Frequently Asked Questions

Employment Practices

What is “employment at will?”

“Employment at will” is the legal doctrine, accepted in every state except Montana, that creates the expectation that either an employee or an employer is free to end the employment relationship at any time, for any reason, without notice. The doctrine can be eroded by procedures or practices at the workplace that create a different expectation, such as: (i) an employee manual that includes descriptive language about the disciplinary process (“progressive discipline”) that the employer will go through prior to terminating an employee; (ii) a verbal promise from a supervisor to a supervisee that employment will be for a specific length of time; and (iii) a requirement that the employee provide notice of termination or risk losing certain benefits, such as accrued but unused vacation. In order to maintain an employment-at-will workplace, most lawyers recommend that employers use “disclaimers” and remind employees in writing about the employment-at-will relationship.

  • Having an at-will workplace does not insulate the employer from employment law claims of wrongful discharge. Even if an employer has done a great job of reinforcing the at-will nature of employment, any employee can claim that their termination was caused by an illegal motive, such as discrimination or retaliation.
  • The Nonprofit Risk Management Center’s publication, Taking the High Road A Guide to Legal and Effective Employment Practices for Nonprofits,offers more details on this and other topics relating to personnel policies, employee handbooks and state and federal laws that impact employment in a nonprofit setting.

Can I fire this person?

Terminating an employee is the single most risky action an employer can take, therefore, this question should always be asked not only of yourself, but in conjunction with guidance from an employment law expert, if possible. Terminations on the spot and in anger should be avoided – Instead, suspend the employee (with or without pay, if your personnel policies give you the option) to give yourself time to review the circumstances, and the documentation, that will justify the termination. Putting someone on “administrative leave” or allowing them to work during a period of “probation” is safer than terminating on the spot. Of course, there are always exceptions. Terminating an employee because the grant funding for the position has run out is far less risky than a termination because of “attitude” or “excessive absenteeism” (both of which are typically challenged as valid reasons for termination). Prior to terminating an employee you should ask the following questions. A “no” answer indicates that you should proceed with extreme caution and that you would be prudent to enlist assistance from an employment lawyer. Hiring legal counsel is essential if you think that offering a severance payment in exchange for a release from liability is the direction you are heading:

  • Has this employee failed to meet expectations for performance or conduct?
  • Has this employee been provided with notice of what the expectations for his/her performance or conduct are?
  • Do you have documentation of the fact that notice of expectations was provided to this employee?
  • Was this employee provided with a period of time within which to demonstrate/try to meet expectations?
  • Have you used a neutral party as a sounding board for the recommendation to terminate so that you are sure you are not reacting subjectively to the situation or this particular employee?
  • Are you sure that this employee has not brought any allegations of wrongdoing/claims of financial impropriety or otherwise “blown the whistle” such that his/her termination might be interpreted as retaliatory? Filing a workers compensation claim, or a claim of harassment, are two examples of conduct for which retaliation would be in violation of state or federal law (or both).

Remember that everyone is in a protected category – we all have genders and ages and most of us are in any number of other protected categories. If you are unsure about the wisdom of terminating a particular employee, seek guidance before it’s too late.

  • The Nonprofit Risk Management Center’s publication, Taking the High Road, A Guide to Legal and Effective Employment Practices for Nonprofits,offers more details on this and other topics relating to personnel policies, employee handbooks and state and federal laws that impact employment in a nonprofit setting.

Do we need an Employee Handbook or Personnel Manual?

If you have paid staff, your organization should have a written collection of policies that describe procedures and benefits, expectations and requirements of employees. An employee handbook (often called a “Personnel Manual”) is a straightforward way of communicating an employer’s expectations to employees. While it is best to combine the delivery of the handbook with in-person orientation to key policies, a written handbook provides employees with a place to go when they have questions. Handbooks are good for employee morale since they provide clarification and demonstrate that the employer is taking a thoughtful approach to employment issues. The presence of written policies, as well as proof that the employer provided the handbook to the employee, and consistent application of policies described in the handbook are effective defenses against legal claims. However, handbooks themselves can cause problems for employers if they are out-of-date and not consistent with federal or state laws, or are written in a manner that can be construed as a contract, or if their procedures are not followed.

