my boss gave me a bonus — from her own personal money

by Alison Green on June 5, 2013

A reader writes:

I received a minimal raise (2%) at my last review. Another team in our small company just lost a big client, so getting any raise at all was a positive. But I asked for another $1,500 on the grounds that I’ve been a top performer among my peers (strong margins, returning clients, etc.). I wasn’t surprised when I was turned down by my manager’s boss.

My immediate manager is on a set salary+sales bonus structure, and did pretty well this year. My manager just gave me card saying that their personal success this year was due to the team effort, and my work in particular, and that the company was being short-sighted in not providing a minimal (from the perspective of the company) additional bump in salary. In the card was a $1,250 check (from their personal account).

Can they get in trouble if someone finds out about this? Can I ethically take this money?

You’ve officially stumped me.

I do think that ethically you can take the money. Your manager is saying that her own earnings this years were due in part to you, and so she wants you to share in them. I don’t have an ethical problem with that.

But I’m at a loss about the rest of this question. I don’t think you could get in trouble, exactly, if someone at your company finds out about this, but I also think it won’t look great. My bigger concern, though, is how it will look for your manager, and overall. If I were in charge at your company, I wouldn’t be pleased that your manager is openly criticizing their compensation decisions and correcting them on her own. I’d worry about things like whether it’s creating an us vs. them dynamic (her team vs. the rest of the company’s management), whether you’ll expect it next year too and what will happen if you don’t get it, the reaction of other team members if they find out, and the impact of this manager essentially rewriting the company’s salary decisions. (For instance, on that last one, what if it turned out that she was giving bonuses from her personal money in a way that appeared racially biased? She’d have taken control of that type of thing out of the company’s hands, but the company could still be liable for it.)

And yes, all of that might be over-complicating something that should be much simpler (“here’s a reward for helping me earn my own reward”), but when you’re looking at issues like this from the perspective of the company as a whole, they’re often not simple at all.

All of which is to say … I don’t know. It’s very well-intentioned of her, but I’m not sure it’s a great move.

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  1. badger_doc*

    How would that work for tax purposes? When we get bonuses, they are reflected as income on our W2’s. Would she need to report this on her tax forms and if so, does the manager get to deduct that from her’s?

      1. De Minimis*

        No, that’s gift tax, a totally different issue.

        Gift tax is paid by the person *giving* the gift. It’s designed to prevent wealthy people from giving away all their money to get out of paying estate tax.

          1. De Minimis*

            Very few people ever have to deal with it—each person has a credit they are allowed before they have to start paying gift tax. The average person never comes close to exceeding it, and if someone is wealthy enough to where it is a consideration they usually have the ability to structure things to where they can avoid it in other ways.

      2. RG*

        And your employer can’t give you a gift. This could be argued that it’s coming from the manager personally, and the company, but it’s going to the employee because of work done.

        I’d call that taxable. I don’t recall exactly where it’s located, but there is a mechanism for reporting income you receive as cash.

        1. Anonymous*

          If my boss gave me $50 at Xmas to say thanks for all your hard work, would you consider that taxable? Not challenging you, just curious what the rationale for money from a personal account being deemed taxable income is. I literally know knowing about taxes and you may be right but it seems odd.

          1. De Minimis*

            I think the rationale is that you are receiving the money based on your work. The case that really cemented their stance on bonuses was from one of the Green Bay Packers back in the 60s [I believe.] The owner paid him a bonus for winning the Super Bowl and the player claimed it was a gift and therefore not taxable. It went to tax court and the ruling was that, nope, it’s income. Of course, if he had won there would have been a real problem with people claiming all sorts of things as gifts when they actually weren’t.

            I know at other jobs anything we’re given for the most part is considered income–we had a wellness program where you could get gift cards for performing certain activities, and the value of those would be included in our W-2s.

            1. LMW*

              To be nitpicky, it was a car from a magazine (which he did have to pay taxes on) and the coach arranged for stoles for wives/mothers (his went to his mother, which he didn’t have to pay tax on, since technically his mother received the gift). So these were objects, not cash income, that were still considered taxable income, which is something to keep in mind.
              And the only reason I looked that up was because the Packers have been publicly owned since 1923, and I couldn’t imagine who the owner could be. :)

              1. De Minimis*

                Ah, thanks for the details. I only heard it second hand from a professor, and never heard the actual story behind it.

              2. the gold digger*

                Was that Mr Lombardi who did that, then?

                (Yes, I know I could google it, but I have to leave in two seconds to catch the bus and it’s too hard to google on my smartphone.)

                1. De Minimis*

                  Nah, it was a magazine, it wasn’t someone connected to the team.

                  When I was googling I learned one other thing…a lot of pro athletes end up in tax court!

          2. SarasWhimsy*

            This is totally taxable no matter the time of year.

            Many employers in times when they need employees to work more hours (think nursing facilities) they will offer gift cards on top of overtime pay if they work specific shifts in addition to their normal shift.

            That gift card is taxable, but the tax is typically taken out of the next pay check.

            If however, they sent you a Christmas card and sent you some cash, it would probably be hard to prove that it should be taxed.

            1. De Minimis*

              With gift cards they would just add it to our gross pay for the next pay statement. Nothing would be withheld from it so it usually added to the tax liability for that year, although probably a fairly miniscule amount.

            2. Anonymous*

              I wasn’t thinking so much about the time of year, I used Xmas as an example, I was thinking more about the money coming from a personal account rather than from the company. If a manager gives money to me out of their personal account, and they are not reimbursed for that money by the company, would you considered that taxable?

              1. Bonnie*

                There are two parts to this the receipt of the money and where it is coming from.

                Generally anything given to you by your employer is taxable income. That includes gift cards and Christmas “gifts”. Exceptions exist for de minimis gifts (the pens you take home).

                Any money given to you for services performed is taxable as income. So in this case since the manger is giving the money to the employee for work she performed the IRS would consider it taxable income but not wages. It would be taxable.

                If a co-worker gives you a $50 wedding gift with no expectation of anything in return, it is a gift and not taxable.

                Does that help?

