Frequently Asked Questions about Nonprofit Human Resources

An Excerpt from the Center's Nonprofit Answer Book: An Executive Director's Guide to Frequently Asked Questions printed in 1998. Our goal is to provide nonprofit managers and directors with a useful reference for spotting potential problems and enable further research.

FAQ #1. Are there recruitment challenges that are particular to the nonprofit sector? 

Nonprofit organizations have traditionally faced challenges in recruiting staff.  Perhaps the main challenge is the difference in compensation — salaries in the nonprofit sector generally are thought to be about two-thirds of what commercial businesses pay for comparable work.  This differential reduces the pool of available workers from which nonprofits can recruit workers.  Finding people who have an interest in working for nonprofit organizations and who may be better able to absorb the pay differential, however, will not alone meet the human resource needs of the nonprofit sector.  Nonprofit organizations typically deal with critical needs and their work demands just as high a level of skill and professionalism as the private sector does.

An additional challenge is the need to recruit individuals who can effectively communicate with or reflect the constituency served in terms of language, ethnicity, and culture.

Finally, a less tangible but real challenge is a largely mistaken image of the work nonprofit organization’s do and the people who do that work.  On one hand, some observers assume that working for the public good just requires good intentions.  On the other hand, many people outside the sector assume that the people who do this work are less skilled than their private sector counterparts.  (Otherwise, the thinking goes, wouldn’t they be working for more money, if they could?)  Different lines of work require different skills and present different challenges in terms of resources available to support workers and the kinds of demands workers face.  Skills and work methods that contribute to success in the private sector will not necessarily prove effective in the nonprofit sector.

Fortunately, despite these challenges, there is no shortage of extremely capable individuals who find it rewarding to work in a nonprofit setting.  (There is a shortage, however, of resources available to allow nonprofit organizations to take full advantage of the pool of those who are interested, willing and capable.)

Strategies for addressing the challenges of finding talented people who have the requisite social and cultural skills, in addition to analytical skills, and who are interested in or committed to your organization’s mission are:

• •   Clearly articulate the position requirements
• •   Develop relationships with representatives of and institutions in ethnic communities to provide recommendations and posting of job openings
• •   Use targeted methods of recruitment (See Human Resources FAQ #2) such as Nonprofit Directions  (the Center’s newsletter of employment opportunities in the nonprofit sector, http://www.nonprofitdirections.org/) that identify candidates with an interest in and appreciation of the nonprofit sector.

A key factor to your success in competing for the best employees, will be demonstrating to potential candidates that they will have access to the tools they will need to perform their jobs well.  For an interesting overview of the state of the nonprofit workforce, see Paul Light’s article entitled, The Content of Their Character: The State of the Nonprofit Workforce 

FAQ #2. How can we recruit employees interested in the nonprofit sector?

Several job listing services publish employment opportunities exclusively for the nonprofit sector. 

The Center for Nonprofit Management publishes Nonprofit Directions, a Web and print newsletter of nonprofit career opportunities in Southern California (Nonprofit Directions). Nonprofit Directions is circulated monthly to more than 8,000 professionals in print and to approximately 4,000 email subscribers.  This is the prime market (nonprofit employers, employees already working in nonprofit organizations and people who have declared an interest in working in the sector) for nonprofit employers.

In addition to placing ads in newspapers and newsletters like Nonprofit Directions, your organization should distribute information on employment opportunities to its colleagues and associates, any appropriate professional associations, and any appropriate networks of service providers.

Yyou may want to consider the resources listed below. 

Idealist.org, The Nonprofit Times:, The Chronicle of Philanthropy

FAQ #3. How should we conduct reference checks?

Employers will differ in their willingness to give detailed references.  Many will limit their responses to confirming only dates of employment, job title, and compensation levels.  The employer may limit the scope of their references as a matter of policy.  Attorneys recommend this limited scope in providing references to protect against lawsuits for libel and defamation of character. Increasingly, former employers are requiring former employees to sign an authorization if they wish the former employer to give more detailed information about their employment and job performance.

As a prospective employer, on the other hand, you would like to obtain as detailed a reference as possible.  Be prepared to ask specific questions, perhaps regarding the applicant’s job function, dependability, ability to take responsibility, work attitude, working relationship with coworkers and advancement potential.  Ask the employer to describe strengths and limitations of the employee’s performance.

This question concerns only references given by an applicant.   If you use a search company or private investigator to run background checks (e.g., credit checks or DMV records), be aware that, under the law, you must comply with specific notice and disclosure requirements (such as providing a separate notice to applicants and employees regarding your use of such background checks).  Ask whether the outside provider can supply you with forms for making those disclosures, and seek advice from an attorney regarding these requirements.

FAQ #4. What should be included in a letter confirming employment?

