Category Archives: Government Regulations

The Glossary for Nonprofit Governance

Adrianne Geiger Dumond

 

 

Many of us in the nonprofit world use terms and acronyms that may be confusing to newcomers – especially young employees trying to learn about the nonprofit as a business. I recently ran across a very useful tool for educating everyone in this business. The glossary should probably be in every manager’s office.

The Glossary is published by BoardSource and can be found under Nonprofit Board Fundamentals on their website. The glossary is alphabetized and runs five pages and has every term that is ever used in this business.

For example: have you ever wondered what the difference was between a 501(c)(3) and a 501(c)(6)? There are also simpler definitions: For example:

  •  Board Development
  •  Disclosure requirements
  •  Emeritus status
  •  Fiduciary duty
  •   Immediate sanctions
  •   Operational reserves

Possibly the most Important definitions provided for novices are the terms for IRS requirements, which can be confusing. For example:

  • Form 990
  • Form 990 – PF
  •  Form 990 – T
  •  Form 1023
  •  Form 1024
  • Or maybe a ‘Federated Organization’ ?

I recommend every nonprofit have a copy of this glossary – maybe even board members might appreciate the information.

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org

The Uncertainty in Nonprofit Regulations

Adrianne Geiger Dumond

 

 

The nonprofit news media is quite frantic since the election. I have read everything from the point that advocacy is now critical for agencies and boards to the notion that ‘rage donations’ might be a good motivator. Actually there has been uncertainty for nonprofit regulations before the election.

Because of IRS scandal and the responsibility for the Affordable Care Act, the IRS introduced the Form 1023-EZ.This Form significantly reduced the level of IRS review for new organizations. The drop in oversight by the IRS of tax-exempt status has caused the states to assume more control over regulations.

In 2004, California enacted its own Nonprofit Integrity Act, which added considerably more control. Significant requirements included a shortened period for registering with the attorney general (30 days after the initial receipt of property), mandatory audited financial statements, and mandatory board or board committee review of senior officer compensation.[1]

Mayer, the noted author below, has made astute observations about these changes. He states:

  • The IRS is not the only sheriff in town. Especially for charities, state regulators have the authority and the willingness to pursue wrongdoing.
  • For compliant nonprofits, increased innovation and cooperation is mostly good news.
  • For noncompliant nonprofits, there is less room to fly below the radar. This highlights the growing sophistication and cooperation of the state nonprofit regulators to work together to catch malfeance.

While naysayers have faulted the incoming administration, there might be a bright light coming. With more jobs, a stronger middle class and a better economy, maybe fundraising becomes easier. But uncertainty remains. 

Addendum: BoardSource, Smart Briefs, January 13, 2017 announced that Pay Pal processed almost $1 Billion in donations over the 2016 holiday season. The Chronicle of Philanthropy stated that 12 wealthy donors surpassed $100 Million each in 2016, and 6 more gave $100 Million exactly.

[1] The Rising of the States in Nonprofit Oversight. Lloyd Hitoshi Mayer, August 11, 2016, Nonprofit Quarterly

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org

VACATION PAY YEA OR NAY

Robin Noah

Robin Noah

 

Every year about this time I receive calls regarding holiday time off and pays so here are a few reminders.

Employers do not have to offer time off on nationally recognized holidays. However, an employer is obligated to provide reasonable accommodation for the religious practices of its employees unless it can show that the accommodation would result in undue hardship for its business.

Many employers offer a “floating holiday” in addition to the regularly scheduled holidays. This allows an employee to take time off for religious observances that are not covered by the employer’s established holiday schedule. Make sure your company policy clearly explains the company rules. While most employers provide the same holiday benefits, equally within the company’s policy, it is not a requirement as long as the rules are not discriminatory.

Employers do not have to pay Hourly employees for time off on a holiday. They are only required to pay hourly employees for time actually worked.