                1. Lindsay J*

                  And cash and cash equivalent gifts can almost never be considered de minimus no matter how small the value is.

                  I ran into this when I wanted to give out gift cards for spot bonuses – even $10 gift cards are considered taxable income and would have to have been done through payroll, even though a gift like a pen or a mug worth $10 are de minimus.

                  The only “gift cards” that can be considered de minimus are vouchers for specific items to be redeemed at specific stores, such as a voucher for a Thanksgiving turkey redeemable at a local grocery store.

                2. Anonymously Anonymous*

                  Exactly. What she received was compensation. The fact is the manager created a second ’employment’ arrangement on her own and the co-worker received compensation. Good idea? Most certainly not. And according to IRS that is taxable income.

          3. Anonymous*

            Where I work we get what works out to be a $50 check for Christmas. The “gift” is more than $50 but each person is given enough to cover taxes for that gift, so each person nets $50 for that gift.

        2. Jessa*

          I don’t know if I’d call it taxable because it’s already BEEN taxed. It’s coming from the manager’s after tax earnings. It’s a gift, I certainly wouldn’t report it as earnings that way. I may be wrong certainly, but it’s a small enough amount that I’d argue it with my tax accountant.

          1. De Minimis*

            It wouldn’t already be taxed for the employee, though. When I pay someone to do work at home, they don’t get out of paying taxes on the money I give them even though for me the money has been taxed.

            Was thinking more about this…I think the employee is kind of stuck even if they decided not to accept the check,
            because they go by “constructive receipt” to determine if you received income. If I give you a check that you have the ability to cash/deposit, the IRS considers you to have income at that point, whether or not you ever actually cash or deposit the check. So it might be best for the employee to accept the check anyway, because a case can be made that they already owe tax on it.

            That is another reason why this probably is the wrong thing to do, even if it’s for the right reasons.

            1. Jessa*

              Except this is different. This is not money subject to corporate tax, this has been INCOME taxed to the manager. This is now the manager’s personal money. The manager is not an owner of the company, I am NOT sure that there’s a 2nd tax bite here. Because I’m still not 100% sure it’s income in the IRS sense because the manager does not normally PAY the employee. The pot of money owned by the manager is not in the company’s control.

              1. De Minimis*

                Anything you get is income, they just let you exclude some things, like gifts or the death benefit from life insurance. It doesn’t really matter that someone else already paid income tax before it got to the employee.

    1. KarenT*

      Maybe, but I don’t think so. The money came from the manager’s personal accounts.

      I get a $100 for Christmas every year from my god mother. I don’t report it as income. Who knows? Maybe the CRA (Canadian IRS equivalent) will be knocking at my door tonight, since I’ve put this in writing!

      1. Sourire*

        You’re not receiving that as compensation for work done though, whereas that is what the OP is receiving, albeit in a roundabout way. Though I guess that argument leads to the slippery slope of babysitting money, lemonade stands, etc.

      2. Chinook*

        According to the CRA (http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-12e.pdf), any cash gift is taxable but you can give employees non-cash gifts up to $500/year. Gift cards are considered near-cash and are also taxable.

        As for lemondade stands and babysitting funds, unless you are making more than approx $9,000 year, it would probably be worth it to file a tax return for the potential gst refund and creation of room in your RRSP and TFSA limits. Anything over the min. may still be taxable but probably in a small amount that would be offset by the future benefits. Plus, those taxes do pay for things like healthcare, schools, police, etc., which isn’t a bad thing.

        1. Chinook*

          As per another thread, the googled answer to the question was #5 on the list so I do not owe Jamie $10 towards her retirement.

  3. The IT Manager*

    I agree with Alison. An awesome stump-worthy question. While initially awesome, there’s all kinds of potential issues with this including the appearance of favortism and the appearance (true or not) that the LW now feels more loyality to her supervisor rather than the senior leadership and company as a whole.

  4. Yup*

    This isn’t a right/wrong response to your question about ethics, but I’d be uncomfortable taking the money because I simply wouldn’t know how to account for it mentally. How do I report it on my taxes (gift or income)? Am I allowed to mention it at the office, like to HR or my boss’s boss when I ask for a raise/bonus next year? Are there any weird strings attached in the work relationship if I accept it? It seems like a well-intentioned act that’s put you in a sticky position.

  5. Jamie*

    Nice gesture in theory – but this seems like one disgruntled manager. A couple of hundy? Sure – but $1250 with a comment about it being because the company should have and didn’t?

    That’s a statement.

    I have to admit I don’t know what I’d do. It would be hard to turn down politely – but I would feel really weird taking it because it just feels so inappropriate.

    Is she going to expect personal loyalty down the road at the expense of the company? Maybe not, but I’d feel so squicky about someone possibly feeling I was personally beholden to them.

    The tax thing is easy – no matter what she does you need to declare it as income if you keep it.

    1. Chriama*

      I agree that it seems nice on the surface but has so many possible subtexts that I don’t know how to perceive it. The appearance of favouritism, the implication (intentional or not) that OP now owes a favour that could be called on unexpectedly, and even the risk of feeling compelled to turn down better job offers or more work or somehow subvert your own happiness because of forced gratitude. Overall, I think if the boss feels so strongly they’re willing to personally pay $1250 to let you know you deserve this compensation, they should be willing to intervene with their boss on OP’s behalf

      1. Chriama*

        That should be *take on* more work or somehow subvert your own happiness *for the manager’s sake* because of forced gratitude

    2. fposte*

      I’m thinking this is one of those occasions where I’d keep this money separate for a while, too.

    3. Sascha*

      Squicky is exactly the word I would use. I have a hard time accepting large monetary gifts anyway, even from family members. I would feel doubly uncomfortable about that money coming from a boss. To me, personal money = I owe you something, even if their intentions are further from the truth. I don’t like to be indebted to people. Obviously there are exceptions and I’m not absolutely inflexible about this, but this situations crosses boundaries for me.

    4. Ruffingit*

      THIS!!! Receiving a gift/bonus/whatever you want to call it from an individual in your organization who has power over you just leads to way too many possible problems. I’d politely decline it with great thanks for thinking of me, etc.

