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PHYSICAL PROGRAMMING

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A subscription for local art

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An annual holiday art market involving over 60 local artists (Last year we sold over $153,000 of local art!)

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ABOUT OUR GUEST experts TONIGHT:

Bob Lawson is currently the Director of Administration and Education at Theatre

Under The Stars (TUTS). He has held this position since December 2000. In this

capacity he oversees many areas of TUTS’ business including Administration,

Human Resources, Operations, and Education. From February 1997 to November

2000 he was employed as the Director, Volunteer Services at AIDS Foundation

Houston, Inc. (AFH). In this capacity he the management of 365 individuals serving

on 10 direct and indirect client service volunteer teams. Prior to his employment at

AFH he spent 18 years with the E.I. DuPont de Nemours Company in positions of

increasing responsibility managing employees and suppliers. Bob became known as

an expert in problem resolution, negotiations, motivation, and financial

management. Bob has an extensive background in quality process management

including Steven Covey’s “Practical Leadership”. He was one of the recipients of

DuPont’s “Excellence Through People” award in 1992. Bob is a cum laude graduate

of Niagara University with a BS degree in Business Logistics.

Elaine C. Becraft is Counsel, Labor & Employment (Americas) for LyondellBasell, one

of the world’s largest plastics, chemicals and refining companies with annual

revenues of $44 billion.* LyondellBasell, a member of the S&P 500, manufactures

products at 56 sites in 18 countries. In her current role, Becraft advises her internal

business clients on all aspects of labor and employment law. She joined the

company in December 2011. Before joining LyondellBasell, Becraft was in private

practice in Seattle, Washington and Houston, Texas. Becraft is a graduate of Seattle

University School of Law and received a Bachelor of Arts degree in International

Affairs and German Studies from Northern Arizona University.

Fundamental HR &

Employment Policies for

Organizations

Bob Lawson

Director of Administration & Education

Theatre Under the Stars

Elaine C. Becraft

Counsel, Labor & Employment

LyondellBasell

DISCLAIMERS

This workshop content should not be

considered legal advice or legal

opinion. You should review

applicable law in your jurisdiction

and consult experienced counsel for

legal advice.

The Big Ideas: HR Essentials

• Human Resource Management

• Compensation and Benefits

• Recruitment and Selection

• Performance Management

• Employee Development

• Employment Law Basics

HR Priorities:

• Strategic: how to best realize your org’s mission

• Administrative: compliance, reporting, and records

• Operational: day-to-day employee relations

The BIG ideas. What we will cover:

What else we will cover

• 1099/W2 distinctions

• Benefit options

• Performance Reviews

• HR reps for small shops

• New Hire concerns

• Interns

• Employment taxes and withholding

• Outsourcing your HR Function

WHAT YOU ALREADY KNOW AND STRUGGLE WITH

Staff without a formal HR background

The use of unpaid staff (volunteers)

Limited resources/budget

Lack of affordable training for staff

High turnover

Staff burnout

Managing office administration

Board of Directors support

Idealist.org describes the unique challenges of Human

Resources (HR) in a nonprofit setting: Support for these

needs can be hard to find, and difficult to navigate.

They include:

The nonprofit human resources function deals with

volunteers, staffs high-risk programs, and can be subject to

intense scrutiny.

These major

challenges can

be

categorized as:

o Economic

o Structural

o Legal

o Cultural

THE “ Absolute Musts " OF ANY EMPLOYEE HANDBOOK

(From April 2014 ADP HR Newsletter)• At-will employment

• Anti-harassment & nondiscrimination

• Immigration Law compliance

• Employment classifications (full-time, part-time, exempt, non-exempt, etc.)

• Leave of absence and time off benefits (holidays, vacation, sick, etc., as well as policies about unused vacation)

• Attendance and time-keeping

• Paydays

• Meals and break periods (if regulated by state law; not necessary in Texas)

• Safety and health (if regulated by state law; not necessary in Texas)

YOUR EMPLOYEE

HANDBOOK

Other handbook inclusions to consider:

Employee conduct

Company history, practices, and culture

Use of company equipment (including no expectation of privacy when using company email, etc.)