  • The Nonprofit Risk Management Center recommends that board members as well as staff are familiar with an organization’s handbook and that employee handbooks are reviewed periodically, such as every three to five years, or as needed when laws or the workplace changes. The Center offers consulting services to review personnel policies at affordable rates.
  • The Nonprofit Risk Management Center’s publication, Taking the High Road, A Guide to Legal and Effective Employment Practices for Nonprofits, offers more details on this and other topics relating to personnel policies, employee handbooks and state and federal laws that impact employment in a nonprofit setting.

I’ve heard that “comp time” is illegal — is that true?

Non-exempt workers must be paid for every hour they work. It is illegal to give them time off instead of paying them or to pay them straight time when they have worked overtime. However, there is a legal way to provide non-exempt workers with “comp time”: an employer can give non-exempt workers the flexibility within a given work week (also called “flex time” ) so that their total hours worked do not exceed 40 hours (or whatever the state’s threshold for overtime is). In such cases no overtime is owed; the employee is paid for every hour worked and still has some extra “time off” (Example: a non-exempt worker works 10 hours on Monday instead of his normal 8 hours. On Wednesday he leaves work 2 hours early. At the end of the week he has still only worked 40 hours.)

  • It is inappropriate, and indeed can result in Department of Labor penalties related to mis-classification, for employers to provide hour-for-hour time off to exempt staff as “comp time.” Compensatory time off is not needed for exempt staff – they are entitled to a flexible work schedule so that if they work extraordinary hours one week, they should be able to work out a more relaxed work schedule with their supervisor, assuming their work duties are accomplished. Exempt staff do not keep track of their hours worked in the same manner as non-exempt staff and are expected to work as long as it takes to accomplish their job duties.
  • The web sites of most State Departments of Labor provide information on exempt/non-exempt worker classification and overtime rules for that state.

What’s the difference between exempt and non-exempt employees and why does it matter?

The Fair Labor Standards Act is a federal law that divides employees into workers who are either “exempt” from overtime or “non-exempt.” When a worker is classified as non-exempt and works overtime, the employer MUST pay the worker time-and-a-half. Consequently, since it is a violation of wage laws not to pay overtime, it is important to know which employees are entitled to overtime and which are not. The following steps will help keep your nonprofit out of hot water on this issue:

  • Know who is exempt and who is non-exempt. To be exempt, an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform job duties that meet the legal definition of “exempt”. The actual job duties that are performed – not the fact that the employee receives a salary – will be controlling of the classification.
  • Put the classification of each position on the job description so that each employee knows up front whether or not s/he is entitled to overtime.
  • Adopt a policy that employees may only work overtime if pre-approved so that you don’t get in a situation where an employee decides that longer working hours are needed, but there is no money in the budget for premium pay.
  • If you need assistance in determining how to classify a particular worker, seek legal assistance or visit the Department of Labor website which provides definitions and resources on exemptions from overtime. The DOL Fact Sheet on exemptions from overtime is also very helpful.

Can I fire an employee who has been out on a medical leave of absence for three months? Her doctor does not know when she will be able to return to work.

Caution! Does this employee qualify for federal or state Family and Medical Leave? If so, the nonprofit is required to provide the requisite time period of leave (generally unpaid, although several states have now passed laws requiring a certain period of paid leave). If not, check the nonprofit’s own leave policies and also all communications with the employee out on leave. Were any promises (verbal or written) about ‘holding the job open’ given to the employee? If the employee has been provided with all leaves of absence s/he is entitled to, then generally there is no obligation to hold a position for an employee who is not able to return to work in his or her former position. One exception would be where the employer owes the employee a “reasonable accommodation” due to a disability. In such cases returning the employee to employment with different job duties or extending a leave of absence would be considered a “reasonable accommodation.”

  • The key to avoiding an employment claim in this situation is to be clear up-front with all employees who are on a leave of absence (i) how long of a leave they are entitled to under either the nonprofit’s own policies or state/federal law, (ii) what date they will be expected back at work, (iii) what will happen to their benefits during their leave of absence, and (iv) whether or not they will be terminated if they are unable to return on that date. If employees know up front that their job will only be held for a certain length of time, they will not be surprised and angry when terminated.