On the other hand, Exempt employees who are given the day off, must be paid their full weekly salary if they work any hours during the week in which the holiday falls. This requirement for exempt employees did not change under the new federal overtime regulations.

If an employer provides paid holidays, it does not have to count the paid hours as hours worked for purposes of determining whether an employee is entitled to overtime compensation. An employee must actually work 40 hours in a week before he/she is eligible for overtime. Collective bargaining agreements and/or government employers may have contracted other provisions for determining overtime.

Employer’s policy statements should clearly explain the criteria for Holiday time off, including the proration of the amount of holiday pay due to a part-time employee. For example some companies as a matter of policy do not provide Holiday pay to part-time employees.

Use it or lose it: In California, vacation pay is considered another form of wages and as such cannot be taken away from an employee under any “use it or lose it” scenarios. “Use it or lose it” policies should be clearly communicated to all workers in employment policy manuals. If applicable be sure to check your collective bargains agreement or any other legally contracted agreement in your company. Remember that in California vacation earned is considered wages due and payable at the employment separation.

All information in this article is general, not intended to be legal advisement. Please contact your legal advisor for applicable laws.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

 

Updating Form I-9

Robin Noah

Robin Noah

 

By now most employers, regardless of size, are well aware that employers have certain responsibilities under immigration law during the hiring process. Failure to comply can be a costly event. Not knowing the law will not excuse business owners or management of business establishments for 1-9 compliance failures. For example the current Form I-9 is valid until Jan. 21, 2017. An announcement was made On Aug. 25, 2016 that the Office of Management and Budget (OMB) approved a revised Form I-9, Employment Eligibility Verification.

USCIS must publish a revised form by Nov. 22, 2016. Employers may continue using the current version of Form I-9 with a revision date of 03/08/2013 N until Jan. 21, 2017.

After Jan. 21, 2017, all previous versions of Form I-9 will be invalid. You can keep up with the changes by subscribing to https://www.govdelivery.com. There are many web sites devoted to the 1-9 including U S Immigrations and Customs Enforcement (ICE) https://www.ice.gov/

Did you know? The current administration has dramatically increased the number of I-9 audits to historically high levels, and promises that I-9 enforcement efforts will remain a high priority. For example, on one day, June 15, 2011, Immigration and Customs Enforcement (ICE) issued 1,000 Notices of Inspection of I-9 forms and subpoenas to various U.S. companies large and small. I-9 investigations are at an all-time high, with more than 3,000 audits taking place in 2012 compared to only 250 in 2007.

A few reminders: An employer must: A) Verify the identity and employment authorization of each person hired after Nov. 6, 1986 and B) Complete and retain a Form I-9 for each employee required to complete the form.

An Employer must not 🙂 A) Discriminate against individuals on the basis of national origin, citizenship, or immigration status and B) Hire, recruit for a fee, or refer for a fee aliens he or she knows to be unauthorized to work in the United States.

Consider some of the penalties:

  • Failure to comply with the IRCA’s I-9 rules can result in significant fines, loss of access to government contracts, and highly negative publicity for your company.
  • Employment of unauthorized workers may result in fines up to $16,000 and six months’ imprisonment. Employers that knowingly hire or continue to employ unauthorized aliens can be barred from competing for government contracts for a year.
  • Paperwork violations can also result in significant fines. Each mistake or missing item on a form can result in a $110 penalty, topping out at $1,100 for each form. A missing form would automatically be assessed at $1,100.

You may want to have an independent 1-9 audit conducted as a strategy for ensuring that your business is compliant with immigration related employment practices.

(Excerpts from articles of Adriana Kostencki, Esq.)

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

Is it harassment or bullying?

Robin Noah

Robin Noah

 

Regardless Employers have an obligation to their employees and to the Law when it comes to Harassment and/or Bullying at work

In the past several years, the Equal Employment Opportunity Commission (EEOC) closed 7,256 sexual harassment and bullying claims nationwide that resulted in over $44 million in fines and lawsuit settlements. Last year there were over 30,000 employee complaints filed in California alone! In a recent survey, 27% of Americans reported that they have suffered abusive conduct while at work. How do we stop this epidemic of workplace harassment and bullying?