Emergency Closings

Social Media

Sample policies to consider:

• Whistle-blower:

Sample language will be

emailed to you

• Internal conflict of interest:

Sample language will be

emailed to you

• Nondiscrimination

• Others?

YOUR EMPLOYEE

HANDBOOK

BASIC BEST PRACTICES FOR INTERVIEWING/HIRING

OVERVIEW : Basic legal concerns: Elaine

Practical concerns: Bob

PREPPING FOR A NEW POSITION – Develop Job Description

• Determine your staffing needs first; create the job descriptions second

• Avoid the common pitfall of crafting job responsibilities on the basis of existing personnel strengths, rather than organizational needs

• Determine the benefits package for the role; are your expectations for salary, etc. realistic and competitive in the market?

• Analyze the current staff to ensure you need to go outside the organization to meet your needs

• Could an internal resource be developed to meet needs?

• Does bringing in an external candidate prevent a strong current employee from experiencing professional development?

RECRUITMENT AND SELECTION

• Screen all applications received

against pre-determined criteria

i.e.:

Do we require a degree?

Second language?

Prior experience using

specific skills?

PREPPING FOR A NEW POSITION – Develop Your Selection

Process

• Post jobs in a variety of places (idealist.org, local arts schools, Linked In,

etc.)

• Use standard method to acknowledge receipt of applications and resumes

(i.e. have one person in charge of emailing each applicant to acknowledge

receipt)

• Reviewing Applications Checklist:

o Completeness

o Availability

o Employment eligibility

o Desired pay/position match

o Employment history

o Reasons for leaving previous employer

o Pay history

o Education

o References

o Signatures

RECRUITMENT AND SELECTION

HIRING PROCESS

• Compare and rank applicants

• If large pool of potential candidates emerges, conduct phone

interviews first

• Invite candidates to interview (Do we have one round of

interviews with internal staff and invite the finalists back to

interview with select board members?)

• Interview process:

o While interviewing, review your limitations as an interviewer: you

cannot ask questions regarding an applicant’s race, national origin/citizenship, disability, sex/gender, military service, criminal background, family history, religion, marital status, age (or date of birth).

o Create a list of interview questions and be consistent in asking them

of all applicants.

o Do’s & Don’ts (emailed to you)

RECRUITMENT AND SELECTION

HIRING PROCESS

• Extend an offer (provide offer letter)

• Include special conditions (Example: Hiring as

temporary employee for 3 months and then, make

full time or full-time vs. 6 months; is the offer

contingent on successfully passing a background

check?)

• Conduct reference and background checks

• Confirm offer and send new hire paperwork

• Send rejection letters (Can be good form to personally

call anyone you interviewed in person)

RECRUITMENT AND SELECTION

Employee ClassificationOVERVIEW : Basic legal concerns: Elaine

Practical concerns: Bob

BASIC DISTINCTIONS BETWEEN 1099 CONTRACTOR VS W2

EMPLOYEE:

Why does it matter?

–Worker classification affects how

you pay your employee’s federal

income tax, social security and

Medicare taxes, and which tax

forms you need to file on their

behalf. Classification affects their

eligibility for social security and

Medicare benefits, employer

provided benefits and their tax

responsibilities.

Employee Classification

HOW TO KNOW THE DIFFERENCE:

• BEHAVIORAL CONTROL

– Instructions: you might be an employee if

you’re told

> How, when, or where to do the work?

> What tools or equipment to use?

> What assistants to hire to help with the work?

> Where to purchase supplies and services?

