This month, a non-profit surgery center in Virginia settled a major lawsuit related to how it treated an employee after being accused of discriminating against the employee because of their age.
The employee, a radiologic technologist, had been out on approved medical leave as the employee took care of carpel tunnel syndrome. The recovery was not going as planned, so the employee asked to extend the medical leave.
Instead of granting the request, the non-profit decided to end the employment and hired two younger technicians to replace the employee, resulting in a lawsuit against the non-profit from the Equal Employment Opportunity Commission.
In the end, the non-profit agreed to pay the employee $50,000 and “revise its policies on the ADA and ADEA, provide training to its management on the ADA and ADEA, educate its nonmanagerial employees on its ADA and ADEA policies and make reports to the EEOC of complaints of disability or age discrimination,” the release from the EEOC stated.
Most likely, that non-profit settled because it could withstand making those changes and paying the fine. The surgery center is part of a larger network of non-profit surgery centers.
For most small non-profit organizations, this type of lawsuit or action could mean the non-profit organization would shut down after spending significant resources on legal fees and other aspects of the fight, not to mention the stress and anxiety such a lawsuit could have on a non-profit organization.
However, the chance of having lawsuits involving human resources issues can be significantly reduced by taking the proper steps before a problem arises. And, if a problem does come up, a non-profit organization can have a better defense by creating policies that oversee human resources – and following them.
The attorneys at The Orlando Law Group specialize in helping non-profit organizations in Orlando, Sanford, Winter Garden and Kissimmee with all of an organization’s essential legal needs, including what is needed for human resources and employment.
Hiring Employees? Be Prepared
For any growing organization, hiring employees is a critical decision. Yes, there are financial implications, but there are also significant legal issues that can arise from employees.
The reality is that most of the same challenges that face for-profit companies also face non-profit organizations when it comes to working with employees. As such, in those cases, what’s critical for Target and Walt Disney World with employees is just as critical for the non-profit organization reading books to children or helping house abandoned cats.
So, let’s start with the basics of employment laws and how all businesses try to protect themselves from issues with employees. Those steps happen long before an employee is ever hired.
At the heart of all employment law is having the right policies and procedures in place and making sure all employees have read the policies, understand how those policies work and agree to follow those policies.
This work needs to be done before any employee has been hired. Here are a few items that need to be created by your non-profit before bringing on any employees.
- An employee handbook that covers all of the policies the non-profit has created. These policies should include these and others specific to your situation.
- Dress code
- Code of conduct
- Processes for requesting time off
- Benefits, if any, available for employees
- Remote work
- Harassment
- Equal-opportunity
- Co-worker relationships
- Grievance procedures
- Whistleblowing
- Drugs and alcohol
- Conflicts of Interest
- An employment contract that includes all the details specific to the individual.
- Job descriptions for all positions in the organization.
- Termination procedures, including any actions to dispute the reason for termination
- Benefit plans
As stated before, this should be commonplace for any business that hires employees. However, non-profit organizations need to be aware of a couple of very specific items that non-profit organizations are particularly at risk of having issues arise even with policies and procedures in place.
Make sure to classify employees as exempt or hourly correctly
This is a common problem for all businesses, but for non-profits who are often on a shoestring budget, the temptation to have someone classified as exempt is great.
However, if an organization is caught falsely classifying an employee, the punishment can include significant costs, including backpay for all employees not classified correctly and additional fines.
The U.S. Department of Labor has a great checklist for determining if an employee can be classified as exempt, but the requirements truly depend on the job. And here’s what can happen if you do not properly classify employees:
- The Wage and Hour Division may supervise the payment of back wages.
- The Secretary of Labor may bring suit for back wages and an equal amount as liquidated damages.
- An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney’s fees and court costs.
- The Secretary of Labor may obtain an injunction to restrain any person from violating the FLSA, including the unlawful withholding of proper minimum wage and overtime pay.
The statute of limitations on this is two years for an accidental misclassification or three years if it was intentional.
The rules on employees are often changing, so it is important to have a labor law and HR professional available to review your classifications of employees.
The difference between a volunteer and a paid employee.
A very similar situation to classifying employees is allowing employees to volunteer at the non-profit. Most non-profit employees enter this type of work because they care about the cause or helping their community in general. They want to give more and donate time to the organization.
Unfortunately, non-profits have to be very careful about how an employee donates their time. The laws are very clear, an employee cannot donate time to do work they are usually paid for.