    5. Jessa*

      I agree, tax or not tax, I feel very weird about the concept in general, I’d not take it. Mostly because it just makes me feel weird. Do I owe her something? What if someone else finds out and didn’t get any?

  6. blue dog*

    I think the most important thing for you is to mention this to NO ONE at all. If this were to get out, it could jam up your boss (both her superiors and her other reports). This would be really bad since your boss was only trying to do something nice for you, even if, in hindsight, it might not have been great form the company’s point of view. Be happy, deposit the check, and take this one to the grave with you.

    1. Meg*

      Honestly? This is exactly what I would do.

      OP, I see nothing wrong with taking the money, as long as you don’t expect that she’ll do the same for you next year. I wouldn’t bring it up with anyone else, though. I don’t see this as a great move on the manager’s part, but she was trying to show appreciation in her own way, and I’d feel bad potentially getting her into trouble by mentioning it.

      1. Meg*

        Also, since this has sparked a debate on whether or not to claim it on your taxes, I’m going to fall on the side of claiming it. When I say “don’t tell anyone”, it’s generally not a good idea to include the IRS in that statement.

      2. Cassie*

        I think that’s what I would do – accept it but not mention it to anyone, especially not in the office.

    2. Juni*

      Unless you really need the money, I’d take it graciously, deposit it into a separate account, and be ready to give it back if something happened.

  7. Catbertismyhero*

    It is a personal gift, so it is not taxable income to the employee and not tax deductible to the manager.

    That said, it is still bad form.

    1. Jamie*

      If it’s a personal gift then the OP shouldn’t accept it – that’s a ridiculously extravagant personal gift. If it’s a bonus you pay taxes on it.

      If this is a personal gift the OP has way bigger issues than taxes.

      1. De Minimis*

        The OP is not employed by the manager, though, so it probably isn’t a bonus as far as taxes go. The way it would “officially” be considered a bonus would if the manager owned the company or had the power to decide when/how to pay bonuses from company funds. Otherwise, there’s a case to be made for it being a gift, especially since it came from her manager’s personal account.

        1. RG*

          But that gets murky if the manager is classifying it as a bonus, not a gift. If the manager is saying that the money is to compensate for a lack of salary, that pushes it into the compensation category. The manager is giving it at what would otherwise be considered bonus time, right? And not in conjunction with another traditional gift giving time (birthday, Christmas)?

          The IRS is pretty skeptical of monetary gifts from employers, or people in management positions, to employees. And will go for substance over form in making determinations.

    2. Bonnie*

      I disagree. I think the IRS would view this a payment for services but not wages. I think the note is further evidence in favor of it payment and not a gift. I don’t think the manger realizes this but I think the IRS would definitively view this as taxable income.

  8. De Minimis*

    The tax situation is tricky, I know tax courts have often frowned on the idea of bonuses being portrayed as gifts [there’s one big tax court case involving this.]

    However, the one case I’m thinking of involved a person who was very obviously in control of the company [an owner,] so this could be construed as a gift from employee to employee. So I would *guess* that the employee would not have to include it.

    I’m less sure about the manager, but I think she would probably not able to deduct the $1500 since she is also an employee—it could possibly deducted as an unreimbursed work expense, but it’s unlikely it would meet the AGI threshold [most of these expenses don’t.]

    As far as the rest of it, I think the employee is okay, but not sure if it’s smart for the manager to do it.

    1. Kimberlee, Esq.*

      Yeah, I can’t see how this could be taxable as income for the employee.

      If you think about the implications… it would mean that the company was responsible for keeping track of not only it’s own finances, but policing when and under what circumstances employees gave money to other employees from their own personal accounts. I would be pissed off if a company I ran were legally responsible for private gifts made from the personal accounts of employees. can’t imaging that being the case here.

      1. fposte*

        There are two different issues there, though–whether the money is taxable, and whether the employer is on the hook for the withholding.

        1. Tax Nerd*

          The IRS is definitely going to view it as compensation for services, not a gift. It was from a manager, thus a representative of the company, to an employee, the end. Nevermind that it was given to help make up for a raise the manager deemed low. Generally, the IRS’s view is that there’s no plausible reason that cash (or valuable non-cash items) given in an employment context is a gift.

          The de minimis rules in the U.S. are that non-cash gifts of $25 or less for small things like dooughnuts, mugs, etc. can be ignored. (Yes, the IRS has thought about whether you should pay taxes when your company brings in doughnuts.) There is a larger amount allowed for career milestones (like the gold watch at retirement), but it has to be accompanied by a meaningful ceremony, etc. to qualify, as well as some other rules about not that many people getting it all at once, or somesuch.

          And yes, the manager could be in all kinds of trouble should the company find out, because technically it should be reported on the employee’s W-2, and taxes either withheld or grossed up (paid by the employer). Even if it’s not on their W-2, the employee can (and should) report it as income on their tax return. Nevertheless, FICA and Medicare wouldn’t have been withheld and they won’t be paid unless the employee puts it on the return as self-employment income (which technically it isn’t). The IRS is oddly fussy about FICA and Medicare not being underpaid, even though they are relatively smaller percentages

          1. Jamie*

            Thanks for the details – although I’m cracking up at the thought of the IRS sending out auditors to see if the ceremony where the gold watch was rewarded met the criteria.

            Auditors Report: there were speeches given by 2 of 3 members of upper management. Of the 19 laudatory statements made publicly they appear to be acquainted with the recipient and are aware she’s retiring.

            Recipients name was spelled correctly on the sheet cake and card – however the sheet cake was from a grocery store and there was no layer of filing,..which calls into question the significance of the event.

            It is the official finding of the audit team that the ceremony did rise to the requisite level of meaningfulness and the recipient does not owe taxes on said watch.

            However she did keep an undeclared pen with the company logo and for that she should pay 28% of wholesale value.