We have a sexual harassment policy already – do we really need to provide training to our staff about harassment? In this day and age, isn’t it obvious what harassment is?

If your nonprofit is located in Maine, Connecticut or California, training on sexual harassment is required by state law. In other states it is still a prudent risk management strategy because the prohibitions against harassment are not limited to sex or gender. Harassment is illegal under federal law if it is based on religion, or race, or any number of protected categories. Anti-harassment policies should be drafted broadly in order to raise awareness about these prohibitions. Setting aside a staff meeting to train employees on your nonprofit’s policy and the law is well worth the time, energy and effort.

  • Be sure that your nonprofit’s policy is broadly worded to encompass harassment in general, rather than specifically focused on sexual harassment.
  • It is imperative that the written policy also prohibits retaliation against someone who has raised a claim of harassment. Retaliation claims are becoming as numerous in federal court as underlying discrimination claims.
  • Many states require employers to post their written anti-harassment policies.

When someone makes an anonymous complaint about a co-worker's harassment, do we have any obligation to follow up?

Once an employer is on notice of harassment at the workplace, there is an obligation to investigate to ensure that workers are not faced with a hostile environment. The law holds employers employers who know about harassment responsible to take prompt and effective action to protect employees from known hostile work environments. The employee has put you on notice of a potential problem. It is better risk management to investigate all complaints, even when the complaining employee is anonymous.

Can we convert our employees into independent contractors?

Mis-classifying workers can result in penalties and back wages/taxes being owed if the Department of Labor (federal or state) finds that the workers your nonprofit is treating as contractors/consultants are actually employees. In order to determine whether it is appropriate to classify a worker as an independent contractor you will need either to hire legal counsel to conduct an analysis, or conduct that analysis yourself based on the facts and circumstances of the particular worker. The most significant difference between employees and contractors is the extent of control that your organization has over the worker — the more control there is, the more the worker is likely to be an employee. Typically contractors set their own hours, bring their own equipment, and are not dependent upon the organization to schedule when, where and how they accomplish their tasks. Think wall paper hanger — s/he brings the equipment, comes to the house, sets up, does the job and leaves, all at the wall paper hanger’s own convenience and you don't supervise or tell him/her how to do the job. That's a classic contractor. Contractors do not qualify for workers compensation or other employee benefits. There should be a contract/agreement with all contractors that sets forth the elements of the contractor’s relationship with the nonprofit, and the board should approve a compensation policy to ensure that compensation of contractors is reasonable and not excessive.

  • Contact the Nonprofit Risk Management Center if you would like to see a sample agreement.
  • The IRS web site offers guidance that can help you decide how to classify a worker as an employee or contractor.
  • The Nonprofit Risk Management Center’s publication, Taking The High Road A Guide to Legal and Effective Employment Practices for Nonprofits, is an easy-to-read book chock-filled with information on human resource issues such as this one. There is an on-lineversion that is updated annually.

What are the most important employment-related risk management practices?

As a fundamental tenet of prudent governance and risk management, each nonprofit should have its personnel policies and procedures reviewed by a lawyer familiar with the laws of the state(s) where the nonprofit operates. The number of employees will determine whether or not certain federal or state laws apply to the workplace. There are a myriad of employment laws and practices that can impact a nonprofit’s risks in human resource management. Here are a few suggestions from the Nonprofit Risk Management Center of practices that can keep your organization out of trouble:

  • Disclaimer in any employee handbook(s) and on the application for employment that underscores the “at-will” nature of employment
  • Hiring and screening procedures to make sure you hire the most suitable applicant for each position, following prudent background checking procedures in instances where the risks associated with the position warrant a background check
  • Travel/entertainment expense reimbursement policy: review and approval by the board of directors
  • Performance evaluation procedures and a practice of an annual written appraisal for each employee, including the executive director/CEO
  • Use of contacts for all independent contractors
  • Employee classification as exempt/non-exempt: review of each position and job descriptions to ensure appropriate classification
  • Documentation of performance concerns: a regular practice of documenting performance counseling sessions between supervisees and supervisors
  • Internal grievance/complaint procedures
  • Leave of absence policy to address family leave, sick and medical leaves, and non-qualifying FMLA leaves of absence
  • Termination/Exit interview: Follow a checklist at termination to make sure all notices, such as COBRA, are provided to departing employees and that all property of the nonprofit is returned. Conduct regular exit interviews.