Workplace bullying is repeated, unreasonable and unwelcome behavior directed towards an employee or group of employees that creates a risk to health and safety:

  • Basically a health and safety issue
  • Affects safe workplace policies
  • Employees can file complaints to the Fair Work Commission.
  • You can be investigated and prosecuted by your State regulator for a breach of health and safety legislation.

Workplace harassment is unwanted behavior that offends, humiliates or intimidates a person, and targets them on the basis of a characteristic such as gender, race or ethnicity. Even when you have less than 50 employees you still need to have written policies regarding these issues. There are very specific guidelines for handling harassment – sexual or otherwise.

Often employers treat bullying and harassment as the same class of problematic behavior. However, the law relating to each of these areas is different, the approaches you take to prevent these behaviors should also differ.

Harassment relates to the prohibition in anti-discrimination laws against sexual harassment and sex-based discrimination in the workplace. These laws differ from health and safety laws in that a victim of harassment can make a complaint to an external agency – in effect, launching a legal proceeding against your organization.

You need to create and implement bullying and harassment policies. Each policy needs to describe what the organization considers harassment and what it considers as bullying. The ensuing action when the policy is violated should also be very specific.

Keep in mind that policies are written so that there is a common understanding of the organization’s behavioral expectations and to what end the organization will take corrective action to provide effective resolutions of these types of problems.

Even if you have less than 50 employees, employers have an obligation to their employees and to the Law when it comes to Harassment and bullying at work.

Author:  Robin Noah, Executive Coaches of Orange County. www.ECofOC.org

Capping the California Sick Leave Benefit

Robin Noah

Robin Noah

 

In the midst of misinformation and confusion, July 1 marked the day California employers were required to begin providing paid sick leave benefits to their eligible employees.

A key concern is employer’s actively managing compliance by following the rules. For example as an employer you are required to have a policy in place to cap Sick Leave benefit at 3 Days.

California’s new sick leave law also carries consequences for noncompliance. If employers do not comply with the new law, they can face Labor Commissioner Enforcement measures that include awarding back pay, damages and penalties up to $4,000. Small employers included.

The California Chamber of Commerce is one of the organizations that is providing information for administering the law. Here are some highlights from CEO Allan Zaremberg’s article of the July 10, 2015 Cal Chamber newsletter.

Sick Leave Policy Important

There is a lot of misinformation about what this law requires. An employers must create a policy addressing the amount of leave they are providing or else they will be subject to the statutory mandated accrual rate of one hour of sick pay for every 30 hours an employee works.

“This means that if employers are not clear about capping their leave at three days, full-time employees will be entitled to 69 hours of paid leave per year and they will be allowed to carry that over to the next year, and so on. This is nearly nine days—not three—if the employee works a 40-hour workweek. It is critical that employers understand that they must have a policy in place—preferably in writing—that clearly communicates to employees about the amount of leave they are providing.”

The law also includes several notice, posting and recordkeeping mandates The Labor Commissioner has released the poster, and it’s available on the Labor Commissioner’s website

  • Wage Theft Notice: The Wage and Employment Notice (Labor Code Section 2810.5), which employers have been required to provide to nonexempt employees since 2012, has been updated by the Labor Commissioner to contain information about an employee’s right to accrue and use paid sick leave and about employee protections under the law.
  • Pay-Stub Notice: An employer must provide an employee with a written notice setting forth the amount of paid sick leave available to the employee each pay period.
  • Recordkeeping Requirements: Employers will need to keep records for at least three years which document the number of hours that each employee worked and paid sick days accrued and used by each employee.

The law also specifies that employers are prohibited from retaliating against employees who take sick leave.

