recognize several individuals in our department. Is there a budget limit?
- The budget for formal recognition of employees is $200 for an employee or a team of employees. This amount includes both gifts and light refreshments.
- Our unit is totally grant funded. Can we spend grant money for employee recognition?
- Grant budgets vary in expenditures they allow. Some grants may allow recognition expenses, others may not. Contact your budget coordinator or the Grant and Contract Accounting office for more information on the Cost Allocation policy.
- My boss wants us to start implementing recognition activities and events in our department, but I’m not sure what we are allowed to do.
- A good place to begin is to review this website for information on developing informal and formal recognition programs. Check out model programs on campus. Contact firstname.lastname@example.org to schedule a consultation with a Recognition Specialist.
- What is an appropriate amount of money to allocate for employee recognition?
- It varies from department to department. One way is to estimate how many recognition events you anticipate per year, and what type/value of awards. Some departments have awards that range from inexpensive items up to $75 awards for exceptional accomplishments. Departments generally budget a set amount based on overall FTE. Remember that recognition can be meaningful without spending a great deal of money (see informal recognition).
Taxes & Record Keeping
Because cash awards are not allowed as of July 1, 2010 due to legislated changes, the information below pertains to cash awards and gift cards awarded prior to that date.
- Are recognition awards taxable?
- Cash and cash-equivalent awards are always taxable, regardless of the amount. Questions regarding tax can be addressed to email@example.com.
- What recognition activities should be tracked?
- Best practice suggests that ALL recognition awards be recorded regardless of value of the award.
- How do I know if a gift card has a cash value?
- Look at the back of the gift card. Cards typically state if they are redeemable for cash or have a cash value.
- What information does Payroll need for taxable gifts?
- Any cash-converting gift certificate or cash award is considered pay and needs to be taxed accordingly. Send an e-mail to firstname.lastname@example.org and include in the e-mail the award recipient's name, UW Employee ID number, and the amount of the gift certificate. Questions on the department’s reporting responsibility for cash or cash-converting gift certificates can also be sent to: email@example.com
- Are there any central funds for departmental recognition programs?
- No, only the Service Recognition Program is centrally funded. It provides an excellent opportunity to recognize an employee’s contributions and milestone anniversaries.
- I like to have the flexibility of paying for recognition rewards out of my own pocket - is that allowed?
- You may use your own funding for recognition activities. The recognition gift or reward should still be tied to a specific behavior or departmental goal that you are reinforcing, regardless of how it is funded. However, the University does not require or expect that individuals spend their own money for recognition gifts or activities. Personal spending should also not be the only source of departmental-wide recognition activities.
Events & Awards
- An individual we will recognize for excellence loves to bowl. We want to take this employee’s colleagues bowling at the HUB for the recognition event. Can we do this?
- You can pay for the bowling costs for the individual being recognized, and up to $200 total for the event, including light refreshments. You could pay for light refreshments (but not the bowling) for all the attendees if the bowling activity was the agreed upon recognition event for the individual being formally recognized.
- Can I take my team out for lunch in recognition of a recent accomplishment?
- Yes, and you can spend up to $200 for the recognition event. If gifts were to be presented, the total must not exceed $200 for the lunch and the gifts for the entire team.
- Can I give an employee a gift certificate because I want to recognize him/her for an outstanding contribution to our department?
- No, as of July 1, 2010, due to restrictions put in place by the Washington state legislature, all cash and cash equivalent recognition awards, including gift cards and gift certificates, for employees are prohibited regardless of funding source. This restriction includes gift cards and certificates that have been purchased but not yet awarded and is in effect until June 30, 2013, unless the legislation is extended.
- Can retirement gifts be paid for with recognition funding?
- Retirement gifts are held to the same standard as recognition gifts (see RCW 41.60.150). Recognition funding can be used to pay for the event that recognizes the retiring employee’s length of service and contributions to the department. Retirement gifts can be purchased with individual contributions from colleagues and peers.
Food at Events
- Can food be paid for with a grant or gift budget?
- Grant & Contract Accounting (GCA) will assess the request for a food flag on a grant or gift budget based on the terms and conditions of the grant, or donor intent of the gift. GCA determines the restriction code which designates the level of food approval.
Use a food form (UoW 1798) to request pre authorization to use a grant or contract to purchase food for a one-time event or for a specific reoccurring event that meets the criteria provided on the Light Meals and Refreshments policy.
Discretionary budgets (beginning with 64) are the only budgets that are approved for food and alcohol at a department's discretion without pre-approval needed.
- Can I be reimbursed for bringing food to a recognition event? If so, how?
- Food may be provided for state employees for the purposes of recognition with pre-approval. Unless you have a discretionary budget, you must request pre-approval for the expenditure using the food form (UoW1798). You can be reimbursed for food purchases that fall within the criteria of the food policy, ie., must be for training, recognition or special business meetings (not regular staff meetings).