Overview: As part of an employee benefit program, employers can offer tuition assistance programs in an effort to support employees in their professional development and broaden their knowledge and skills. The investment an employer makes in an employee's future often translates into an increase in job satisfaction, efficiency and productivity as formal education is transferred to the job.
Employers may provide tuition assistance for undergraduate and/or graduate level courses. The benefit may also include reimbursement for books, administrative fees and tests. Most employers put a cap on the dollar amount of the benefit they provide, which is usually the maximum amount that can be provided to the employee on a tax-free basis in accordance with IRS guidelines.
Most employers put guidelines in place for tuition assistance. For example, employers might require that: (i) classes be job-related in order to qualify for reimbursement; (ii) employees stay with the company for a certain period of time after completion of a degree program (if an employee voluntarily leaves the company before the agreed upon time frame, he or she may have to reimburse the employer some or all of the money); and (iii) employees earn a passing grade and/or maintain a certain grade point average (GPA) in order to qualify for tuition assistance.
Author: Tracy Morley, SPHR, Legal Editor
Enhanced by the addition of a new law in New York City requiring employers to offer commuter benefits to full-time employees, enforced as of July 1, 2016.
Employers seeking to advise employees that they will offer educational assistance as a benefit and encourage employees to continue professional development through advanced training and education should consider including this model policy statement in their handbook.
The Taxation of Employee Compensation: Indiana section of the Employment Law Manual has been updated to reflect a retroactive change in the law regarding the taxation of employer-provided educational assistance.
In-depth review of the spectrum of Indiana employment law requirements HR must follow with respect to taxation of employee compensation.
In-depth review of the spectrum of Alabama employment law requirements HR must follow in respect to taxation of employee compensation.
In-depth review of the spectrum of Pennsylvania employment law requirements HR must follow in respect to taxation of employee compensation.
In-depth review of the spectrum of Georgia employment law requirements HR must follow with respect to taxation of employee compensation.
HR guidance on the benefits of offering a tuition assistance program.