 In writing a letter that confirms an offer of employment, be careful not to refer to either the position or the employment as “permanent.”  Such a reference, as well as those describing possible future events, has the dangerous result of implying an employment contract for an indefinite period of time.

The employment letter should include:

• •   Confirmation of title.
• •   Compensation (hourly or salary), employment status (regular/temporary), and job classification  (exempt/non-exempt).
• •   Description of benefits currently provided to employees in that classification, subject to change.
• •   First date of employment.
• •   Description of orientation period, if any.
• •   Supervisor’s name and title.

Presently the presumption under California law is that employment is “at-will.”  However, if your organization has an at-will employment policy, this should be made explicit (see Human Resources FAQ #28).  Suggested wording:  “Employment at our organization is at-will and subject to termination at any time, by the organization or yourself, with or without cause and with or without advance notice.”

FAQ # 5. What factors determine whether someone is an independent contractor or an employee?

Like many employers, a nonprofit organization may wish to try to cut employment costs by using independent contractors. 

Be very careful if you are tempted to reclassify your employees or replace them with independent contractors.  If your organization inappropriately classifies an individual as an independent contractor, when by the nature of the work relationship they are in fact an employee, you can be liable for both the employee’s and employer’s share of payroll taxes, as well as possible penalties.

The Internal Revenue Service, California courts and state agencies typically use a number of tests to determine whether an individual is an employee or an independent contractor.  No single test is absolute or conclusive on its own.  The 20 factors used by the IRS to determine whether an individual is an employee or an independent contractor are:

• 1.    Instructions:  An employee must comply with instructions about when, where, and how to work.  Even if no instructions are given, the control factor is present if the employer has the right to control how the work results are achieved.
• 2.    Training:  An employee may be trained to perform services in a particular manner.  Independent contractors ordinarily use their own methods and receive no training from their customers.
• 3.    Integration:  An employee’s services are usually integrated into the business operations because the services are important to the success or continuation of the business.  This shows that the employee is subject to direction and control.
• 4.    Services rendered personally.  An employee renders services personally.  This shows that the employer is interested in the methods as well as the results.
• 5.    Hiring assistants: An employee works for an employer who hires, supervises and pays workers.  An independent contractor can hire, supervise, and pay assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result.
• 6.    Continuing relationship: An employee generally has a continuing relationship with an employer.  A continuing relationship may exist even if work is performed at recurring although irregular intervals.
• 7.    Hours of work: An employee usually has set hours of work established by an employer.  An independent contractor generally can set his or her own work hours.
• 8.    Full-time required: An employee may be required to work or be available full-time.  This shows control by the employer.  An independent contractor can work when and for whom he or she chooses.
• 9.    Work done on premises: An employee usually works on the premises of an employer, or works on a route or at a location designated by an employer.
• 10.  Order or sequences set: An employee may be required to perform services in the order or sequence set by an employer.  This shows that the employee is subject to direction and control.
• 11.  Reports: An employee may be required to submit reports to an employer. This shows the employer maintains a degree of control.
• 12.  Payments: An employee is generally paid by the hour, week or month.  An independent contractor is usually paid by the job or on a straight commission.
• 13.  Expenses:  An employee’s business and travel expenses are generally paid by an employee.  This shows that the employee is subject to regulation and control.
• 14.  Tools and materials: An employee is normally furnished significant tools, materials, and other equipment by an employer.
• 15.  Investment:  An independent contractor has a significant investment in the facilities he or she uses in performing services for someone else. 
• 16.  Profit or loss: An independent contractor can make a profit or suffer a loss.
• 17.  Works for more than one person or firm: An independent contractor is generally free to provide his or her services to two or more unrelated persons or firms at the same time.
• 18.  Offers services to general public: An independent contractor makes his or her services available to the general public.
• 19.  Right to fire: An employee can be fired by an employer.  An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of the contract.
• 20.  Right to quit: An employee can quit his or her job at any time without incurring liability.  An independent contractor usually agrees to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make good for failure to complete it. 

Adapted from: IRS Publication 15-A (January, 2003):  Employer’s Supplemental Tax Guide.  http://www.irs.gov/pub/irs-pdf/p15a.pdf (See pg. 5)

FAQ #6. What is not legally permissible to ask in an employment interview?

When you hire an employee, you may not discriminate on the basis of age, race, national origin, religion, sex, or physical or mental handicap.  Some employers may also be subject to laws prohibiting discrimination based on veteran status.

Employers should seek advice of an attorney or a reputable guidebook, therefore, before asking questions about the following topics: Race or color; religion or creed; birthplace, national origin or citizenship (other than verifying right to work in U.S. after hiring); marital status; children or plans or ability to have or adopt children; disability; arrests; relatives (except for questions about relatives also employed with company); and membership in associations.