– Training: you might be an employee if you

need training to do a job a way specified by

the company

Employee Classification

HOW TO KNOW THE DIFFERENCE:

• FINANCIAL CONTROL

– Expenses (If you aren’t typically reimbursed for expenses)

– Opportunity for profit or loss (If you can realize a profit or incur a loss, you’re likely a contractor)

– Compensation timing: If the nonprofit controls the frequency of compensation, as opposed to the worker sending an invoice after services are performed, you’re likely an employee

Employee Classification

HOW TO KNOW THE DIFFERENCE:

• RELATIONSHIP OF THE PARTIES

– Employee benefits (If you receive benefits,

you may be an employee. However, the

reverse cannot be assumed)

– Are duties of X integral to operations of

nonprofit?

– Written contracts to define

Employee Classification

RESOURCES:

• http://www.irs.gov/pub/irs-pdf/p1779.pdf

• http://www.nonprofitrisk.org/library/enews/2009/e

news042909.htm

EXAMPLE: Independent contractors (dance

teachers)

Employee Classification

OTHER CLASSIFICATION CONCERNS:• Do not classify people with similar duties differently

• Contractors should not get organization business cards or be

listed in staff directory

• Email addresses for contractors should have disclaimer in

footer

• Always issue IRS Form 1099s to contractors/consultants and

W-2s to employees.

• Adopt and standardize language in a written agreement that is

used with all contractors/consultants, spelling out that, “[Name

of Contractor] reserves the right to control the manner in which

services are performed and the scheduling of performance.”

Employee ClassificationBASIC DISTINCTIONS BETWEEN

EXEMPT/NONEXEMPT

Why does it matter?

• Exempt employees are exempt from minimum wage and overtime premium pay protections of the Fair Labor Standards Act (FLSA). As such, you are not required to pay them extra for overtime.

• Nonexempt employees must generally be paid for overtime –at time and one half their regular rate of pay – for each hour, or fraction thereof, in excess of 40 hours in a workweek. (Minimum wage laws apply.)

Exemptions from the overtime requirements of the FLSA are just that— exceptions to the rule. They are very narrowly construed, and as the employer, you will always bear the burden of proving that you have correctly classified an employee as exempt.

Employee Classification

BASIC DISTINCTIONS BETWEEN

EXEMPT/NONEXEMPT

Why does it matter?

• The FLSA recognizes seven major categories

of exempt workers:

o Executive employees

o Administrative employees

o Learned professional employees

o Creative professional employees

o Computer employees

o Highly compensated employees

o Outside sales employees

Employee ClassificationBASIC DISTINCTIONS BETWEEN EXEMPT/NONEXEMPT

Why does it matter?

• EXEMPT TEST: Might be exempt if the employee is paid at least $455/week on a salary or fee basis, AND:

– Executive: Primary duty is management of the organization or department. Regularly directs the work of two or more other employees; AND Has authority to hire or fire other employees, OR the employee’s suggestions as to hiring, firing, promotion or other change of status of other employees are given particular weight.

– Administrative: Primary duty is the performance of office work directly related to the management or general business operations of the employer or the employer’s customers. Primary duty includes the exercise of discretion and independent judgment in matters of significance. Regularly exercises discretionary powers and independent judgment in performing the job.

– Creative professional: Primary duty is the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

– http://www.nibmimages.com/nibm/Audit-TestYourCompliance.pdf

Employee ClassificationBASIC DISTINCTIONS BETWEEN EXEMPT/NONEXEMPT

Why does it matter?

• Determining whether or not a position is exempt requires a detailed analysis, you should seek legal assistance in conducting this analysis.

• So you have a nonexempt employee, now what?

– Timecards? (ADP Template included in resources)

– Overtime calculation http://bit.ly/overtimecalculation

Employee ClassificationINTERNS

How to avoid abusing them: (Bob)Temporary full-time employees?

According to The Department of Labor, the following six legal criteria must be applied when making a determination if an internship is required to be paid:

• The internship, even though it includes actual operation of the facilities of the employer, is similar to training, which would be given, in an educational environment.

• The internship experience is for the benefit of the intern.

• The intern does not displace regular employees, but works under close supervision of existing staff.

• The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.

