Leaders with the National Federation of Independent Business are reminding employers that, technically, March Madness pools are illegal in many places, including Tennessee.
And although it's unlikely that the FBI will spend time prosecuting people for this, Beth Milito, senior executive counsel with the National Federation of Independent Business’ Small Business Legal Center in Washington, D.C., gave tips to avoid getting in trouble.
—Managers and supervisors shouldn’t coordinate the pools. If employees feel coerced into participating, that could be grounds for legal action.
—Participation in employee-organized pools should be voluntary.
—Employees organizing the pool shouldn’t take a cut of the money. Because most states have laws that prohibit people from earning a profit from this kind of activity, Milito said this is how people get in trouble.
—The stakes should be low, such as $5 a bracket, with a maximum of two brackets per employee.
—Employers who want to have a contest built around a basketball tournament should consider prizes such as an extra vacation day; employer-run contests shouldn’t have an entry fee or involve money.
—Winners technically must declare their earnings on their income taxes. Although most office pool winnings aren’t reported, if there’s a comma in the number, winners should report it. Winners wouldn't want the IRS to discover undeclared income, Milito said.