A guidebook the Center recommends is Employee Handbook and Personnel Policies Manual by Richard J. Simmons.  Note that standards are often more stringent under state law than federal law (as is certainly the case with California law), so take care to consult a source written under your state’s law as well as under federal law.  The California Chamber of Commerce publishes the California Human Resource Essentials Kit, available on their website, http://www.calchamberstore.com/calchamber.

We discuss the following sensitive topics only to give you an idea of some of the questions you should carefully consider before asking.

National Origin: You should not ask about the candidate’s or the candidate’s parents’ or spouse’s nationality, ancestry, lineage, or parentage; whether the candidate’s parents or spouse are native-born or naturalized citizens; the name of the next of kin; the candidate’s or the candidate’s family’s birthplace; how the candidate learned a second language. You can usually ask whether, if an offer of employment is made, the candidate will be able to provide proof of the right to work.  If relevant to job requirements, you can also ask about languages the candidate speaks (as long as the question is relevant to the job).

Religion and Political Beliefs: The Civil Rights Act of 1964 was amended by the Equal Opportunity Act in 1972.  In it, all questions relating to the examination of religious and political beliefs and affiliations are designated as impermissible. You should not ask about a candidate’s political beliefs or affiliations; religious beliefs, affiliations, or denomination; his or her parish, synagogue, church, etc.; and religious holiday observations.  You can usually ask about a candidate’s willingness to work on Saturdays or Sundays (if the job so requires).

Race: You should not ask questions regarding a candidate’s complexion or skin color or that of the candidate’s family. 

Marital or Family Status and Gender-Related Issues: You should not ask about a candidate’s change of name, maiden name, or original name; current or previous marital status; preferred form of address; spouse; number, name, or ages of children or dependents; methods of birth control or reproductive ability.  You can usually ask whether the candidate has ever worked for your, or any other, organization under another name and whether any of the candidate’s relatives currently work for your organization.

Age: The Age Discrimination in Employment Act prohibits discrimination in employment against candidates over the age of 40. Subsequent state and case laws have effectively lowered the threshold age to under 40 years in some circumstances.    Ultimately, the only question you can ask concerning age is whether or not the candidate is over 18 years old. 

Disabilities:  Under the Americans with Disabilities Act (ADA), employers are not permitted to ask any applicant a question about a physical condition that does not pertain to the candidate’s ability to perform the “essential functions” of the job and any accommodations they may require to do so.

Military History: Most questions concerning military history are illegal, unless the job specifically requires a military background.

Criminal History: Prospective employers can be financially penalized for asking improper questions about an applicant’s criminal history.  Under California law, employers cannot ask applicants about arrests that did not lead to a conviction (e.g., they cannot ask “Have you ever been arrested?”) or participation in any pretrial or post-trial diversion program, nor can they use any answers to those questions they may learn from other sources in making their employment decision.  As of this writing, California law does, however, permit employers to ask applicants whether they have been convicted of a crime or whether they are under arrest but out on bail or subject to pending criminal proceedings.  (Be sure your job application forms are consistent with the law in this area.)

FAQ #7. What should we look for in reviewing a resume?

Although there is no standard method to reviewing a resume, we will suggest several steps you can take to make the review process more profitable. 

The steps are:

• •   Before reviewing resumes, develop a personalized matching sheet for each open position listing the experience and qualifications that you are seeking.
• •   Compare each resume to the matching sheet. Because this technique makes the matches more obvious, it saves considerable time, frustration and indecision. 
• •   Once you have selected only the viable candidates from your matching sheets, return to each resume and establish employment history and experience continuity.  Determine any employment gaps
• •   Read resumes in batches, rather than piecemeal, which can be an extremely tiring process during which you may pass over qualified candidates.
• •   Once you decide that you want to interview a particular candidate, read through the resume again and jot down questions for any areas that you feel need clarification or probing.  Do it in advance, when you are still objective and unaffected by personality.
• •   An initial telephone conversation can be helpful when you are not certain from reviewing the resume if the candidate warrants an interview or if you have too many solid candidates and need to narrow the list down.

In addition, the Center for Nonprofit Management has always found that a well-written cover letter presenting why the applicant is a good fit for the position can be a strong indicator of an applicant’s strength.

Adapted from: Hiring the Best:  A Manager’s Guide to Effective Interviewing, by Martin Yate.

FAQ #8.  Do the same personnel laws apply to both nonprofits and for-profit businesses?

Personnel practices are largely governed by state or federal law, whichever is more restrictive on the particular subject. 

These laws apply equally to nonprofit and for-profit businesses.  In certain cases, there are different laws for employees of governmental units.

FAQ #9. How can we put together an effective set of personnel policies?