• The intern is not necessarily entitled to a job at the conclusion of the internship.

• The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Employee Classification

INTERNS

Are interns considered employees and does it

matter? • A temporary intern DOES count as an employee, UNLESS:

– 1.) the person is interning as a part of a "school sponsored"

program;

OR

– 2.) the intern works for less than 20 weeks (about 4 months) out

of the year with the organization.

• (NOTE: the Texas Workforce Commission counts toward the 20

weeks full- and part-time work performed in any day.)

It matters towards employee totals for certain reporting!

Employee Benefits &

CompensationOVERVIEW

To consider: Legal requirements + Employee retention

TYPES OF BENEFITS

» Compensation

» Health insurance (dental, vision, etc.)

» Unemployment compensation

» Worker’s Comp

» Life insurance

» Investment Plans

» Flex time

Employee Benefits &

CompensationCOMPENSATION• Minimum wage in Texas: $7.25/hour

• Issues of competitiveness?

• Restrictions about timing of pay (must pay regular basis, set out in

writing, final pay within 5 days if you fire)

For perspective: From the 2008-2009 United Way of Houston Wage & Benefit Survey

For orgs with budget under $350K» Executive Director compensation (Median $48,000 / Mean $51,111)

» Program Director compensation (Median $29,000 / Mean $30,467)

» Marketing Director compensation (Median $43,000 / Mean $43,000)*

For orgs with budget between $350-599K » Executive Director compensation (Median $60,000 / Mean $62,288)

» Program Director compensation (Median $40,000 / Mean $38,041)

» Marketing Director compensation (Median $26,500 / Mean $28,500)*

* The Marketing Director pay rate

discrepancy (the Marketing Director at

slightly larger org making less) is due to

small number of respondents.

For a national

perspective: 2013

Nonprofit Times Wage &

Benefit Survey:

http://www.thenonprofitti

mes.com/wp-

content/uploads/2013/02/

1359731596_2-1-

13_SalaryBenefits.pdf

Employee Benefits &

CompensationHEALTH INSURANCE

• You must be consistent in offering benefits. If you offer benefits to

one full-time employee, you must offer benefits to ALL full-time

employees.

• ACA (Affordable Care Act or Obamacare) as it pertains to nonprofits:

http://www.councilofnonprofits.org/resources/resources-

topic/affordable-care-act-faqs

– There is NO requirement on employers to provide health

insurance -- but there is a penalty (that is only applicable to

employers with 50 or more full-time employees) under the ACA’s

employer “shared responsibility” provisions effective starting in

2015 if the employer does not provide a minimum level of

insurance coverage to their full-time employees

– Look-back provision (documenting how many hrs a week

average over 3 month or a year-- depending on company size

Employee Benefits &

CompensationHEALTH INSURANCE

• SHOP (Small Business Health Options Program)

Marketplace

– Insurance solutions specifically for small employers

– In Texas, must be handled through agent, broker, or insurance

company

– Starting in 2014, small employers can claim the Small Business

Health Care Tax Credit only for coverage purchased through the

SHOP Marketplace.

– Basic eligibility: business address or primary workplace, at least

one common-law employee on payroll (not including sole proprietor

or spouse), and less than 50 full-time or FTE

employees.http://marketplace.cms.gov/getofficialresources/publicati

ons-and-articles/who-can-use-shop.pdf

– Premium Estimate Tool: https://www.healthcare.gov/find-premium-

estimates/

Employee Benefits &

CompensationHEALTH INSURANCE

• Small Business Healthcare Tax Credit

http://www.councilofnonprofits.org/small-employer-credit

– Eligibility: pay at least 50% of healthcare costs, Less than

25 FTE employees, must be able to calculate average

salaries (The credit is decreased as you approach an

average salary of $50K.)

