Run: Employee Recognition Program Policy

This policy establishes a consistent, fair, and compliant framework for employee recognition. It defines how recognition may be given and received, who is eligible, what award types are permitted, how spending is controlled, what approvals are required, and how tax obligations are handled.

This policy applies to all employees unless otherwise stated, including full-time, part-time, temporary, and intern employees where permitted by law and company practice. It applies to recognition provided by managers, peers, departments, and the company. It does not create a contract of employment and does not limit the company's right to modify or discontinue the program at any time. **Applicable jurisdictions:** United States. **California employees:** recognition awards must still be evaluated for wage-and-hour treatment under the California Labor Code and applicable wage orders. **All employees:** recognition activities must comply with Title VII, the ADA interactive process, the FLSA, and NLRA Section 7 rights.

For purposes of this policy: - **Eligible employee** means an employee who meets the criteria established for a specific recognition award or program. - **Peer recognition** means recognition initiated by one employee for another employee. - **Manager recognition** means recognition initiated by a supervisor or manager. - **Spot award** means a discretionary award given for an immediate contribution or achievement. - **Milestone award** means recognition tied to service anniversaries, project completion, certification, or similar milestones. - **Budget owner** means the person responsible for approving recognition spending within an assigned cost center. - **Good-faith** means an honest, documented decision made using the criteria in this policy.

The company encourages timely, equitable recognition of employee contributions that support business goals, teamwork, customer service, safety, innovation, and values-based behavior. Recognition decisions must be based on objective, job-related criteria and applied in a non-discriminatory manner consistent with Title VII of the Civil Rights Act of 1964 and the ADA. Recognition must not be used to reward or discourage protected concerted activity under NLRA Section 7, and it must not interfere with employees' rights to discuss wages, hours, or working conditions. Recognition awards must be administered in good-faith and in a manner that does not create wage-and-hour violations under the FLSA. The policy holder is Human Resources, in coordination with Finance and department leadership.

Employees may be eligible for recognition based on documented performance, service milestones, safety performance, customer feedback, innovation, collaboration, or other objective criteria approved by HR. Permitted award types include: 1. Certificates, plaques, or letters of appreciation. 2. Non-cash items of nominal value. 3. Gift cards or cash-equivalent awards, subject to tax and payroll treatment. 4. Spot awards or discretionary bonuses, subject to approval. 5. Service anniversary awards. 6. Team-based recognition awards. The following are not permitted unless specifically approved by HR and Finance: awards that are discriminatory, tied to attendance in a way that conflicts with protected leave rights, or structured to evade wage reporting or overtime calculations. **California employees:** awards that function as wages may be subject to California wage statement and payroll requirements. **Employees on leave:** recognition eligibility must not penalize employees for approved FMLA leave, ADA accommodations, or other protected leave.

1. **Nomination:** Any eligible employee or manager may submit a recognition nomination using the approved form or system. 2. **Review:** The manager and/or department leader reviews the nomination for eligibility, performance basis, and budget availability. 3. **Approval:** Awards above the delegated threshold require approval from HR and Finance before commitment. 4. **Issuance:** Approved awards are issued through the approved channel and recorded in the recognition log. 5. **Documentation:** The nomination, approval, award type, amount, date, and approver must be documented. 6. **Tax handling:** Taxable awards must be reported through payroll and may be subject to withholding. 7. **Appeals/Corrections:** HR may correct or revoke an award issued in error, subject to applicable law and payroll rules. Recognition decisions should be made using a documented, good-faith review of the stated criteria. Managers must not promise awards outside approved budget or authority.

Recognition spending must remain within the approved annual or quarterly budget assigned to each department or program. Controls include: - Maximum award value per employee per event. - Maximum monthly or annual spend per department. - Approval thresholds based on dollar amount. - Separation of duties between nomination, approval, and payment where practicable. - Periodic review of spend by HR and Finance. Suggested approval structure: - Up to the manager's delegated limit: manager approval. - Above the delegated limit: manager + department head approval. - Above the high-value threshold or any cash-equivalent award: HR and Finance approval. Any exception to budget or approval limits must be documented in writing and approved before the award is communicated to the employee.

The company will determine whether an award is taxable based on applicable federal, state, and local tax rules, including Internal Revenue Code Section 74 and related payroll guidance. General rules: - Cash and cash-equivalent awards are typically taxable and must be processed through payroll. - Gift cards are generally treated as taxable compensation. - De minimis fringe benefits may be excluded only when they meet applicable IRS requirements. - Service awards may qualify for special treatment only if they meet statutory requirements. Employees are responsible for providing accurate tax withholding information. HR and Payroll will determine reporting and withholding obligations. The company may adjust the award amount or payroll treatment to satisfy tax withholding requirements.

**Employees:** Nominate peers appropriately, use the program in good-faith, and avoid favoritism or retaliation. **Managers:** Recommend recognition based on objective criteria, confirm eligibility, and obtain required approvals. **Human Resources:** Maintain the policy, review equity and compliance, administer documentation, and resolve disputes. **Finance/Payroll:** Confirm budget availability, process taxable awards, and ensure proper reporting and withholding. **Policy holder:** Owns program design, updates, and final interpretation of this policy.

Misuse of the recognition program, including favoritism, retaliation, falsification of nominations, unauthorized spending, or attempts to avoid tax or wage reporting requirements, may result in corrective action up to and including revocation of the award, repayment where permitted by law, documented warning, PIP, or other discipline consistent with company policy and applicable law. Nothing in this policy limits employee rights under the NLRA, FLSA, FMLA, ADA, or EEOC-enforced laws. Where a conflict exists, applicable law controls. Employees may report concerns about discrimination, retaliation, or misuse of the program without fear of retaliation.

This policy will be reviewed at least annually and whenever there is a material change in tax law, wage-and-hour guidance, anti-discrimination requirements, or company budget structure. HR is responsible for maintaining the current version, documenting revisions, and communicating updates to affected employees.