Unfortunately, in many cases, nonprofit organizations put their personnel policies together by borrowing those of their colleagues.  While learning from or adapting your colleagues’ practices is frequently an effective strategy for nonprofit organizations, it is not recommended for personnel policies.  In many cases, what is borrowed may not be well written, appropriate for the circumstances of the organization or correct under the law.  Precise language is important in employee handbooks so as not to convey more rights to the employees than is intended.

Employment laws change frequently.  Accordingly, you should have your personnel policies reviewed in their entirety every three years.  Specific provisions should be updated, as you become aware of personnel law changes.

We recommend the Employee Handbook and Personnel Policies Manual by Richard J. Simmons.  This very helpful book outlines in clear language the underlying legal concepts of different personnel issues and then provides various sample provisions – each of which has been written by labor and employment lawyers.  Another helpful resource is a binder of different personnel policies put together by Aspen Publishers, entitled Nonprofit Personal Policies.

FAQ #10. How do we provide our employees with a safe workplace?

Employees have the right to expect that their workplace will be safe.  In 1970, Congress passed the Occupational Safety and Health Act (OSHA), a comprehensive law designed to reduce workplace hazards and to improve health and safety programs for workers.  It broadly requires employers to provide a workplace free of physical dangers and to meet specific health and safety standards.  Employers must also provide safety training to employees, inform them about hazardous chemicals, notify government administrators about serious workplace accidents and keep detailed safety records.  As an employer you are required to post a notice called “Job Safety and Health Protection,” available from the nearest OSHA office.  For information related to federal and state laws, you can contact the Los Angeles branch of Cal/OSHA.  (on the internet: Federal http://www.osha.gov/, California http://www.dir.ca.gov/occupational_safety.html )

California law also requires all employers to institute an Illness and Injury Prevention Program.  It identifies those responsible for implementing the program and describes the system for identifying workplace hazards, methods for correcting unsafe or unhealthy conditions and practices, training programs for teaching employees safe and healthy practices, and systems for communication with employees and monitoring their compliance with safety practices  (California Labor Code Section 6401.7).

You are responsible for providing proper safety training to an employee.  Do not let an employee start a job until he or she has received instructions in how to do it safely.  Training will also be necessary for employees who are transferring into new jobs or are starting to use new equipment. 

To provide a safe workplace, employers and staff should constantly assess whether unsafe conditions exist.  You may wish to consult a risk management expert who will have the expertise to identify potential problems.  (Contact your insurance carrier to see if they can supply you with information or refer you to, and perhaps pay for, a risk management expert.)

You should also include a provision regarding workplace safety in your employee handbook, to encourage employees to be safety conscious and detect and report potential safety hazards in order that they can be corrected or eliminated.

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons, and The Employer’s Legal Handbook, by Fred S. Steingold.

FAQ #11. May we use “introductory” or “orientation” periods for new employees?

Introductory or trial periods are permissible, but if you choose to apply such rules and classifications to new employees, take care that these policies are carefully crafted and are consistent with your overall personnel policies, such as the characterization of all employment as “at-will.” (For more on “at-will” employment, see Human Resources FAQ #28.)

Employers generally use such trial periods to apply a review period for new employees outside of the normal review cycle the organization uses for other employees with similar job classifications, and to determine or phase in eligibility for benefits (including making employees ineligible for benefits until expiration of the period). The chief danger in using such introductory or trial periods is that if the employer’s personnel policies are not carefully worded, a court might interpret the introductory period as modifying the “at-will” character of the employment relationship. In plain language, that means a court might rule that a poorly drafted introductory period makes an implied promise to an employee that if they get past the introductory period, they are then somehow a “permanent” employee who can only be fired for good cause.  This risk can be reduced by incorporating clear and unequivocal language in your policies stating that employers and employees retain the right to terminate the employment relationship at-will, with or without cause, at any time in the relationship including during or after any introductory period.  Readers are urged to seek competent counsel from an attorney experienced in employment matters when creating such policies.

Although many employers use different terms (“probationary,” “introductory,” “trial,” “initiation,” “evaluation,”) to describe special interim periods, none of these terms is necessarily safe.  A court will look at whether the overall policy has created an implied promise that employment after the special period is no longer “at-will”. The word “probationary” is not recommended, both because of a perceived higher legal risk and the negative connotation it carries. 

Employers must keep in mind that during their introductory period, employees are still protected under state and federal civil rights laws as any other employee.

FAQ #12. Should we have a grievance procedure for our employees?

The availability of a grievance procedure increases employee confidence in the employer’s personnel policies, although grievance procedures are not required by law.  Grievance procedures provide employees a vehicle, as well as a forum, to argue disputes and vent frustrations.  Further, grievance procedures help provide that employees will not fall victim to arbitrary or capricious actions of supervisors.  Supervisors are more reluctant to take ill-founded or hasty action where they know that employees can “appeal” and seek an overturn of unreasonable decisions. 

