Using "Cash Surrogates" to Deliver Cash Awards
Using "Cash Surrogates" to Deliver Cash Awards
Cash surrogate--a special form of cash award
Some agencies occasionally wish to present their cash award recipients with a "cash surrogate" that is neither currency nor a U.S. Treasury check, but is easily convertible to cash. Current examples of such cash surrogates are "award vouchers" created by the agency itself that can be exchanged for currency through its imprest fund and "gift cheques" that are purchased through a vendor and that are easily and widely redeemable for cash, rather than just for merchandise. Such an approach may be pursued for a variety of sound administrative and policy reasons including a desire to present prompt "same as cash" recognition when there are significant constraints on getting checks issued. Also, the increased use of electronic fund transfers and "non-cash" transactions, which is widely anticipated and even mandated by law, may well bring additional forms of cash surrogates into wider use.
Criteria for cash surrogates
OPM has concluded that cash surrogates are an appropriate option for delivering cash awards. Recipients of cash surrogates must have the same freedom and control over how that award may be used as they would have over any currency or U.S. Treasury check they might otherwise receive as a cash award, including the option of saving the money or turning it over to any third party (e.g., a charity or other individual). Consequently, cash surrogates must meet the following criteria:
- They are subject to all the limitations and requirements that apply to cash awards.
- They must be easily and immediately convertible to cash.
- They must not be limited to be redeemed only where purchased, at a few selected sites outside the agency, or through specific vendors.
- If purchased from a vendor or financial institution, they are subject to all relevant procurement regulations.
Cash surrogates vs. gift certificates
Cash surrogates should not be confused with merchant gift certificates and other common merchandise vouchers. Such items usually cannot meet a cash surrogate's criteria because of limitations on where, how, and for what they may be redeemed. As nonmonetary awards, such certificates and vouchers fail to meet the criteria for honorary awards because they convey a clear monetary value and cannot be characterized as symbolizing the employer-employee relationship. Consequently, the only circumstance where a gift certificate or voucher may be used to recognize an employee contribution is as an informal recognition award, which may not exceed nominal value.
Tax withholding obligations
The face value (i.e., redeemable value) of a cash surrogate given to an employee represents the net value of the award after necessary withholding of income and FICA taxes. This is consistent with the way an award check is given. For most reporting purposes, including reporting to the Central Personnel Data File, the gross award amount would be used.