You Hired Who? Top 10 Nonprofit Employment Mistakes

October 15, 2014       Siobhan Kelley      

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Nonprofit employers face a unique set of challenges. They are always trying to do more with less -- fewer staff members, less support, less funding. A combination of these pressures can result in poor employment practices, even when one thinks they are doing “the right thing.” Engaging in best practices with nonprofit employees will result in helping to decrease employee turnover and retain high performers. It will also help identify problem employees who might otherwise fly under the radar or be the low performing “hot potato” that gets passed between departments. Avoiding the most common pitfalls with employment issues can help avoid costly lawsuits. Here are some common, and uncommon, mistakes being made by hiring managers. 1. Rushing To Fill An Empty Seat With A Warm Body: Mistakes In Hiring One of the best practices in hiring is to be honest about what makes someone a successful employee. You can prevent high turnover by being honest about the aspects of the job that are frustrating and you can sell a candidate on the mission of the nonprofit while still being honest about the challenges of the work, especially if the candidate is new to the field. The hiring process is the first and best place to prevent problematic employment situations from ever developing, so watch for “red flags” in the hiring process. For example, you might want to dig deeper into the background of that charismatic applicant who has had five different jobs during the past five years. If you are in a rush to fill an open position as soon as possible, you’ll end up with “anyone” instead of the right person. 2. Lack Of Performance/Disciplinary Records The number one problem that arises when defending nonprofits from wrongful termination claims is a lack of documentation to support the decision. Verbal coaching with an employee might be appropriate as an early correction, but it is no substitute for written corrective action. Two people can participate in the same conversation and come away with two very different impressions. The employee could think they have received informal direction and coaching. The manager might think they have delivered a warning. Effective corrective action should clearly describe the problems, future expectations and the consequences if expectations are not met. An employee who is surprised to learn they are being fired has most likely not been counseled appropriately. If a problem is important enough to trigger a termination, it should be important enough to document in writing, well in advance of the termination. 3. Not Requiring Managers To Document Performance Problems Directly connected to a lack of documentation is the absence of tools and time available to do the documentation. Nonprofits are notoriously understaffed and managers are overworked. Managers might be frustrated with an employee’s continued performance or disciplinary problems to the point where they are ready to fire the employee. The hard truth is that managers get paid to deal with these issues. The solution for this issue comes from the top of the management chain. Make sure that the heads of each department and the Human Resource Department (or, in a smaller nonprofit, the executive director) regularly check in with managers about low-performing employees. Disciplinary issues should be centralized. Overwhelmed managers could need help coaching employees, writing disciplinary notices and even balancing their workload to have enough time to appropriately address these issues. 4. Independent Contractor Misclassification Independent contractors are workers who are not employees and are not on your regular payroll. They are paid a flat fee for the services performed and receive a Form 1099 at the end of the year reflecting total compensation. Whether a worker is an independent contractor or an employee will depend on the relationship between the parties. It is not a matter of preference for the nonprofit or the contractor when it comes to characterizing the relationship one way or another. In general, employers direct the work of their employees and contractors, not surprisingly, work independently. Taking someone who is doing the work of an employee and making them an independent contractor might sound like a great way to save money on payroll taxes, but it is also a great way to land in hot water with a multitude of federal, state and local authorities. The test used to determine whether a worker is an independent contractor or an employee varies by state and by the agency enforcing the rule. When in doubt, invest in the opinion of an employment attorney. Surprisingly, a person who gives you advice on this issue who is not an attorney might share the liability if they get it wrong. 5. Making All Employees “Salaried” You should start by assuming an employee should be paid on an hourly basis. Under the federal Fair Labor Standards Act, employees may only be paid a salary if they clearly fit into one of the exemptions to the hourly rule. You should also keep in mind there may be special state rules. For example, California requires exempt employees to meet a somewhat more stringent set of requirements. Just like with an independent contractor, an employee’s preference does not play a role in the determination. 