Grievance procedures assist employers in identifying personnel difficulties early and give them an opportunity to rectify improper actions taken against an employee who otherwise would have no internal recourse available to obtain relief from unfair treatment.  Grievance procedures thus function as a safety net that enables the employer to reconcile problems internally without the need to involve outside agencies or courts.  This can save time, energy, substantial legal and administrative costs, and, in some cases, exposure to considerable liability.

If your organization decides to have a grievance procedure, your personnel policies should be specific regarding: 

•            •     Eligible employee classifications.
•            •     Types of matters and disputes covered.
•            •     Grievance steps.
•            •     Levels of authority.
•            •     Designation of substitutes.
•            •     Time constraints on grievances.
•            •     Rules governing evidence and cross-examinations.
•            •     Employer time constraints.
•            •     Written responses to grievance.
•            •     Representation at grievance procedures.
•            •     Use of arbitration.
•            •     Rules against retaliation. 

In most cases, the grievance procedure would start with submission of a complaint to the human resources department, the supervisor of the employee’s supervisor or, if the complaint is against the executive director, to the chair of the board of directors.

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons.

FAQ #13. What is COBRA?  Does it apply to nonprofit organizations?

The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) provides eligible employees and their family members the right to continue health care coverage under their employer’s group health plans.  The right to continue such coverage arises when specific events (such as resignation, termination or death of an employee, or a reduction in an employee’s hours) occur that would normally result in the loss of coverage.

COBRA’s provisions apply equally to nonprofit organizations and for-profit businesses.  COBRA applies to group health plans, including any plan sponsored by an employer that provides medical care to employees, former employees or their families, regardless of whether benefits under the plan are provided directly by the employer or through insurance, reimbursement, an on-site facility, a cafeteria plan or some other manner.  Dental, vision care, hearing, drug and alcohol treatment, and other medical benefits are also covered by the COBRA rules.

Employers exempt from COBRA include churches, the federal government, and small employers with fewer than 20 employees.  (California law currently applies COBRA’s requirements to employers with from 5 to 19 employees, effectively reducing the exemption.)

The election period (i.e. the period of time after the qualifying event such as resignation) for qualified beneficiaries to opt to pay for continued coverage must be at least 60 days long.  COBRA provides that elections made during the election period may be retroactive to the date of the qualifying event.  A group health plan must provide written notice to each covered employee and spouse (if any) of their rights to continue coverage. 

The employer will almost always require the individual to pay the full extent of the costs associated with the continued coverage.  The qualified beneficiary must be allowed to pay the premiums in monthly installments if he/she so chooses.  The eligibility periods and allowable premium costs vary, so seek advice from your insurance carrier or employment attorney if you are unfamiliar with COBRA’s rules and regulations.

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons.

Links:

http://www.cobrainsurance.com/

FAQ #14. What are our obligations when an employee is called for jury duty?

Many states prohibit employers from discriminating against employees for taking time off to serve as jurors.  California law forbids employers from firing or in any way discriminating against employees called to serve as jurors or testify as witnesses, provided that the employees give their employers reasonable advance notice. Employers generally are not required, however, to continue an employee’s wages while he or she serves as a juror or a witness (as is the case in California). 

Nonprofit employers should be sure to address jury leave among the other types of leave in their personnel policies. 

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons.

FAQ #15. What are the requirements for maternity leave?

Answer currently undergoing revision.

FAQ #16. How should we develop job descriptions?

This is one of the most commonly asked questions.  There is no good shortcut to developing job descriptions.  The job description should be tailored to your specific organization and requirements of the position

The process of developing the job description will provide clarity about job responsibilities.  It can be helpful at the time the job description is developed to allocate percentages of time to the various responsibilities.

Elements to include in a job description are: 

• •   Job title
• •   Basic purpose and function of the position
• •   Exempt/non-exempt status
• •   Reporting relationships (title of position to whom employee reports, title(s) of any positions reporting to employee)
• •   Principal activities and responsibilities (i.e. what must the employee be able to do consistently and with quality to be successful in the position)
• •   Required skills, knowledge and experience
• •   Decision-making authority

The supervisor for a new position (and if appropriate other staff and representatives from the human resources department) should develop the new job description.

For current employees, the employee and his/her supervisor should work together to develop and update the employee’s job description, using an agreed upon format for the organization.  At a minimum, job descriptions should be reviewed as part of the annual performance review process, and they should be updated anytime significant new responsibilities are assigned.

FAQ #17. How should we set compensation? Do we need a philosophy?

Employees in the nonprofit sector generally understand that salaries are lower as compared to the for-profit and government sectors.  Employees often desire to work in the nonprofit sector for a wide variety of reasons that go beyond compensation.  Still, compensation and issues of internal equity are factors that influence the effectiveness of the organization.