For in-depth guidance on risk management in employment practices in an easy-to-read format, see the Nonprofit Risk Management Center’s publication, Taking The High Road: A Guide to Legal and Effective Employment Practices for Nonprofits.

How can I know what federal employment laws apply to my nonprofit?

The U.S. Department of Labor has posted various “elaws advisors” on its web site that provide an overview of federal laws that apply to the workplace. The most recent elaws advisor, FirstStep Recordkeeping, Reporting and Notices Advisor, focuses on recordkeeping, reporting and notice requirements that apply to the workplace.For instance, if your nonprofit is not sure which posters are required to comply with federal law, the FirstStep Recordkeeper, Reporting and Notices Advisor is the place to start. Through a series of ‘yes’ or ‘no’ questions, the elaws advisor helps you determine which laws apply and provides a printable list, as well as a summary analysis of the employer’s federal law obligations.

The Department of Labor offers more than 25 other elaws advisors that are a great place to start when researching the applicability of a wide range of employment law topics, such as calculating overtime payments, compliance with federal drug-free workplace law, health benefits, and workplace safety and health under OSHA regulations, including rules regarding fire safety protections at the workplace. For a list of all the elaws advisors, Click here. For more information, visit www.dol.gov/elaws.

Can we enforce our “professional attire” dress code with an employee who has visible tattoos by asking him to cover them with his clothing?

Nonprofits are conscious of their image and entitled to enforce “professional dress” policies just like any other business. However, the risk in enforcing such a policy without engaging in a discussion with the employee is that the employee may claim that his/her costume/dress stems from a religious belief or practice. Title VII requires employers to accommodate employees’ religious beliefs. EEOC guidelines clarify that religious practices include moral or ethical beliefs that are “sincerely held.” Consequently, if an employee’s tattoos are part of his or her religious beliefs, the employer has an obligation to engage in a dialogue with the employee to explore whether there is an accommodation that does not pose an undue hardship on the employer. In some cases asking an employee to cover his tattoos may be appropriate—in others the facts and circumstances may require the nonprofit employer to revise its dress code policy. The key is not to enforce dress code policies without engaging in a dialogue with the employee and exploring both the nature and bases for the employee’s costume/dress as well as the impact of possible accommodations.

How are “part-time” employees defined and what benefits do we have to pay them?

Essentially the definition of “part-time” is up to the employer. Most organizations define “full time” in terms of hours regularly worked each week and then define part time work as anything LESS than that. There is no legal requirement to provide part time employees with any particular benefits. The employer should define the benefits that part time, as opposed to full time employees, are eligible for and should spell out those benefits or limitations on eligibility clearly in employee handbooks. The only requirement to watch out for is that if the nonprofit offers a pension plan covered by ERISA, all employees who work over 20 hours per week must be entitled to participate in the plan.

What specific policies are advised regarding personal relationships between supervisors and employees and between employees who are not in a supervisor/employee situation?

Personal relationships between employees/volunteers raise at least three issues that many organizations address through personnel policies, including: (1) anti-nepotism policies, (2) prohibitions against sexual harassment/hostile environment, and (3) managing conflicts of interest. The conventional wisdom is that employees or volunteers with an other-than-professional relationship should not supervise one another or be in a position to control the work environment or compensation and fringe benefits of the other. Personal and family relationships can impact your objective professional judgment; conflicts need to be disclosed and even close personal relationships can deteriorate into uncomfortable ones. Accordingly, many nonprofits elect to limit the interaction between employees and volunteers who share more than a professional relationship in order to reduce the risk of collateral damage when a relationship sours or due to the appearance that personal interests trump professional ones.