On April 16, 2024, the IRS issued fact sheet FS-2024-13 providing answers to frequently asked questions  about the tax treatment of work-life referral services provided to employees under an employer’s work-life referral program. The FAQs clarify that, under certain circumstances, the value received from work-life referral services provided to employees through a work-life referral program can be excluded from federal income and employment taxes as a “de minimis fringe” benefit.

A work-life referral program is an employer-funded fringe benefit that provides referral services to eligible employees, with such services being restricted to “informational and referral consultations that assist employees with identifying, contacting, and negotiating with life-management resources for solutions to a personal, work, or family challenge.” For example, work-life referral services include assisting employees with answering questions about finding child or elder care, obtaining legal guidance, or eligibility for government benefits. Work-life referral services also include assisting employees with completing paperwork and basic administrative tasks that help direct the employee to appropriate providers of the underlying life-management resources.

Work-life referral programs are often incorporated into an employer’s employee assistance program (“EAP”) or may otherwise be bundled with other types of services or programs offered by the employer.  These programs may be available to a majority of an employer’s employee population, but in practice, the programs are used infrequently, on a short-term basis, and only when an employee faces one of the particular challenges the program is designed to address.

Takeaways

By definition, a work-life referral program is an employer-funded fringe benefit offered to employees, and so the value received (if any) from such program by an employee qualifies as gross income, unless excludable under a specific provision of the Code.

Fact sheet FS-2024-13 clarifies that the value received from work-life referral services can be excluded from an employee’s gross income for employment tax purposes, but it is important to note that the conclusion reached in the fact sheet applies only to the limited informational and administrative work-life referral services provided to an employee. In other words, the IRS has not indicated that the actual life-management resources or other services that the employee is referred to and then may receive through an employer EAP or through another employer program qualify as de minimis fringe benefits.  Accordingly, employers should carefully consider whether services provided to employees beyond referral services through their EAP or other programs qualify as de minimis fringe benefits or might otherwise qualify for exclusion under another provision of the Code, such as those for health benefits.