Financial Policies

FN30 Employee Reward and Recognition Programs (formerly FNG04)

Policy Status: 


Subject Matter Expert: 

Associate Vice President for Budget and Finance, 814 867 2477,

Policy Steward: 

Associate Vice President for Budget and Finance



The Pennsylvania State University (University) encourages the establishment of Employee Reward and Recognition programs throughout the University for recognition of exemplary work performance and achievements by employees. Rewards should be given for significant outstanding performance that advances business area goals and should be tied to a specific accomplishment. Rewards are not adjustments to base salary, supplemental compensation, or variable pay programs.


The University’s financial policies are applicable throughout the University, including all direct and indirect subsidiaries, and are required to be followed by all University employees who engage in financial, accounting, purchasing or other transactions, including University employees who in the course of their assigned duties engage in such transactions on behalf of third parties such as the Penn State Alumni Association or other related entities. The University’s financial policies are not applicable to Penn State Health or its subsidiaries, or to Penn College of Technology, each of which has its own financial policies.

This policy does not apply to student workers, non-student workers, tutors, and federal work-study employees.


  • Eligible Employee – Eligible employees may include full-time and part-time faculty and classified staff as specified on each award.
  • Immediate Award – A method that provides acknowledgment at any time for demonstration of excellent behaviors and values of the University; contributions to the goals and objects of the University or business area; and individual or team accomplishments. An immediate award can be monetary or non-monetary.
  • Monetary Awards – awards paid by any negotiable instrument (i.e., cash, check, money order, direct deposit, and gift certificates or gift cards) or any item that can be readily converted to cash, such as savings bonds. Monetary awards may not exceed $5,000 per fiscal year. The $5,000 limit includes both monetary and non-money awards.
  • Nominators any employee, student, or member of the community as identified for each specified award.
  • Nomination Period the advertised specified length of time in which nominations will be accepted. Should the University be unexpectedly closed for business on the last day of the advertised nomination period, the closing date will automatically, without advertisement, be extended to the next open business day.
  • Nominees - individuals meeting the requirements and eligibility criteria as based on the specific award.
  • Non-monetary Awards - may include but are not limited to the following:
    • Meals
    • Movie tickets
    • Plaques, trophies, or certificates of appreciation
    • Pens, Pencils, and desk items
    • Cups and mugs
    • Personal items of clothing such as caps, shirts, and sweatshirts
    • Tools
    • Electronics
    • Sports equipment
  • Taxable Awards – all monetary awards and non-monetary awards in accordance with Internal Revenue Code.
  • Team Recognition – recognition given to a group of employees who collectively accomplish a goal or complete a project or event.


Employee reward and recognition programs are most effective when such reward and/or recognition aligns with the University’s mission, vision, values, and goals.

Employee reward and recognition programs must be formalized. Each program must identify the following:

  • purpose,
  • criteria for eligibility and selection,
  • number of recipients,
  • frequency of the award,
  • determination of the type of award, and
  • guidelines for presentation of the award.

Employee Reward and Recognition Programs which include an award (check, desk set, special professional development opportunities, etc.) in addition to a Certificate of Achievement, must be formally documented with review and approval by each of the following prior to initiation of the selection process:

  1. the appropriate budget executive,
  2. the Business Area Financial Officer, and
  3. the Business Area Human Resources Representative

The Financial Officer must review the proposed program with the Director of Tax Services to assess the federal tax (IRS) implications.

This policy does not imply that each business area must have a recognition program. A recognition program should strive to be aligned with a business area’s mission and/or core values to help create a positive work environment for employees, increase employee performance, engage employees, and improve employee morale.


Reward and recognition may be intended for individual employees, groups of employees, employee work-units, or departments. All categories of employees should be represented and considered for employee recognition.

Due to financial aid considerations, full-time graduate and undergraduate students are not eligible for Employee Reward and Recognition Programs.

Business Areas must consult with the Office of Human Resources (OHR), Compensation and/or the Office of Academic Affairs (OAA) when cash distributions to an entire business area or unit are being considered. OHR and/or OAA must approve such distributions prior to implementation.


Selection criteria must be documented as part of the unit's Employee Reward and Recognition Program. The budget executive may designate an individual or committee, working in conjunction with the Business Area Human Resources Representative, to develop specific award standards and selection criteria, and to nominate or select award recipients.

The reward or recognition should be delivered as close as possible to the time of the desired behavior to strengthen the link between the employee’s action and the result to the organization.


Awards can take many forms and should be appropriate to the achievement being cited. Certain types of employee awards are subject to taxation via the University's payroll system as determined by IRS regulations. General funds may be used for awards such as certificates of achievement, plaques, Nittany Lion statues, special professional development opportunities, etc. (see table below for examples and general funds dollar limitations). General funds may not be used for cash, checks, or gift certificates.