Your organization’s approach to compensation will affect its ability to attract, retain, and motivate the caliber of employees necessary to fulfill the organization’s mission.  For this reason, it is recommended that each organization articulate its position on how salaries will be set and how increases will be made.

The policy statement should:  (1) address the relationship of the organization’s pay scale to that of competitors, to facilitate recruitment; (2) state how individual roles in the organization are valued, based upon their work content or market price, to ensure internal equity and facilitate fair and defensible compensation decisions; and (3) tie all salary increases to performance.  In addition, the statement should discuss:

• •     Who has responsibility for making compensation decisions.
• •     How job descriptions are developed (see Human Resources FAQ #16).
• •     How salary grades are established and administered.
• •     How hiring salaries are set (see Human Resources FAQ #18).
• •     The relationship of performance review to salary increases (see Human Resources FAQ #24).
• •     Guidelines related to compensation for promotions, transfers, etc.

The policy should state as clearly as possible the results and behaviors that the organization is willing to pay for and use to differentiate one level of performance from another.

FAQ #18. How do we find out about comparable salaries in the nonprofit sector?

For information on salaries across nonprofit service fields in California, the Center’s annual Compensation & Benefits Survey o outlines salaries, compensation practices and benefits for California nonprofits.  The survey’s information is organized by job title.  Information is further grouped by service field, budget size and geographic region.  The publication is available for a fee, with a discounted rate for organizations that participate in the study.  For information, see http://www.cnmsocal.org/salarysurvey.

For information about a specific service field, professional associations or umbrella groups may gather salary information for that field.  Contact these sources to see if such surveys exists. 

For positions that are not specific to the nonprofit sector (e.g., chief financial officer, receptionist, janitor, etc.) it may be helpful to benchmark against for-profit data.  Your public library may have additional salary information from government sources.

FAQ #19.  What strategy should we use to provide benefits to our employees?

Answer currently undergoing revision.

FAQ #20. Can we reduce the benefits we provide to our employees?

Employers do not have a legal requirement to offer employees paid benefits. However, once an employer offers benefits, the employer must then abide by state and federal regulations affecting the provision of these benefits, including anti-discrimination laws.

Changes to benefit programs may become necessary over time.  In some instances, you may wish to modify your benefit plans to respond to changing costs, organizational factors, or employee morale considerations; in other cases changes may be dictated by new or revised regulations.

Employee benefits are factors in recruitment and retention of employees and their morale.  Therefore, you should not adjust them without a solid basis of research and without clearly communicating the reasons for the changes.  Involving employees in providing input or serving on a task force to look at options may provide for more creative solutions and better acceptance of decisions. 

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons.

FAQ #21. What are 403(b) plans?

A 403(b) plan is a tax-deferred annuity designed exclusively for employees of 501(c)(3) tax-exempt nonprofit corporations and those of public education institutions.  The plan allows employees to voluntarily contribute a portion of their compensation to a retirement account before it is taxed.  Employees can remove funds from their accounts for emergencies and other circumstances with differing tax consequences.

A 403(b) plan can be set up solely based on employee contributions or it can also have an employer contribution.  Because there is not a mandatory employer contribution, this is a relatively easy benefit for a nonprofit organization to provide to its employees.  403(b) plans do involve employer processing of payroll deductions and making the appropriate payment to the plan provider responsible for the 403(b) plan.

FAQ #22. How do we establish and use a salary range or grade?

Answer currently undergoing revision.

FAQ #23. What are some considerations for disciplining an employee?

Answer currently undergoing revision.

FAQ #24. Should we have a performance evaluation process for employees? 

Evaluations help employees improve their performance and protect employers from false claims of wrongful termination. 

Ideally, the information provided through a performance appraisal system should encourage an employee to do his/her best job and encourage the organization to provide the employee with the support needed to do the best possible job.

Evaluations can be conducted annually, semi-annually, or quarterly.  Evaluations should be conducted for all employees at the same time or on the anniversary of each employee’s hire date, so long as the same system applies to all employees.

To keep the evaluation process as consistent and objective as possible, devise an evaluation form that you can use with all employees in the same job category.  The form should take a positive approach, focusing on how well the employee has performed the various specific duties of the job, rather than seeking particular faults.  This will help to raise both excellent and deficient performance in the context of overall job functions, producing a more balanced impression that employees are more likely to accept as relatively fair. 

Consider these guidelines:

• •     Give a balanced picture of the employee’s strengths and weaknesses.
• •     Use specific examples of when the employee has met expectations or has exceeded or fallen short of expectations.
• •     Let the employee know the areas in which he or she must improve.  Set objective goals for the employee to meet by the next evaluation period.
• •     Where an employee’s performance is substantially below par, set a date to meet again to review his or her progress.
• •     If the employee’s failure to improve may lead to disciplinary measures or discharge, state this clearly in the evaluation.

