Q: Can one employee donate PTO to another?

A: Yes, but the government doesn’t make kindness easy. There are IRS rules which directly impact PTO donation plans. 

In general, it is preferable to have a neutral plan that anyone can donate PTO and anyone can apply to receive the donated PTO. To avoid IRS issues, qualified applicants would be limited to those with FMLA qualifying events (they don’t have to actually qualify for FMLA, but the event has to be an FMLA type) and/or presidentially declared emergency. 

When crafting your policy, think about structure, how much they can draw, and what happens if they receive more PTO than they need. Those are all questions which are likely to crop up.