Cash, checks, and gift certificates are permitted only from specifically designated funds.

Awards not specifically addressed in the table below must be reviewed and approved by the Financial Officer to determine if general funds may be charged and to determine if taxes will apply.

The 25-year Service Achievement Award will continue as a University-wide recognition. (Reference Policy HR49 Twenty-Five Year Service Award Program.) Given that this award recognizes longevity, it is expected that unit-awards would focus primarily on merit.

University-wide awards which are presented at the Annual Awards Convocation will continue to be handled through Strategic Communications.

Examples of types of awards, the permissibility to utilize general funds or not, ​and the requirement to report the award to Payroll for tax reporting and withholding, follow.
Certificates of Achievement Yes (Limit $100 per award) No
Plaques Yes (Limit $100 per award) No
Nittany Lion Statues Yes (Limit $100 per award) No
Book ends, Desk sets, etc. Yes (Limit $100 per award) No
Penn State Mementos Yes (Limit $100 per award) No
Special Professional Development Opportunities Yes No
Checks and Gift Certificates/Gift Cards No Yes

Employee Reward and Recognition Programs have certain tax implications. Although there are exceptions, awards employees receive are generally taxable and must be reported as additional earning on an employee’s W-2 Form at calendar year-end. See the De Minimum Exclusions on the Internal Revenue Service website for complete details. Contact the Director of Tax Services with any questions pertaining to tax reportability.

In accordance with tax regulations, non-monetary awards may be taxable based on the value and/or if given frequently to the same individual over a short period.


The budget executive shall assume the responsibility of making the awards at suitable functions during the year. General Funds may be used for award presentations (maximum of $100 per recipient, unless approved in advance by the Associate Vice President for Budget and Finance). The costs of the award presentation must be reasonable and appropriate to the achievement being cited. Presentations may be incorporated with professional development, training or other regularly scheduled business sessions, meetings, or receptions. Annual or group presentations are encouraged where appropriate.

Guest lists for awards ceremonies are intended to include the award recipients and a limited number of guests. Any travel costs incurred by the guests (lodging, transportation, and meals outside the immediate presentation) are personal expenses and not reimbursed by the University.

Alcoholic beverages may not be charged to general funds (see Policies AD18 Possession, Use, and Distribution of Alcoholic Beverages and FN10 Other Business Expenses and Activities).


Employee Reward and Recognition Programs must be continually monitored for relevance. The evaluation process should be completed after every award cycle so that adjustments can be made to improve the process and retain employees’ interest. Employers should keep in mind that behaviors rewarded are likely to be repeated.


Administrators must be cognizant of budgetary constraints; awards may not negatively impact department budgets and may not be given from restricted funds. Administrators are responsible for identifying funding sources. Inconsistent application of this policy could bring claims of favoritism and/or discrimination toward the supervisor which will be investigated by Human Resources.


Any exception to this policy must be approved in advance, in writing, by the budget executive and Associate Vice President for Budget and Finance (via the Financial Officer). Justification must accompany such requests.


Violation of a financial policy should be reported to your supervisor, your human resources representative, unit manager, and/or the office responsible for the policy. Where these resources are inadequate, you may choose to make an anonymous report through the Pennsylvania State University hotline or by calling 1-800-560-1637.


Business areas that do not follow the guidelines set forth in this policy will, at a minimum, be held responsible for any fines, penalties, or losses.


For questions or additional details, please contact the Business Area Financial Officer.

To request changes to this policy, please contact the Office of Systems & Procedure, by submitting a GURU Technical Service Request form.




  • December 14, 2023 - Converted to policy from Policy Guideline FNG04


  • February 1, 2023 - Editorial changes: Changed all references to the Associate Vice President for Finance to the Associate Vice President for Budget and Finance, per the directive of the Senior Vice President for Finance and Business.
  • January 5, 2023 - Editorial changes, per the directive of the Associate Vice President for Finance:
    • Changed all references to the Office of the Corporate Controller to the Office of Budget and Finance
    • Changed all references to the Corporate Controller to the Associate Vice President for Finance
  • November 8, 2018 - Subject Matter Expert added.
  • October 3, 2013 - Editorial changes. Addition of policy steward information, in the event that there are questions or requests for changes to the policy.
  • The taxability of awards was de-emphasized in place of emphasizing reportability and withholding.
  • The heading for the last column of the chart of the section TYPES OF AWARDS was changed from "Taxable?" to Reportable?".)
  • July 1, 1998 - New Guideline.

Date Approved: 

December 13, 2023

Date Published: 

December 14, 2023

Effective Date: 

December 14, 2023