6. Letting Employees Work “Off The Clock” Or Volunteer Employees cannot volunteer to perform the same or similar duties they perform as part of their own jobs. If they get paid to do a certain kind of work at 10 a.m. on a Monday, then they should also be paid if they are doing the same or similar work at a fundraiser on Saturday. 7. Overly Optimistic Personnel Policies You should not write policies for the employees your nonprofit would like to have, but rather the employees who do work there. For example, you might put together a grievance policy that allows an employee to escalate any issue or concern from their supervisor all the way to the Board of Directors. Of course, an employee should have a way of escalating concerns if the employee reasonably believes there is unethical or illegal conduct occurring. However, frequently the grievance policies, which are written with the ideal employee in mind, end up being a vehicle for a disruptive employee to create significant dysfunction within the organization. The best grievance policies give each level of appeal enough time to make an adequate investigation and response (hint: three days is not enough) and exclude disciplinary decisions, including terminations. If your nonprofit has union employees, a Collective Bargaining Agreement might require a specific internal appeal process. 8. Not Appropriately Addressing Disability Issues Laws protecting mentally and physically disabled employees have expanded significantly during the past several years. The federal Americans with Disabilities Act applies to companies with 15 or more employees. Some state laws have an even lower threshold of employees. The focus of these laws has deliberately shifted from what constitutes a disability to the employer’s obligation to engage in the interactive process with a disabled employee. It is important for any nonprofit manager to know that it is not necessary for an employee to identify themselves as disabled to be protected by state and federal laws. The burden rests primarily with the employer to make a disabled employee aware of their ability to request accommodations for their job. You should focus on the accommodation, not on the disability. You can simply ask the question: Is there anything we can do for you to help you perform your job? Document your offer to help and the employee’s answer. You have then entered into the interactive process. 9. Treating Employees As Clients Most people don’t work at a nonprofit for the amazing compensation package or material perks. They are there because of their passion for the mission. Particularly in social service agencies, the line between carrying out that mission and managing an employee can get blurred. How do you fire an employee for making a mistake when you’re in the business of second chances? The important distinction here is to identify an employee who needs different tools to be successful from an employee whose actions will negatively impact your organization in other ways, particularly when it affects client care. Employment performance standards should be distinguished from the standard of care for your clients. This might be a matter of organizational culture. Some employers are willing to be more flexible with employees who are also former clients or who are experiencing the same types of challenges as their nonprofit clients. However, consistency must be a fundamental part of your employment practices. Employees should be held to similar standards of conduct. Failure to do so can expose your nonprofit to the risk of being sued for discrimination. In addition, any issue that directly affects client care should always be treated seriously. Compassion for an employee’s situation should never undermine clients’ safety or the nonprofit’s legal compliance. 10. The Empty Desk: Forgetting About The Employee On A Leave Of Absence Simply having a note from a healthcare provider doesn’t mean the employee is automatically entitled to job-protected time off from work. However, if an employee has been sending in notes for months, and has never heard from the employer, why wouldn’t they assume that they have approval for an indefinite leave of absence? You should always write to an employee at the beginning of a medical leave to explain how much time off has been approved. You should also write to the employee again near the conclusion of their leave to request documentation releasing them to return to work so that you have enough advance notice to evaluate any medical restrictions upon their return to the workplace. While emails and text messages are great for quick, informal messages, this is not one of those times. Employers subject to the Family and Medical Leave Act (FMLA) or state or local leave laws may have additional notification requirements. The FMLA has a very precise timeline for notifying employees of their leave rights and whether the leave has been approved. Nonprofits may also have obligations to consider regarding leave requests under federal or state disability laws. Nonprofit leaders with responsibility for employment policies and decisions who think they don’t have time to become informed about federal, state and local laws, contracting requirements, licensing and other regulations impacting their organization run the real risk of prolonged and difficult litigation. Sadly, common sense, is no longer enough when it comes to employment practices. NPT Siobhan Kelley, J.D., is an employment risk manager with the Nonprofits Insurance Alliance Group. She previously served as in-house counsel for a large technology corporation. Her email is skelley@insurancefornonprofits.org.