  9. Chriama*

    OP I think you should talk to your manager. Let her know exactly how it means to you that she acknowledges your performance, but you’re concerned for the reasons Alison mentioned above for her sake. If you’ve got a good relationship and she’s a reasonable person (and it sounds like she mostly is, if somewhat misguided) you can also point out that her gift was a short term solution and the company will be better off in the long run if it re-evaluates its stance on compensation. If she feels so strongly about rewarding and retaining good performers it’s worth bringing up to management, for your sake as well as all your coworkers. If they’re not interested in being as competitive as possible by getting the best talent, don’t count on sticking around for more than a few years anyways.

    Good luck! I really want to see how this one plays out.

    1. C-suite Diva*

      I think this is perfect, actually. As a manager who has struggled to get my team what they’re worth, and an executive who has to make cold, hard business decisions, I understand where the company and the manager are both coming from. But the only way to enact real change is to talk about it at the executive level.

  10. Zahra*

    I’m with the crowd. Maybe you could suggest to her that she could give gift cards to the local mall or something when she wins a big account during the year. It would probably cone out to a similar amount at the end of the year, but I think it looks less like she’s criticizing the company and it’s easier to justify it to other employees. It might even be a good suggestion for management since they could reward top performers openly.

    1. EK*

      Gift cards or other non-cash gifts sound like a better idea. There was time where I got an extra-large bonus when my small organization had gone through an especially difficult time. Even though I felt like all the staff had been given appropriate raises and bonuses, I took them all out to a nice dinner on my dime (voluntary for them, of course.) I probably could have even expensed the dinner, but I wanted to pay for it out of my own money, because I wanted to provide a personal, as opposed to organizational, thank you. It was almost about recognizing for myself that my success was in part due to their hard work. I’m not even sure that they realized I had paid for it as opposed to the company paying for it.

      So while I’m not against managers paying for something out of their own pocket if they are so moved, this doesn’t seem to have been handled well. Her heart might be in the right place, but the way she’s doing it I think sends a bad message.

      1. Chinook*

        I like the idea of paying for a good meal as a thank you instead of the cash. While I doubt OP’s boss thinks she is buying loyalty, it would make me uncomfortable because I would always wondering what she expected in return. A meal (and you can took the staff out for lunch on a slow day at work and not make them rush back) seems more like an expression of appreciation with no strings attached.

  11. Sourire*

    Ugh, a wonderful thought/gesture that could end up hurting the both of you far more than it helps. Manager really should have gone to bat for raises/bonuses as opposed to trying to solve the problem from out of pocket expenses. Perhaps she did, but if she did and failed, this is not the way to solve things.

    It’s rather ironic really, to specifically note that the money is to combat the company’s short-sighted behavior, when giving it is just as short-sighted. It won’t solve any kind of a long term retention issue the company is likely to have, and as others have pointed out, it creates major liabilities and complications for both the manager and the OP.

    I’d return it and say that while you truly value and appreciate the gesture, you are unable to accept compensation from anyone other than your employer.

  12. mahmadiqbal*

    Refuse, might be ethical but is wrong professionally speaking. Absolutely refuse and look for another job. Your manager though well intentioned, is incompetent. He/She should be the one to fight for your bonus with higher management, if he/she believes you deserved it.

    1. -X-*

      Incompetent due to losing one battle over pay to staff (and also making big $ herself)? No.

      1. fposte*

        Agreed. I also don’t think she needs to look for another job, especially since she was clear on the big picture reasons for the lack of bonus.

    2. Anonymous*

      “Incompetent” is not the right word but there is something off about the manager’s performancee here. The road to hell and all – good intentions perhaps but the bottom line is, the message from the manager to the employee is “The company didn’t do the right thing and so I will”. That seems noble and kind-hearted on a human-level, but from the company’s perspective, that’s a huge problem. They can’t have a manager who so vehemently disagrees with them that she takes money out of her own pocket to give to employees. I

      I also think that the manager could have done this in a more savvy way that didn’t overtly criticize the company. “OP, thank you for all your hard work with clients X, Y and Z, I appreciate your efforts, here’s a $250/$500 gift card ($500 seems like maybe too much) with my appreciation”.

      1. Chinook*

        Ooohhh…I could handle a $500 coffee card. That would be a years worth of Timmy’s coffee and doughnuts or 10 Starbucks fancy drinks, right?

        1. Meg*

          I immediately started thinking of all the fancy coffee drinks and pastries I could buy with a $500 Starbucks gift card.

  13. JennS*

    There are other payroll expenses the IRS may have issues with such as a 401K match. Would the employee be “owed” matching funds? What about payroll tax? This could potentially cause problems for the EMPLOYER if it ever does find its way back to the IRS.

  14. Kathryn T.*

    Wow this is tough.

    Perhaps you could have a closed-door (or offsite!) meeting with her in strict confidence where you express your gratitude, both for the cash itself and for its implications about how she values you as an employee, but you want to make sure she’s considered all the implications of her action before you accept it? And then mention Allison’s concerns above. If she says “Yep, I’ve thought about all that, I am prepared to deal with that if it happens,” then I think you’re definitely in the clear.

  15. Joey*

    No way. Its a bad management move. As a manager you have to work in concert with and support management, good and bad. You can’t undermine decisions management makes no matter how well intentioned. I’d be worried that if this manager didn’t like future decisions she would ignore them. Its pretty ironic that the manager says the company is being short sighted while she herself is not taking a holistic view of her actions. I’d be sympathetic to her intentions, but pissed that she undermined those above her.

    1. Joey*

      Let me clarify a point. Something small would probably be okay, but giving an employee a $1250 bonus under the table is definitely inappropriate. Either way, as the manager of this manager Id want to know. Here’s a good way to tell if she’ll get in trouble- if you or she feels it needs to be kept a secret then…….

      1. Joey*

        Now that I think about it one other point. As an employer Id feel much better if the employee came to me to ask if this was okay to accept. Is it ethical to accept? I think so, but I’d think much more highly of an employee who came to me to ask whether it was okay to accept. That would tell me that the person is looking out for the company’s interest and not just their own.

  16. edj3*

    Does your company have an ethics policy that covers gifts & hospitality? If so, consult that policy.

