Employers have often implemented creative workplace benefits to attract and retain highly sought-after employees. These benefits range from generous profit-matching retirement plans to ping pong tables and unlimited, free popcorn. Although offering an employee a higher wage is the most common way to attract a new employee, stock options, noncash fringe benefits, health and wellness plans, and increased retirement options are some of the other, popular options employers have implemented. In the race to attract and retain the best talent, a few employers have explored a new compensation strategy: compensation in cryptocurrencies. While allowing employees the option to receive all or a portion of their compensation in cryptocurrencies may seem like a simple proposition, the reality is that paying employees in cryptocurrencies summons a host of practical and legal problems that employers will likely want to avoid. The benefits of attracting an employee who insists on being paid in cryptocurrencies does not outweigh the risks involved for the employer that takes on the task of paying employees in cryptocurrencies.

First, this paper will review the history of cryptocurrencies and explore why some consider them an attractive alternative to government-backed currencies and traditional banking. Next, this paper will review the relevant statutes and caselaw that effect employee compensation. These statutes include the Fair Labor Standards Act (FLSA), individual state statute equivalents to the FLSA, and IRS regulations. Through this background, this paper will illustrate that the liabilities an employer takes on by paying employees in cryptocurrencies likely outweighs any benefits from attracting and retaining employees. Therefore, paying employees in cryptocurrencies is not advisable.

Still, for employers who insist on compensating employees in cryptocurrencies—whether because their employees demand it or because cryptocurrencies are attractive to them for philosophical reasons—there are some workarounds to the legal issues. Unfortunately, many of those workarounds defeat the purpose behind paying an employee in a cryptocurrency, and create an administrative burden when it would be simpler for an employee to purchase a cryptocurrency him or herself.