The evaluation is, generally, completed by the employee’s immediate supervisor. Once you have completed the written evaluation, meet with the employee to go over it and to make sure the employee understands it.  Leave space on the form for the employee to comment on the evaluation and to acknowledge receiving a copy of it.

Verbal feedback should be an ongoing process.  The written evaluation should be a culmination of the feedback you have given through the year.  Your goal is for there to be no surprises, on either the employee’s or employer’s part, about how an employee is doing. You can also use a form which allows for self-review by the employee or having employees conduct upward profile of supervisors. These two procedures may increase communication and place greater emphasis on improving the overall organization. 

Adapted from: The Employer’s Legal Handbook, by Fred S. Steingold.

FAQ #25. Should a board have a contract with its executive director?

Perhaps the most important point to keep in mind about employment contracts is that they impose more obligations on the employers than an at-will relationship which is what most employment experts recommend.  (See FAQ #28 for more information on at-will employment.)  Accordingly, you should only use employment contracts in special circumstances such as when employing certain key or senior level executives. 

In the Center’s 2009 Compensation & Benefits Survey of Southern and Central California Nonprofit Organizations, 36% of the organizations reported having a contract with their executive directors.  Contracts are more common when hiring a new executive director who is leaving an established position and is seeking to minimize their risk.

The main advantage of having an employment contract with the executive director is the process of clarifying the employment relationship, including issues of communication, reporting, compensation, accountability, and performance review.  It adds formality to the hiring process and makes it less likely that either party (the new executive director or the board of directors) will have mistaken assumptions about the relationship.

The principal disadvantage of an employment contract with the executive director is that it is more likely for the nonprofit organization to be bound to its terms, especially regarding severance, than the executive director.  For example, if an executive director grows dissatisfied with the position and organization, it is unlikely that the board will require the executive director to give the full amount of advance notice required under the contract.  The second disadvantage to both the executive director and the nonprofit organization is the process of finalizing the written contract.  It can make negotiations more precise and focused on self-interest and protection for worst-case scenarios than is advantageous to a new relationship.

FAQ #26. How should a board evaluate an executive director?

As with any employee, it is important to have a formal process for evaluating the performance of the executive director on a regular basis, at least annually.  The evaluation provides for clarification of expectations and setting performance goals that will put the nonprofit organization in the best possible position to fulfill its mission and achieve its goals.  It is important to establish the process and criteria for evaluation in advance.  Retroactively applying standards usually does both the executive director and the organization a disservice and can strain communication between the board and the executive director.  If your organization has a contract with its executive director (see Human Resources FAQ #25), the process for evaluation should be included in that document.

In setting up the review of the executive director, the board of directors working with the executive director determine who will be involved in the evaluation, set the schedule for the review, determine the form and nature of the evaluation (e.g. specific individual performance goals, feedback from board leaders, etc.).   The evaluation process should address the executive director’s goals for the period and their performance in achieving those goals, setting future goals, and the relationship of the review to compensation recommendations.

Additional Resource

Nonprofit Organization Management, Forms, Checklist and Guidelines .

FAQ #27. How can we avoid wrongful termination suits?

Answer currently undergoing revision.

FAQ #28. What is employment “at will”?

An “at will” employment relationship means that the employer and the employee have agreed that either of them may terminate the employment relationship at any time and for any reason or for no reason (provided that in the case of the employer they are not terminating the employee prohibited by federal and state employment law).

Historically, the right to sever the employment relationship at the will of either party has been construed to enable employers to discharge employees at any time, with or without cause or advance notice.  Employees, of course, have enjoyed the same right to terminate their employment.  The most widely recognized exceptions to the employment “at-will” rule are predicated on either express or implied-in-fact contracts to terminate only for good cause or an implied covenant of good faith and fair dealing. 

Although employers cannot acquire an absolute protection against wrongful discharge claims, they can attempt to avert any adverse implications regarding their right to dismiss employees by expressly reserving the right to terminate the employment relationship at will, with or without cause.  This right is often articulated in job applications, personnel handbooks and policies and procedures manuals.  

The objective of “at will” clauses is not to encourage the discharge of employees for arbitrary or inappropriate reasons, it is simply intended to confirm that the employer and the employee share the legal ability to sever the relationship at any time.  Of course, the purpose of periodic reviews and progressive discipline plans is to make the reasons for discipline or termination clear to both the employer or the employee, which may seem to contradict the “at will” characterization.  The point of having both clear communication about performance and an “at will” characterization is that the review process helps to demonstrate that a termination is not based on a prohibited reason, and then in the absence of a prohibited motive, the employer’s reason for terminating the employee becomes irrelevant and the termination is upheld because employment is “at will.”

Employment law is complex, and whether to characterize an employment relationship as “at will” is a crucial decision.   Nonprofit organizations developing personnel policies should seek counsel from attorneys or personnel consultants who specialize in these areas and understand the circumstances nonprofit organizations face.