    1. Joey*

      Most ethics policies I’ve seen don’t cover a scenario like this. They typically cover scenarios with vendors, customers, contractors, stakeholders, etc

      1. Tinker*

        In less cut and dried situations, the policy might serve as a starting point to determine the appropriateness of a personal gift — if it’s officially unethical to accept X from outsiders, it’s unofficially worrisome to accept X from your boss personally. That sort of thing.

        I think over a thousand dollars probably crosses the skeevy line in almost any workplace, though.

      2. edj3*

        Ours actually does, and perhaps the OP’s may as well.

        Where I work, both the source and the amount of the gift matter. This particular amount would trip the requirement to report the amount given and the source of the gift.

  18. Tinker*

    I’ve received small gifts from managers before, but key word: small, as in under three figures. Passing over the question of whether it could get the boss or OP in trouble with the company, it seems like a breach of workplace boundaries that could cause problems between the boss and OP later on, even if done with the best of intentions now. What happens if the boss’s partner doesn’t approve of the expense, or an ongoing pattern of such expenses should this continue? How is the OP going to negotiate compensation in the future, if it’s no longer between them and the boss as representative of the company but also with the boss personally? It seems like a recipe for drama, even if nobody else finds out.

    Myself, I think I’d thank them for their support and appreciation, and decline the gift.

  19. mel*

    I have a guilt complex and very few expenses, so I would probably have refused the gift as I wouldn’t want to cause trouble for the manager, but express sincere gratitude for it.

    If I was barely scraping by, though, mum’s the word.

    Totally off topic: sometimes my mouse rolls over the “share” button which opens a menu that never goes away and then I can’t read the rest of the post.

    But if I try to make it “break” again on purpose, it works normally! Grrr. So I guess it’s just me?

  20. Wilton Businessman*

    A $100 gift card to Five Guys, sure. $1250…awkward.

    I understand the gesture. The manager did real well this year due to the effort of her team members. My reservation is in how much over-the-top it is. Perhaps your manager is trying to address the compensation policy by defiance. I don’t think you’ll get in trouble for taking it. If anybody is getting into trouble, it’s her for giving it.

    Personally, the amount makes me uncomfortable and I would probably try to give it back. On the other hand, $1250 puts a lot of gas in the Range Rover…

    1. Woodward*

      When I left my previous position, the CEO was very sad to have me go (not so much my manager; hence my leaving) and gave me a handwritten note with a $50 restaurant gift card and a $20 local flower shop gift card. I never considered the tax side of? I just figured it was a personal gift.

      They also used gift cards in the $20-$30 range to Subway, Target, McDonalds, etc. to “bribe” us into working late (still getting paid overtime, etc. – just an incentive to cancel my personal plans and stick around). It happened quite often (4-6x/month) I learned something valuable though: a delicious veggie sandwich in my hands at 5:00 PM (unexpectedly staying until 7:30 PM to work) is better than a $20 Subway gift card I can use later.

  21. PEBCAK*

    Don’t look a gift horse in the mouth. Thank your manager, cash the check, and never tell anyone but your spouse/partner if applicable.

  22. Anonymous*

    The only analogy I can think of in our situation is that it’s against company policy to offer cash gifts for Christmas. Sad, because it’s the best kind of gift.

  23. Anon*

    I’m up here in Canada, where the PM’s office is in serious trouble after a staff member gave $90 000 as a “personal gift” to Mike Duffy, a Senator who owed that exact amount back to taxpayers in false expense claims. Friends don’t gift friends large sums of money…Just an example to show just because it’s a personal gift doesn’t make it ethical, and can still get you into hot water. Obviously the context here is very different, but then again the full context might not be clear.

  24. Will Green*

    Not much of a stumper to me. Upper management here has shown that they value middle management more than the people doing the work. Her manager recognized this, and wanted to avoid facing the truth that both of them know, but don’t want to talk about: they both need to find a job where their employer demonstrates respect for all the employees.

    The taboo over openly discussing compensation, while designed to put the employer into a position of power over the employees, inevitably leads to conflict and uncomfortable situations like this. Things would go so much smoother if the culture of the company encouraged open and honest communication among everyone.

    1. Ask a Manager* Post author

      Maybe — but it could also be that the company has a legitimate reason for caring more about retaining the manager than the OP (manager could be much harder to replace, different skill set, etc.).

    2. Joey*

      Will,
      Aren’t companies typically justified in valuing middle management more than lower level workers?

      What you’re forgetting about communication is for most employees the boss is the company. Its her job to communicate why the decision was made and to make the best of it. So if anyone didnt communicate well its the boss.

      1. Will Green*

        Perhaps.

        What I’m saying is that fostering that ambiguity fosters distrust and conflict, and will always give rise to situations like this.

        Open, honest, respectful communication is the only way to combat this.

        1. Joey*

          The op knows she didn’t get a good raise because another team lost a large client. The only person creating ambiguity is the manager failing to explain why she did so well when her team didnt.

      2. Will Green*

        Joey:

        Not any company I would want to work for! That’s rather dehumanizing, don’t you think?

        1. fposte*

          Why do you think it’s dehumanizing? We’re not talking about value as a human being, we’re talking value to the company. I don’t feel dehumanized because my organization values people above me more than it values me. How would you have a situation where everyone is valued equally without having them all paid equally?

      3. CatB*

        Aren’t companies typically justified in valuing middle management more than lower level workers?

        I don’t really know if this is always true. From the letter I tend to think it’s some kind of sales job (“strong margins, returning clients”) and if it is a B2B setting, where strong relationships between sales personnel and buyers are key… that makes the answer to your question closer to “No”.

        That said, if a supervisor feels the need to do that kind of thing, it means the company is really screwed up in more ways than one.

        2. Joey*

          Or she doesn’t understand the compensation philosophy or just doesn’t agree with it.

  25. Lily in NYC*

    I think this kind of thing happens in finance once in a while – I remember my ex getting “shafted” on his bonus and his boss felt awful and gave him part of hers. The thing that made my jaw drop is that my ex and his boss considered his getting a 90K bonus an insult. Ah, Goldman Sachs, you are a different planet.