– Nonprofits are eligible, but must file Form 990-T

Employee Benefits &

CompensationUNEMPLOYMENT COMPENSATION

The Texas Unemployment Compensation Act (TUCA) requires liable Texas

employers - including sole proprietorships, partnerships and corporations, and

other entities registered with the Secretary of State - to pay unemployment

insurance tax. Employers become liable if they: Are a 501(c)(3) nonprofit

organization (excluding churches and religious organizations) and have at least

four employees for part of a day or more each week for 20 weeks.

• In Texas, the maximum amount of taxable wages per employee, per

calendar year is set by statute and is currently $9,000.

• Entry level unemployment tax rate is 2.7%

• Texas Workforce Commission policies on unemployment taxes:

http://www.twc.state.tx.us/ui/tax/unemployment-tax-program-overview.html

• Reimbursement method:

http://www.guidestar.org/rxa/news/articles/2005/alternatives-to-

unemployment-taxes-for-501c3.aspx

Employee Benefits &

CompensationWORKER’S COMPENSATION

Optional in Texas

• However, company must notify all employees of decision

to NOT offer worker’s comp at time of hire

• Notice of NOT providing coverage must be posted

prominently:

http://www.tdi.texas.gov/pubs/factsheets/noncoveremp.p

df

• Must report non-coverage to Texas Department of

Insurance via DWC Form-005

RESOURCES:

http://www.tdi.texas.gov/wc/employer/index.html#aboutw

c

Employee Benefits &

CompensationBASIC REQUIRED STEPS FOR NEW HIRES

http://www.twc.state.tx.us/news/efte/new_hire_paperwork.html

• Attorney General in Texas:

https://portal.cs.oag.state.tx.us/wps/portal/EmployerHome

– Federal & state law require employers to report new hires/rehires

within 20 calendar days from date employee starts earning wages

• I-9 report (confirms that employee is eligible to work in the US)

• W-4 Form

• Notice of worker’s compensation coverage (or confirmation that

there is no coverage)

• Written consent for background checks

BASIC REQUIRED STEPS FOR NEW HIRES – CONT’D

Notice of Coverage Options (Affordable Care Act)

What: Under the Affordable Care Act (ACA), employers must provide a Notice of Coverage Options (“Notice”) to all new hires.

Who: All employers subject to the Fair Labor Standards Act (which encompasses almost all employers) must provide the Notice, regardless of whether the employer offers health coverage.

What it must contain: (The Notice must be provided in writing and may be hand delivered, sent by first-class mail, or sent electronically as long as the U.S. Department of Labor's electronic disclosure safe harbor rules are met.)

– Information about the services provided by the Marketplace;

– How to contact the Marketplace;

– Information about the employer, including any employer-sponsored health coverage available;

– The potential impact on the employee if he or she purchases coverage through the Marketplace (including that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code; that he or she may lose any employer contribution toward health benefits offered by the employer; and that all or a portion of such contribution may be excludable from income for Federal income tax purposes); and

– Information the employee will need to gather in order to apply for coverage through the Marketplace.

See details: 29 CFR 2520.104b-1(c), Disclosures through Electronic Media.

Employee Benefits &

CompensationBASIC OPTIONAL (BUT RECOMMENDED) STEPS FOR NEW HIRES• Acknowledgment of receipt of employment handbook

• Agreements regarding pay, wage deductions, benefits, schedule, work location, and so on (with employment-at-will disclaimers)-- this can be handled in the offer letter

– Employment at Will Disclaimer: I understand that this agreement concerning my compensation and benefits does not modify the at will employment relationship between myself and ABC Company; does not constitute a commitment by ABC Company to employ me for any particular length of time; does not commit me to remain with ABC Company for any particular length of time; and does not restrict either ABC Company or myself from ending the employment relationship at any time for any reason, with or without notice.

• Consent for drug testing

• Consent for video surveillance

Employee Benefits &

CompensationOTHER NECESSARY STEPS WHEN HIRING

• Enter employee into payroll system

• Enroll employee in any benefits

• Issue equipment or supplies necessary for job

(consider using aproperty return security deposit

agreement to minimize the risk of damage or non-

return of property, like laptop, etc.)

