Employers seeking ways to help their employees during the coronavirus (COVID-19) pandemic may want to consider implementing a leave-sharing program. These programs allow employees to donate some of their accrued paid leave time, such as paid time off (PTO), vacation or sick leave, for the benefit of other employees who need additional paid leave. During the COVID-19 crisis, many employees may exhaust the leave available to them through illness, quarantine or isolation, or caregiving responsibilities.

Although the IRS has approved leave sharing in the context of medical emergencies and major disasters, it has not issued guidance on leave-sharing programs specifically for COVID-19, despite major disaster declarations for all 50 states due to the pandemic.

While these programs can be beneficial to both employers and employees, they need to be carefully structured in order to avoid negative tax consequences for the employees who donate their unused paid leave.

• IRS Notice 2006-59 (leave sharing for major disasters)
• IRS private letter ruling (opinion on a leave-sharing program not limited to helping employees adversely affected by a major disaster)


  • Employers may establish paid leave-sharing programs to allow employees to help those in need.
  • Leave sharing allows employees to donate their paid leave to other employees.
  • Leave-sharing programs can provide employees affected by the COVID-19 pandemic with critical needed leave.