    1. Chriama*

      To be fair, don’t they make most of their money from bonuses? It’s not on top of their regular income like it is for us common folk, it *is* their regular income.

      1. Lily in NYC*

        Their base salaries are pretty high as well. My ex was making well over 250K at the time.

    2. Julep*

      It happens in law, too. Here I’m thinking more along the lines of gifts given to executive assistants during the holidays and on administrative professionals’ day. There can be a culture of one-upping the cash gifts given by other partners to assistants. Not really the same type of bonus that is described in the post, but sort of along the same lines.

      1. Cat*

        Well, and the theory at large law firms, I understand, is that lawyers are given substantial bonuses (or are well-compensated part owners of the firm) but their staff aren’t. So it’s not just one-upping each other: in a sense, the firm gives a bonus to the attorneys who then individually provide cash to their assistants.

        My firm, which is a small public-interest side firm, gives a fairly token bonus to everyone and we don’t do the large cash gifts. It is standard practice for the attorneys assigned to an assistant to all kick in for a gift card of some sort though.

  26. Anonymous*

    This happened to me before. I didn’t realize it was an issue. Our manager at the time received a bonus and she chose to split it amongst her team. We thanked her and cashed the checks.

  27. Seal*

    We had a semi-creepy staff member who planned to give his favorite temporary employee a “raise” out of his own pocket. Because he didn’t like his boss (who was new at the time) he assumed she would not approve his request, so he didn’t bother to ask. His boss’s boss got wind of his plan and immediately put a stop to it. Among other things, she told him that he would be jeopardizing his position and his employee’s by paying her under the table, since it was completely against university policy. He was also told under no uncertain terms that he needed to take up the question of raises with his own boss. Much to his surprise, his boss approved the raise without question.

    Ultimately, this guy’s actions lead to his getting fired. This incident proved to be part of an escalating pattern of inappropriate behavior towards his employee. The employee left because she was uncomfortable with his overly affectionate behavior; his boss had already reprimanded him several times for unprofessional conduct. Management and HR decided that he wouldn’t or couldn’t change his behavior and let him go. After he was gone, everyone breathed a big sigh of relief.

  28. JFQ*

    “And yes, all of that might be over-complicating something that should be much simpler…but *when you’re looking at issues like this from the perspective of the company as a whole,* they’re often not simple at all.”

    Why is this employee meant to bypass monetary gain because he or she is supposed to think about “the company as a whole”?

    The company gets to decide how much it pays employees, not how much money they get to have.

    Think only about yourself on this one one, OP. You may incur some risk with your standing in the company by taking the money, but you don’t have to pay the company money–which is effectively what declining this money would be doing–to save it from problems.

    1. fposte*

      How is it paying the company money? It’s not going to the company whether she accepts it or not.

      1. JFQ*

        Fair enough–it’s passing up monetary gain for the sake of the company, which is still a bad idea unless there is some self-interested reason that the risk isn’t worth $1250.

  29. Michelle*

    If you are a state employee (I know in MA and RI this applies) there is a certain amount (or present up to this amount) you can accept as a gift. You have to go through ethics training and accept this policy before starting. In MA it’s $50 from one person. I think this would fall into this category.

    1. De Minimis*

      I work for the federal gov’t and I think we aren’t allowed to accept gifts at all. I know we can’t give gifts to supervisors either.

      I think a few things are allowed, like some of the artwork in our building was given to us by patients. Think the general rule is that we can only accept things that can benefit the facility as a whole, and even then it’s limited.

      1. Natalie*

        We have federal government tenants and they are allowed to accept chocolates and such at Christmas. I’m sure there are rules (there are always rules!), but I believe gifts of a certain size and type are generally allowed.

        There is one agency in my state that accepts nothing, but they had a major kickback scandal 10 years ago so they’re an exception.

  30. Foam chick*

    Personally, this would sound some alarms for me. Maybe I’m too cynical, but all I can think of is OP being approached at a later date by the manager, asking for a favor and saying something like “remember when I helped you?”

  31. HAnon*

    late to this…but could the manager approach HR (or whoever) and ask that they dock her paycheck by this amount because she really feels that the employee deserves this money, so then it would be coming from the company instead of a personal check…

    2. Ask a Manager* Post author

      They’re unlikely to agree — she’s basically telling them to undo their compensation decisions, which isn’t her call to make.

  32. OP*

    Thanks everyone for the really great comments (both for and against taking the money). I have a really great relationship with both my boss and my boss’ boss, and the poster who said that if I felt uncomfortable talking about it then I shouldn’t take it really struck a chord. My immediate manager is a very good person, a great IC and hates the business side of managing. While the money isn’t a make or break amount for me, it is still substantial, so it was a tough decision.

    So I pulled my manager aside for a coffee-shop discussion and thanked them for the generous & tangible display of their appreciation for my work, but that it felt awkward taking such a large gift and so I was returning it.

    They apologized for putting me into a position I felt uncomfortable with and indicated they hope that this won’t hurt our working relationship going forward.

    1. Esra*

      Sounds like it turned out well. I’m glad you were able to deal with it in a low-key way.

    2. Not so NewReader*

      Bravo, OP. Good call on that one. And a tough one to do- give back a check that size.
      But, it was the route you had to go.
      Personally, I would have had to return it myself. I can just picture me being wide awake at 2 AM worried about all the ramifications of keeping the money. (Notice, I am not saying I would have found this easy to give it back!)
      And you handled a difficult conversation with finesse, on top of all that. Good for you! Well done.

      Just as a point of curiosity– if you get some good karma flooding back to you in the near future- let us know.

  33. anon*

    Ok, I’m glad this question was posted. I manage a small team of freelancers whose pay scale is decided upon by people over my head. I was planning to buy one freelancer who I believe is criminally underpaid (based on the amount/quality of work she does without complaining) a small gift card ($50ish) in lieu of the bonus/pay raise she deserves but won’t get. Is this also a bad idea? Or is it the amount of the bonus in OP’s question that raised red flags?

    3. Shannon*

      I had a similar situation, where someone under me was very much underpaid. I received a smallish bonus, which she was ineligible for because of her level, and when I received it, I gave her a Thank You card with a $200 check in it. Because if it weren’t for her, I wouldn’t have earned the bonus.