Adapted from: Employee Handbook and Personnel Policies Manual, by Richard J. Simmons.

FAQ #29. Should we conduct exit interviews?

Exit interviews can be a valuable source of information about employment conditions and morale, specific strengths and weaknesses of managers and supervisors, and the effectiveness of the organization’s activities.  Employees may be more candid about these issues when they are leaving the organization than when they were still employed.

Exit interviews also provide the employee and employer an opportunity to settle and clarify certain matters, including the employee’s right to benefits following separation from service and the employer’s rights to the return of its property, manuals, tools, and equipment.

The exit interview should be conducted by the staff member responsible for personnel.  The interview should address:

• •     The employee’s reasons for leaving.
• •     What the employee liked most and least about working for the organization.
• •     Steps  the organization might have taken to help the employee be more productive.
• •     The employee’s view of compensation practices.
• •     The employee’s relationship with their supervisor.
• •     The employee’s right to benefits, if any, following separation from service.
• •     The return of any of the employer’s property, including keys, manuals, files and information, tools and equipment.

It may be helpful to use an exit interview checklist to ensure that all the topics that should be addressed are discussed in the interview and to document agreements about benefits, return of keys and other property, and the like.

Review the employee’s responses promptly to see if there are any significant issues in that employee’s situation (e.g. sexual harassment) that should be investigated immediately.  Otherwise, information gathered from exit interviews is usually stored for analysis at a scheduled time.

As with any employment practice, all employees should be subject to the same exit interview procedures. Of course, it will be more challenging to complete the interview with employees who have been fired or laid off.

FAQ #30. How can we get samples of nonprofit job descriptions?

There is no resource that outlines a comprehensive set of sample job descriptions for nonprofit organizations.  Such a resource would be of limited use, since the circumstances and demands of particular jobs will vary considerably, even if the jobs may have similar titles.

We recommend that the employer and employee develop a job description that is specific to that job (see Human Resources FAQ #16).  While you should not rely on someone else’s job description, looking at how other nonprofit organizations have defined job duties and qualifications can give you some guidance in describing the particular duties of the relevant position with your organization.

FAQ #31. How can we recruit interns?

Many nonprofit organizations involve interns as a way of recruiting qualified employees to the organization or simply increasing their human resources.  Interns are more likely than other volunteers to have specific educational goals and defined terms or lengths of service. 

As with recruiting any staff member, when recruiting interns it is important for the management and staff of the organization first to define: 

• •   Why you want to involve interns.
• •   What if anything will be different for interns than other staff or volunteers.
• •   Who will supervise/mentor the intern.
• •   What skills are required.
• •   What are the time and scheduling considerations of the work needed.
• •   What experience will the intern need prior to coming to the internship.
• •   What skills and experience are reasonable for the intern to assume he/she will obtain during the internship.
• •   Whether any compensation, stipend or coverage of expenses or other benefits will be provided.

After these initial questions have been answered, you can then identify recruitment strategies, which may include:

• •   Outreach to local colleges (both undergraduate and graduate) and high schools. Many universities have intern programs through specific departments. 
• •   Announcing opportunities through career placement programs, such as those listed in the yellow pages (for young adults, those switching careers or those that have been recently laid off).
• •   Posting a request on national internship listings.  These listings make sense if you will annually have projects for interns versus a singular short-term need.
• •   Circulating a request through professional associations for your field.
• •   Contacting volunteer centers.
• •    Placing an ad in such newsletters as Nonprofit Directions — a newsletter of nonprofit job announcements produced by the Center for Nonprofit Management.

FAQ #32. What can be included in an employment application? Are there legal restrictions?

Answer currently undergoing review.

FAQ #33. What are recommended sexual harassment policy guidelines?

Answer currently undergoing revision.

FAQ #34. What employee records do we need to keep and for how long?

Answer currently undergoing revision.

FAQ #35. Can nonprofit organizations pay bonuses?

Answer currently undergoing revision.

FAQ #36. How do we design a program to meet our staff development needs?

Answer currently undergoing revision.

FAQ #37. How does worker’s compensation affect nonprofit organizations? 

Worker’s compensation insurance programs are designed to pay medical costs and lost wages to employees who suffer work-related injuries or illnesses. The issues and practices governing worker’s compensation are the same for nonprofit organizations. An employer’s obligation to provide worker’s compensation insurance is governed by state law.  Worker’s compensation benefits will be awarded to employees who sustain work-related injuries.  It is ordinarily sufficient if the employee simply shows that he or she sustained an injury in connection with the performance of his/her duties. 

Your employee handbook should outline provisions for worker’s compensation including:  a brief description of the amounts of benefits available, the principal eligibility restrictions, and any obligations that employees have to report accidents and injuries in the work place.