Subscribe and download our eBook, "Innovative Ideas for Surviving a Recession and Avoiding Problems in Your Small Business."
Get the:

Encouraging Employee Education

On my desk I have a quote from Benjamin Franklin that reads: "An investment in knowledge pays the best interest." Employers who embrace this philosophy can reap rewards from a better educated -- and more satisfied -- staff. As the fall semester approaches, there are a number of ways in which to do this.

Underwriting education costs
There are several tax incentives that encourage employer-provided assistance without incurring any tax cost to employees. These education incentives (described in IRS Publication 970) include:

  • Education assistance plans. These allow employees to receive up to $5,250 annually for undergraduate and graduate level classes, whether or not the coursework is job-related.
  • Cost reimbursement. There is no dollar limit to the tax-free benefit that employees can receive if courses are job related.

From the company perspective, all employee education costs are tax deductible. To the extent the type of education assistance is a qualified fringe benefit, there are employment tax savings. Instead of increasing employee pay to cover education costs, which would be subject to FICA and FUTA taxes, a fringe benefit is exempt from these taxes. Check IRS Publication 15-B for details on the tax rules for fringe benefits.

Rewards for additional education
A well-established company policy rewarding employees for additional education may inspire employee action. Options:

  • Monetary awards. A lump-sum payment or an increase in wages to reflect additional education can help employees pay for any education costs they've incurred.
  • Promotions. A new title may come with or without a pay increase. A promotion reflects how much your organization values education and employees who take advantage of learning opportunities.
  • Recognition. Options for acknowledging your employees' educational successes include a note in the company newsletter, recognition at a quarterly meeting, or a celebratory lunch.

Even if you can't afford to provide any financial assistance, you can be supportive of employees taking courses. For example, allowing flexibility in scheduling to accommodate class and exam schedules can make all the difference in an employee's decision to take a class.

In-house opportunities
In some instances, you may be able to host onsite training and development classes. These can even take place during a lunch hour or after hours. This training can cover new computer system or other tools used on the job, as well as key skill sets and job-relevant performance strategies.

Incorporate education incentives and assistance into your business planning to make sure you budget and schedule appropriately.