Okay, so what does keeping the Sabbath have to do with insurance? Well, it’s not so much “the Sabbath,” per se, but taking a sabbatical. Many not-for-profit organizations (NFP’s) offer periodic sabbaticals to their employees, in order to help them refresh and renew their commitments. Unfortunately, such practices may be unlawful under the little-known legal principle of “personal inurement.”
In law, “compensation based on skill, effort and time expended, remunerated by salary or fee, does not constitute personal inurement.” So the challenge is in determining the monetary value of a sabbatical. Common sense [ed: quite the oxymoron, no?] would seem to equate a sabbatical to “unpaid leave;” the only real “value” is that one is assured of having a job to come back to. So what is the value of that certainty, and how would it apply to, say, a minister taking a year off to “find himself?”
Peter Marathas, a benefits attorney, warns that “(n)onprofit employers have to be sensitive about setting compensation. And when they're considering all parts of compensation, they shouldn't ignore sabbaticals." In other words, if the sabbatical has a value, then it has to be included with the rest of said minister’s benefits package. This hasn’t, apparently, been a big deal until recently, when the Infernal Revenue Service (at the urging of Congress) decided to start “cracking down” on NFP’s which offered such benefits as part of their employees’ compensation arrangements.
There are some pretty hefty fines that can be levied against folks who run afoul of these reg’s: starting with a 25% individual tax penalty. And the fines go up from there. And the NFP itself can face substantial whacks, as well: such as a $10,000 penalty on each of their trustees. Ouch!
We tend to think of benefits in terms of health and life insurance, flex plans and vacation days. We’ve discussed transportation reimbursement, of course, as an unusual type of benefit. But I’ve never really thought about sabbaticals as such, and this is a heck of an intro, to boot.
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