Let’s say the founder of a pet kennel has a medical emergency and cannot tend to dogs during the day as they normally do. The overnight kennel manager is sympathetic to the cause and “volunteers” to stay a few extra hours to help out.
That can’t happen.
However, if the kennel specialist volunteered to register people at the kennel’s gala, that would be allowed because it is not part of their actual position and job duties.
The best step is to make those rules clear in the employee handbook.
Non-disclosure agreements are essential.
Non-disclosure agreements, commonly referred to as NDAs, are fairly standard with many businesses, but for non-profits, they can be essential to prevent the worst from happening. Perhaps the main reason is that most people don’t go to work for a for-profit company because they believe in the mission, but employees of a non-profit are almost always tied to the mission. They entered the non-profit world because they cared.
Guess what? Volunteers, community leaders and the press are also invested in the mission of the organization and when something goes wrong, the temptation to smear the board, the executive, or others is great and often gets a much larger audience.
An NDA, along with a whistleblower policy, can help keep any disgruntled employees from running to the TV news or bashing the non-profit on Facebook. If they do, a non-profit organization could have a claim against them for damages because of the impact on the non-profit organization’s reputation.
Outside compensation policies can help employees.
Face it, non-profits are not going to make most people rich, and most employees are not being hired by your non-profit because the pay is significant. Yes, they want a good paycheck, but they understand non-profits can be a sacrifice.
Having a policy on outside compensation, including what is allowed and what is not allowed, can help your employees pay their bills. For instance, you could say outside compensation is allowed as long as it is not with a vendor of the organization or as long as it is not adult entertainment, such as an OnlyFans page.
Having a policy presented when the employee starts can help avoid conflicts in the future.
No commissions or finder fees for development officials.
In many businesses, the person bringing in the revenue for the company can be paid a percentage of that revenue. It’s one of the reasons so many people go into sales, particularly commissioned sales. That’s because their pay can be increased based on what they bring in.
For non-profits, this type of pay structure for the people responsible for bringing in donations is considered unethical and is not accepted. Many more issues are considered unethical for non-profits. Here is the list according to the Association for Fundraising Professionals.
Review the list and make sure your policies and procedures keep your non-profit ethical and in line with industry standards.
Curtail bad behavior from alcohol before it starts.
For many non-profits, event revenue is one of the largest fundraising activities. And at many events, the alcohol flows freely for its guests.
It can’t be for employees.
While many would think it would be understood that employees should not be overindulging at the annual gala, you are dealing with human nature and mistakes could take place. You also may have an alcoholic as an employee without knowing.
After all, when an employee drinks too much, many other issues could arise. What happens if they confront a donor – or try to become romantic with another employee? That could result in a multitude of issues that can affect the financial stability of any non-profit organization.
A chain of command helps avoid problems.
In the governance of a non-profit organization, it is almost always clear that employees should not be communicating with board members unless approved by the executive director. However, it often happens and often causes significant issues for the non-profit organization.
For instance, trying to be helpful, a board member recommends their friend to be an employee of the non-profit. Of course, the executive director will treat the interview process for that person like all the other applicants.
In this case, the board member was right. The person will be a great employee.
Unfortunately, when there is a disagreement between the executive and the employee, the employee complains to their friend, the board member. The board member then approaches the executive asking questions without fully understanding the issue that might have started the disagreement.
Now, instead of spending time on the organization’s mission, the non-profit director is working to explain their actions to their boss, even if it was justified
In a non-profit organization’s bylaws, it is recommended the board manages the highest-paid executive and the executive manages the staff. This needs to be clearly stated in the bylaws but also shared with employees. If a board is dealing with the day-to-day management of employees, the non-profit is not operating at its full potential.
Utilizing contractors can be a solution.
More and more businesses are utilizing 1099 contractors to outsource certain tasks. This can be a solution for non-profits as well. Just like other businesses, it is important to understand the rules dealing with a contractor vs. employee status.
For instance, the contractor can’t be provided with a company email address, a sales target list, a business card or any other things that you think might be common. You also can’t dictate how the job is done or when the job is done. You can only require the job that needs to be done.
It is important not to try to replace employees with contractors. Much like the classification of exempt employees, the fines and back pay for treating contractors like employees can be significant.
The attorneys at The Orlando Law Group help all types of legal issues for non-profit organizations in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
Whether it is on this issue or one of the thousands of other issues facing non-profit organizations, The Orlando Law Group can help.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.