  34. Another Day, Another Dollar*

    This is an interesting discussion. I actually know of a similar situation where a manager was the only one from his team given a cash award for a project his whole team worked on. He split the award $$ with the team members, which came to a couple hundred dollars each. The team member who told me about it appreciated the gesture and the $$ share and never thought of not accepting it. I think it says something about the relationship between the manager and OP and how the $$ was presented that OP has these concerns.

  35. the gold digger*

    I gave bonuses from my own money to cow-workers once. I was not their boss, but I got a lot of credit for the project and it would not have been successful without them. I was bonusable; they were not. So I went to the bank, got some brand-new hundred-dollar bills, and gave $100 each to three people, along with a note about how much I appreciated their efforts. I remember it hurt a little to give that money because we only got about 5% bonus that year compared to 20% the year before!

  36. Thought*

    My take on it is this: If my manager got a bonus and I didn’t, even though I should have (happens ALL the time, execs get bonuses while the grunts get nothing) then I would be okay with my manager giving me something, essentially sharing her bonus. If my manager didn’t get a bonus then this gift was coming out of his/her income, which would make me uncomfortable.

    Of course, my view is probably different than others because I view bonuses as special money meant as bonuses, not every day expenses. My spouse and some of our friends get annual bonuses and even though we do end up paying some bills with them we also have fun with the money too and treat each other to dinner or some other form of fun/entertainment. So, I am generally inclined towards “bonuses should be shared” anyways…

  37. T*

    Just speaking as someone who has worked in investigative journalism, DON’T TAKE THE MONEY! It might seem a little odd but well intended, but if something were to come up in the future (company/manager/etc get investigated for unethical or illegal allegations or something), chances are your under-the-table bonus will get revealed and it will look sketch even though it isn’t.

  38. Shawn*

    Many people are saying this manager made a mistake, shouldn’t have done this, it’s not right, etc. I agree that the message attached to the money probably wasn’t the best choice. However, just how awesome is this manager to actually go through with this? Stop and think about that for a second. Much of this space is used for questions about really bad management, unfair practices, is it legal?, etc. This manager so valued his/her team member that when the company wouldn’t reward him/her, the manager did it themselves. This is a totally selfless act (if we remove some of the passive aggressiveness from the message), and it’s effort/ caring that many people don’t get from their managers. Most managers would go oh well, maybe next year, let me cash this huge bonus and go on vacation. This person ponied up their own money with the intention of rewarding/ motivating/ retaining their staff. It’s like damned if you do, damned if you don’t around here.

    1. fposte*

      I think that’s overstating things. Most good situations aren’t things that people write in about, for one thing. For another, I don’t think it’s hugely rare for people not just to hog the whole pie when they could pass it on to staffers–the thing this manager tried to do through channels initially is something that managers do succeed in doing with some frequency. Really, when the big boss tells Wakeen he’s got $6k for raises in his unit and he can spend it how he wishes, I think it’s actually less common rather than more for Wakeen to give himself $6k.

      I’m glad the manager recognized that her staffer deserved more money than she was getting, but that’s really not isolated, and many do indeed do something about it.

    3. Joey*

      You’re missing the point. If it was such a good thing why did she have to keep it a secret.

  39. Tex*

    I had a friend in the same situation. It was somewhere between $5 and 10k (I can’t remember). She said she nearly fell off her chair … but she took it. I-bankers….

  40. Estelleen*

    Working in the financial services industry (as an admin / support person) getting a casual cash envelope bonus at year end is pretty common, as is a group gift from investment bankers who work on your team. If you get it great, if you don’t it’s no big deal.

    This is separate from any corporate bonus (which is taxed at least 50%)….

    But I’ve never heard of people reporting these bonuses and gifts. It would ruin things for everyone really. You don’t really talk about it but it explains why some of the crazier employment situations full of disfunction last for years and years. You know, the devil you know, softened by the cash.

    It isn’t right or wrong, it’s just the way financial services industry works.

    So I would say it’s dependent upon industry standards.

  41. Windchime*

    I haven’t read many of the comments yet, but if the employee were required to pay taxes on this money, wouldn’t the IRS be getting paid twice? Because if the manager got this through her regular paycheck, then that money will already claim it as taxable income on her own income taxes. So in my opinion, the employee shouldn’t have to pay taxes yet again on this gift.

    Having said that, I would still feel kind of uncomfortable about accepting a personal check from my manager, especially one so large.

    1. totochi*

      Depends. If the manager claims the “gift” as a business expense, it may be tax deductible. It’s kinda like alimony. The recipient needs to report it as taxable income while the other party can claim a deduction. If he/she doesn’t, then the money is taxed twice.

    2. Bonnie*

      If you take the money you got in your payroll check and use it pay a nanny she is required to pay taxes on that money as income regardless on your payment of taxes. Same thing here. Now the manager would probably get to deduct this as a business expenses but that doesn’t change the treatment for money received in payment of services.

      1. Jessa*

        Except that I’m employing the nanny. The manager is not the employer of the OP, the company is. The manager is not an owner (now if they are that’s a totally different issue.) But I am the owner of the company paying the nanny.

        1. Bonnie*

          The employer/employee relationship is different than the double tax question. My point was that you use your after tax money to pay for things all the time. The fact that you paid taxes on it first is not related to the taxability of the income to person or business receiving it.

          As far as taxability to the employee see the response of Tax Nerd above for the IRS perspective on the relationship between the manager and the employee.

  42. Hannah*

    What if one took the check and cashed it and soon after, the manager left the job or was layed off/fired?

    I had a situation where someone I managed wanted to pay bonuses out of her pocket since the company had a no bonus policy that year. I told her that it would seperate her team from the rest of the company and we needed to stand as a whole together supporting the policy.

  43. Georgiana Mihalache*

    I say “absolutely not!”. That is bribe and you shouldn’t accept that money. Your manager should support you in front of those that decide the bonuses and convince them that you deserve a bonus of your own, not give you her own money. Absolutely not!