Resource: www.calchamber.com/PaidSickLeave.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

The California Paid Sick Leave- A brief reminder

Robin Noah

Robin Noah

 

Most California businesses are aware of the new law for businesses with operations in California passed Sept. 10, 2014. At that time Gov. Jerry Brown announced that California employers will now be required to give part-time and full-time workers at least three days of paid sick leave per year, starting in July 2015.

As the July 1 deadline approaches employers need to be prepared for meeting the obligation of the benefits under the new, mandatory, paid sick leave law titled The Healthy Workplaces, Healthy Families Act of 2014.

Employers need to be prepared for administering the new law. For example employers are required

  • To post a paid sick leave poster that advises all employees of sick leave rights and is in a conspicuous location. Willful failure to post can result in a penalty of one hundred dollars ($100) for each offense.
  • Provide written notice of the paid sick leave to all new hires from January 15, 2015 and existing employees, covering the following points of information:.
  • Understand that an employee may accrue and use paid sick leave and may not be terminated or retaliated against for using or requesting the use of paid sick leave and has the right to file a complaint against an employer who retaliates.

Payday Notices have to be updated with each payday notice presented providing the amount of paid sick leave available to the employee

There is a lot more information available in the internet. One resource is the Q and A at http://www.dir.ca.gov/DLSE/Paid_Sick_Leave.htm

If there is an existing paid sick leave policy in place and it is modified prior to the July 1 operative date an employee notice regarding the change must be provided within seven days of the effective date of the company’s policy change

It is recommended that any separately written documents that will be included with the payment of wages should be reviewed with a labor law attorney.

Recordkeeping; Retention of records that document paid sick leave activity is required for at least three years including;

  • Number of hours that the employee worked
  • Paid sick days accrued by an employee
  • Paid sick days used by an employee.

Failure to maintain adequate records establishes a presumption that the employee is entitled to the maximum number of hours accruable. Briefly stated ‘‘ persons employed in California for 30 or more days in a year earn one hour of paid sick leave for every 30 hours worked’.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

Holidays approaching…

 

Robin Noah

Robin Noah

Some businesses dread the holiday season as it creates situations hard to control. If you said “never again” guess what – it is here – again.

According to Erika Frank, CalChamber’s general counsel and VP of Legal Affairs “employers should start thinking now about how they want to manage holiday parties. Alcohol-fueled mistakes could have a lasting impact on individual careers or on the business as a whole.”

The use of alcohol at work is a concern for many employers throughout the year. It’s ironic that some employers with strong anti-alcohol and drug programs actually serve alcohol during work hours, to employees, at holiday parties. In some cases employees then return to work, even in hazardous occupations, under the influence of alcohol. If an employee is injured in an accident, the employer is exposed to legal liability and excessive workers’ comp claims.

Alcohol, business entertaining, and employee functions are a volatile mix. You need to understand your organization’s needs and responsibilities before setting policy. If you don’t want to prohibit alcohol consumption totally and thus be viewed as the “holiday bad guy,” then take a proactive position to control consumption, require accountability, and limit your exposure.

The most conservative position is to ban alcohol consumption throughout the company building. A more practical solution is to have clear policy statements that address key issues. For example:

  • Limiting the availability and consumption of alcohol by stipulating that it may be served only for a set period of time.
  • Use of alcohol and illegal drugs
  • Behavior at social functions – especially at client/customers premises.
  • Company policy prohibiting harassment

Be sure to define consequences for unacceptable behavior.

Consider that many employers forego an evening affair in exchange for a holiday luncheon. Ifnonexempt employees are required to attend a lunchtime party, their employer will owe them a one-hour missed meal penalty. It doesn’t matter that the employees performed no productive work during the party or that the employer fed them. If attendance is not completely voluntary, the nonexempt employees technically missed a meal period and are owed the penalty.”

