Regulations

What To Know About Employee Sweepstakes And Contests

The DOs and DON’Ts Of Employee Sweepstakes And Contests

In this era of transient workforces, employees can use a much-needed pat on the back to let them know that they are valued within their company, whether as a bonus, a gift or praise. Contests and sweepstakes can be a way to reward employees, break down barriers, boost morale, and just have fun. As you look to find new and exciting ways to keep your team happy and productive and think a contest or sweepstake is one way to do that, remember that certain rules need to be kept in mind.

Sweepstakes, contests, and any competition usually have federal and state laws and regulations that govern how they can be held. This should not prevent you from doing something great for your employees, but you will want to make sure you are in compliance as you conduct your employee activity.

Dale R. Joerling of Thompson Coburn LLP has updated his excellent blog post on how to create in-house incentives within the rules. Here are some DOs and DON’Ts we gleaned from his post.

DO Understand the difference between a “contest” and “sweepstakes.”
Many employers hold contests determined by a competition. However, a contest can easily become a sweepstake if the final decision becomes a drawing of chance. Once that happens, a whole other set of rules apply.

DON’T Be vague with your contest rules.
It is imperative that when holding a contest in the office, you are clear about the rules and they are made available to every participant. That means also keeping track of the various parts of the contest. If the rules specify certain criteria to be met, you must have detailed records confirming that the winner met the contest criteria for winning.

DO Treat employees equally.
Whether holding a contest or sweepstake, you must give every participant a fair chance, especially with sweepstakes. Sweepstakes are not merit or work based; winners are chosen by chance. Showing preference to one participant over another is not permitted. Further, participants must be given clear rules to ensure understanding, including how many times they can enter and how the winner is drawn.

DO Be accurately descriptive of the prize.
Who doesn’t love a prize? Just be honest about what that prize entails. Make sure the retail value of the prize is provided in both the official rules as well as the abbreviated ones (estimate lower if you don’t know the exact value). When dealing with prizes (especially monetary ones), it’s important to determine if that prize is factored into your employee’s salary or must be reported to the state or federal government as taxable income. Find out from your financial department and include that information in your contest or sweepstake.

DON’T Avoid public sweepstakes and contest because they require compliance with legal requirements.
Sure, they can be work and you need to be sure you are complying with the law. However, sweepstakes and contests that truly incentivize your employees are valuable. Like any public contest or sweepstake, you must be very clear about the rules, including any state or federal laws that must be met. Make sure the official rules are provided prior to the contest/sweepstake, along with abbreviated rules made available in different parts of the office that etch out terms and conditions, and watch your employees have some fun and see their morale boost.

Click this link to view the Thompson Coburn blog post.

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What To Know About Employee Sweepstakes And Contests
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What To Know About Employee Sweepstakes And Contests
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In this era of transient workforces, employees can use a much-needed pat on the back to let them know that they are valued within their company, whether as a bonus, a gift or praise.
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First Capitol Consulting.Inc
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