Want to Lure Young Workers With Cryptocurrency? 3 Things to Know

Want to Lure Young Workers With Cryptocurrency? 3 Things to Know

Miami Mayor Francis Suarez made headlines in December when he announced he would receive his paycheck in Bitcoin. But paying employees with digital currency was a growing trend even before that. And it’s particularly appealing to young workers, with 36% of millennials and 51 % of Gen Z saying they’re willing to get half their salary in cryptocurrency.

In today’s tight labor market, Bitcoin could give you an edge. But before you forego paychecks, here are 3 things to consider.

Comply with federal and state law: Some states require wages to be paid in US currency. However, others allow an employee to agree in writing to receive part or all of their wages in another form. No matter where you operate, you’ll want to make any program optional and have employees authorize their participation in writing.
Decide how you’ll pay: You can either pay employees in their normal currency, with a portion of the wages then converted to the digital asset of their choice, or you could pay in the cryptocurrency itself. With the latter, keep in mind you’ll need to withhold and report payroll taxes, which could be a little more challenging administratively since you’ll need to determine the fair market value of the cryptocurrency.
Disclose the risks: Bitcoin and other cryptocurrencies can be volatile and drop steeply in value. (In December, Bitcoin fell as much as 21% in a matter of hours.) Plus, there’s the potential capital gains taxes they’ll need to understand since cryptocurrencies are currently considered property by the IRS. Be sure to make employees aware of the risks and agree to them in their written acknowledgment.

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These are just a few of the topics you’ll need to think about when considering digital currencies as a payment method. With many potential legal issues, it’s a good idea to consult your attorney first before making any decision to pay wages or bonuses in cryptocurrency.

Sam Slade is Managing Director, Employee Benefits, at The Hilb Group of New England, where he delivers consulting and brokerage services to local employers. He has extensive experience in all aspects of employee benefits, including underwriting, plan design, communications, compliance, and analytics, with a particular focus on alternative funding and self-insurance. Sam lives in South Kingstown with his wife and three sons.