  44. Anonymously Anonymous*

    I’m a day late and dollar short. I thought this was today’s post but anyway it seems the compensation issue was already addressed.

  45. DLB*

    At my previous company, all department managers and employees received a quarterly bonus if their department (profit center) were profitable. I was an “associate” in the business development department (technically a cost center – no billable time), but my boss received a bonus based on the other department’s profits for helping drive business to the profit centers. I didn’t get a bonus because I was in a cost center, and also not a manger. So my boss graciously shared his bonuses with me whenever he received one. He’d give me a card and a few hundred dollars and say something like “thanks for your hard work, you deserve this.” All the managers and employees in my branch thought it was unfair that I was literally the only person that didn’t get any sort of bonus. It was a dumb rule that the corporate office had, and refused to reevaluate. I always put it in savings, but also never told anyone. However, my boss told his boss that he would do this (his boss was the area manager) and he was fine with it.

  46. Corporate Cowgirl*

    Sheesh…..this is a tough crowd. As a manager, I gave all members of my staff (3) $1,000 each one year when management bonuses were very good. These folks were not bonus eligible. I simply wanted to show my appreciation for all their work that year. I wasn’t trying to slam the company or make an employee uncomfortable or create a taxable event. They were SO appreciative and each one spent it on something special. No one asked me about taxes or reported it on their taxes. I thought it was just a nice thing to do!

    1. OP*

      I think the context of splitting it across all the team members, and without a message of “they should have given you a raise” would reduce much of the concern people have.

      And nobody is arguing that it isn’t a nice thing to do :)

  47. EC*

    technically any ‘money’ is probably taxable. If they gave you a turkey, the value of it wouldn’t be, because you can’t really do much with it, other than eat it, and you can’t ‘spend’ it as you choose. gift cards and money are usually considered taxable compensation. though a lot of employers probably don’t know to include small amounts (like gift cards) in compensation.
    In many cases the additional $$ affects the regular hourly rate and therefore the Overtime rate for the period of the bonus.

  48. anon-2*

    I’ve seen things like this – out of pocket payments from managers who were lavishly rewarded for something an employee did — and originally failed to give the employee credit for it.

    Better to write a check out of that big bonus he/she received to the employee, rather than have to deal with HR later….

  49. Paul*

    I think the cheque should not be accepted, but appreciation verbally expressed and it returned.

    An alternative could be for the team manager to show her personal appreciation and value for all of her team by providing some non-monetary appreciation, such as a meal out, a special theatre trip, possibly a team away day (that last one needs further thinking though!).

    I also would not feel comfortable being singled out from my team colleagues to receive a ‘special’ acknowledgement/reward, but I know many who would not have a care for that ethical dilemma.

  50. ECP*

    It may be that your company has a slush fund, so to speak, for bosses to spend a certain amount of money as they wish so it may have been the company money, ie an expense account. This way it makes your boss look good to you, but it doesn’t make the boss look good to the company it he tells you it was the bosses own money. If you reject the bonus, you may not get another. If you take it, it is reward for past work performance. It should not be used as a way to bribe you into doing work over and above the call of duty or owing the boss for expectation of another bonus that may not come. You may wish to comment that you appreciate your boss acknowledging the work you have done to date – just to clear up any possible misconception. It’s a cheque so its traceable, copy it and keep the thank you card it came in for your own records and check your pay information as it may have been added to your payroll, ie taxes.

  51. C*

    I work in sales, and when I was an assistant in my early years– my managers would often give me thank you cards with a small cut from their bonuses to thank me for my hard work, and helping with their success. I really appreciated the recognition from my managers. I’ve since carried this on for my assistants as thank you gifts.

  52. OP*

    And a happy update. My manager’s boss pulled me aside and let me know that thanks to my past performance and importance to the future growth of the company they are giving me a raise. A bigger raise than I requested at my review. Not sure how much my immediate manager had to do with this. (obviously the two of them need to get better at figuring out how they’re communicating to us, but that is another story)

    $5k + I’m now on the first ladder of the official bonus structure, not just the “if we like you this year and we made lots of money” variant I was in before.

  53. Shallorl*

    My friend she is an intern in a company , where she used to where she used to work from home,
    two days back her BOSS gave her an option to buy a phone by saying its from company.
    The phone cost is INR25K or $500, as an INTERN do any company gave expenses phone like this.
    I am in a worry about her, please help me out is it good or bad and if bad how do i tell her about this …
    as she is fresher and comp gave him laptop with internal dongle to work from home but giving expensive phone is bad…
    First he taken her for a lunch and then for buying phone…
    please help me out to help her if its having some bad sign …

  54. Jeanne Nelson*

    Many managers give their assistants generous gifts at the end-of-the-year holidays, on Administrative Professionals Day and on their birthdays to show extra appreciation for the work they do on an ongoing basis. I believe the gift is taxable for the recipient and deductable for the giver as a business deduction. But, a CPA or other tax professional can answer that question.

    As well, some boss’s have supplemented their assistant’s income when they wanted to provide an incentive, especially in the area of sales. Again, I believe that would be considered additional income for the assistant and a business tax deduction for the boss, but check with a tax professional.

    The other thing to consider is that some companies have policies that prohibit their employees from lending or accepting money to or from each other in anything other than a token amount (say under $100), and from giving or accepting gifts valued at more than $100 (or other established amount) to and from other employees as well as to and from clients, vendors, etc., without reporting it to the company. This involves full disclosure and a lot of paperwork, but in some companies and highly-regulated industries failure to do so could mean disciplinary action up to and including dismissal. There are very good reasons for such policies; one is to keep employees from putting themselves in compromising positions.

    So for these reasons as well as the others mentioned I would not engage in lending or giving one’s assistant money nor would I accept money from my boss unless it fell within company policy and did not violate any ethical or political guidelines. Instead, as a manager I would use my influence with my manager to get a bigger piece of the compensation budget allocated to my team for both salary and bonuses. That’s what most managers do – engage in ongoing struggles for more funding for larger salaries and projects! This particular manager was generous, appreciative and kind hearted but misguided in her efforts to be fair.

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