EMPLOYEES GET HOLIDAY BONUSES PAID BY THE ASSOCIATION?
Lanier Coulter, Esq.
December 4, 2013
or not an association should pay a bonus to a vendor or employee
greatly depends on the actual working relationship between the
association and the vendor/employee.
Very few associations actually hire employees.
Most associations will hire independent contractors to
assist with its day to day operations.
If an association has directly hired a person or persons
to work for the association as an employee, then the association
can pay a holiday bonus. For
example, if an association directly hires a person to serve as
an on-site manager, it can pay the manager a bonus as part of
the overall compensation to the manager.
if an association does not have any employees, but rather has
hired vendors as independent contractors, then the question of
holiday bonuses is a little different.
First, if the association gives any person a bonus of
$600 or more, it must issue a Form 1099 to that person.
Second, an association should be very careful in how it
terms any "holiday bonus" that it gives an independent
there are several factors under the law that the courts will
look at in determining if an employer-employee relationship
exists (thereby exposing an association to potential tax
consequences), regularly giving a person a "holiday
bonus", whether explicitly tied to performance or not, can
be a factor in a determination that an actual employer-employee
most associations, instead of a "holiday bonus", the
safest route is giving a small token of appreciation at the end
of the year, that is not attached to a performance review of any
governing documents for most associations allow for association
funds to be used for the common benefit and welfare of the
community and issuing a small token of appreciation to
association vendors, thereby gaining goodwill, would certainly
fall within this allowed use.
in doubt about issuing holiday bonuses, it is best for an
association to consult with both its attorney and tax
professional to ensure that there are no hidden consequences.