Operations ConcernsEMPLOYEE TAXES

• How to know which payroll taxes apply:

http://www.bizfilings.com/toolkit/sbg/tax-info/payroll-

taxes/determining-payroll-taxes-for-employees.aspx

• Typically: Federal Income Tax Withholding + FICA (Social

Security + Medicare)

• Payroll Tax Calculator (ADP): http://www.adp.com/tools-and-

resources/calculators-and-tools/payroll-calculators.aspx

• IRS Withholding Calculator http://www.irs.gov/Individuals/IRS-

Withholding-Calculator

Operations ConcernsPAYROLL TOOLS

• RESOURCE: ADP http://www.adp.com/~/media/PDF/Payroll%20Packages.ashx

– Basic (Essential) Plan:

• Semi-monthly for 2 employees $58+/pay period or

4 employees $64/pay period

• Monthly for 1 $69

• RESOURCE: Tobin & Associates

Operations ConcernsREVIEWS: YOU NEED TO DO THEM

REGULARLY

• Employee reviews (timing + actually have them +

documentation needed)

• Employee review of director by board

• 360 review of director

Operations ConcernsDO YOU HAVE A HUMAN RESOURCES REP ON THE

BOARD?

• HR advocate on board of directors for smaller nonprofits

(i.e. to provide an additional outlet for reporting HR

problems)

• Division of Board / Staff HR responsibilities:

http://hrcouncil.ca/docs/Table_HR_Resp.pdf

• Board’s involvement in HR:

http://www.blueavocado.org/content/nonprofit-boards-

role-hr

• Board Planning toolkit: http://hrcouncil.ca/hr-

toolkit/planning-board-role.cfm

OUTSOURCING YOUR

HR

• The advantages and timing

of outsourcing, rather than

handling HR in house

Operations Concerns

Common employment law

mistakes• Misclassifying employees as independent

contractors.

• Misclassifying non-exempt employees as exempt.

• Not complying with state wage payment laws.

These rules include providing new employees with

written notice of their rate of pay and regular pay

date; prohibiting deductions from wages unless for

the employee's benefit and authorized in writing;

requiring written contracts for commissioned

salespersons; and providing terminated employees

with written notice of their last day of work, their

last day of benefits, and their right to apply for

unemployment benefits.

Common employment law

mistakes• Not having an employee handbook.

• Not documenting employee job performance.

• Not training supervisors regarding EEO laws.

• Not providing reasonable accommodations for disabled employees.

• Not obtaining releases from terminated employees where appropriate.

• Not protecting confidential business information.

• Not consulting a qualified employment law attorney.

Directly from: http://warshawskylawfirm.com/lawyer/2010/12/04/Employment-Law/Ten-Common-Employment-Law-Mistakes-Made-By-Businesses._bl1518.htm

http://www.employmentlawgroup.com/wp-content/uploads/Employers_Common_Mistakes_Encouraging_Employees_Seek_Legal_Advise.pdf

Resources• Jody Blazek: HR Handbook

• TX Workforce Commission (handbook samples-- policies)

• “Especially for Texas Employers” - TWC webpage:

http://www.twc.state.tx.us/news/efte/tocmain2.html

• ACA as it pertains to nonprofits:

http://www.councilofnonprofits.org/resources/resources-

topic/affordable-care-act-faqs

http://commongoodvt.org/nonprofit-101/human-resources/

IN YOUR INBOX TOMORROW This PowerPoint

Example docs and resources

Info about upcoming workshops includingDevelopment Finance and Operation Basics

for the Jack-of-All Arts Administrator

(Gift Acceptance, Disclosure Rules & Basic Financial

Reporting)

Wednesday, June 4, from 4-6 p.m.@ Fresh Arts

Meet Your Media

With Joel Luks, Molly Glentzer, Bill Davenport

Tuesday, July 8, 6-8 p.m. @ Diverseworks Artspace

Link to a post-workshop survey