This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.
Q: We are a public entity employer that is considered “essential” during the pandemic. A local bank wanted to give our employees gift cards to recognize their service to our community. Is this a problem because they are public employees?
A: This question is a little more complicated then it first seems. Many people simply assume that a public employee or public entity cannot accept donations or gifts, but the details are important.
If the local bank is considered a “restricted donor,” the public employees cannot accept the gift cards. So we turn to the question of who is a restricted donor - it depends on whether the public entity currently does business with the donor or seeks to do so in the future.
A restricted donor:
If the employer is currently doing business with the bank, it is clear the acceptance of the gift cards would be problematic. If not, then it is not the same issue and the employees can potentially keep the gift cards.
Iowa law also allows gift cards to be provided to a public entity instead of directly to employees. The gift cards could be donated to the entity, and the entity could use them for business purposes. For example, if the gift cards are for local businesses then the entity could use the gift cards to purchase items or services, lunch for employees, supplies, or other items.
There may be tax implications to keep in mind - when employers provide gifts to employees those are likely taxable.