You may want to visit the OSHA website and view the recently issued employer guidelines for safe holiday parties: A Safe and Sober Message about Workplace Parties and Drinking – www.osha.gov/law-regs.html.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

Reimbursing employee cell phone use …

Robin Noah

Robin Noah

Under California law, employers must now reimburse employees cell phone usage for certain job-related expenses.

As noted in a recent California Chamber newsletter: “In an unprecedented decision, a California court of appeal recently ruled that an employer must reimburse an employee if the employee is required to use a personal cell phone to make work-related calls; this is true even when the employee did not incur an extra expense by making the work calls because he/she had an unlimited data plan. The court ruled that the employer must pay some reasonable percentage of the employee’s cell phone bill. “

The case for the decision is identified as Cochran v. Schwan’s Home Service, Inc., 2014 WL 3965240 B247160 (2014).

This case could ultimately be appealed to the California Supreme Court. In the interim, employers may want to review their cell phone policies.

A key component of the decision was the existing Labor Code Reimbursement Requirements: Section 2802 requires an employer to reimburse employees for all monies that they necessarily spend or lose directly related to performing their job duties or following the employer’s directions. For example employers need to reimburse common expenses as work-related travel and dining expenses and mileage when an employee uses a personal car for work-related business.

The key question was “Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job?”

The answer from the court was “reimbursement is always required.” To comply with the Labor Code, an employer must pay “some reasonable percentage of the employee’s cell phone bill.”

Issues of employees with special plans or where a third party is actually paying the bill were not considered for the ruling. Instead to prove liability all the employee needs to show is that “he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.”

According to the court, the ruling prevents the employer from passing its operating expenses onto the employee and avoids an employer windfall.

 

The appellate court did not provide guidance on how much an employer will have to pay when the employee subscribes to an unlimited data plan or when someone else pays for the employee’s plan – the court noted only that the reimbursement needs to be “some reasonable percentage.”

If this is a current situation for your company I suggest you contact an attorney that specializes in labor law to help you unwind this ruling and that you update your policy manuals. You can search the internet for additional information.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org

The Independent Contractor …

Robin Noah

Robin Noah

It is estimated that as much as $1.5 billion in income, Social Security withholdings and unemployment tax revenue is lost annually due to misclassification of as many as 3.5 million workers as independent contractors (source www.taxes.ca.gov ). That is a lot of money!

It is the IRS – as the federal taxing authority – that determines whether an employment relationship exists between a worker and employer requiring payment of federal employment taxes, including Social Security taxes, payment under the Federal Unemployment Tax Act and withholding of worker-owed employment taxes. The EDD is also involved when one of these “1099 employees” files an unemployment claim.

An IRS Form 1099-MISC is a method the government uses to track and report certain types of non-employment income. When a “1099” is provided to a worker for payment of services, it does not automatically make the worker an independent contractor nor does calling someone an independent contractor make him/her one in the legal sense. Employers that have “1099” employees or “contractors” working for them improperly classified are subjecting themselves to heavy penalties from the IRS.

The most important factor in that determination involves the independent contractor’s right to control the manner and means of accomplishing the desired result, even if the contractor does not exercise that right with respect to all details.

Before classifying an individual as an independent contractor, employers need to familiarize themselves with the many factors the different governmental agencies use to determine independent contractor status. Information regarding the laws governing the Independent Contract classification can be found at www.IRS.Gov

Misclassification of bona fide employees as independent contractors can result in the federal government collecting significant financial penalties from employers. The IRS is aggressively auditing companies to expose abuses.

All businesses or government entities required to file a Federal Form 1099-MISC for service performed by an independent contractor must report using Independent Contractors Report – DE542

For more information see Employer’s Supplemental Tax Guide (IRS Publication 15A), and California Employer’s Guide (DE 44) . The EDD will also assist employers in making a proper classification with an Employment Determination Guide form DE38 which is accessible at www.edd.ca.gov/pdf_pub_ctr/de38.pdf

I highly recommend employers seek legal advice when in doubt re 1099 employees.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org