Employment Law for Nonprofit Board Members
Disclaimer: This article is for informational purposes only and does not constitute legal advice. If you have concerns about employment law, consult a qualified attorney.
Nonprofit board members play a crucial role in governance and oversight, but many do not have a deep understanding of employment law. While some board members may be legal professionals, most are not, and this knowledge gap can create serious issues when making decisions about staff and volunteers.
Anecdotally, some nonprofit board members may unintentionally pressure executive directors (EDs) to push staff harder, work unpaid overtime, or make compromises that could lead to burnout and even legal violations. While their intent is often to maximize impact with limited resources, these actions can create long-term challenges for both employees and the organization.
So, how can nonprofit board members educate themselves about employment law to create a fair, ethical, and legally compliant workplace? Let’s explore the key concepts every board member should understand.
why should you care?
Why Employment Law Matters for Nonprofit Boards
Board members are responsible for the well-being of a nonprofit’s employees and volunteers. This means understanding employment laws that protect workers from unfair labor practices. While the board does not manage daily HR operations, their oversight role means they should know enough to avoid pressuring leadership into legal or ethical missteps.
Common issues where board members overstep include:
Expecting salaried nonprofit employees to work excessive unpaid overtime.
Misclassifying employees as independent contractors or volunteers to avoid taxes and benefits.
Pressuring EDs to ignore labor laws in favor of budget constraints.
Overriding or disregarding HR policies meant to protect employees from burnout and exploitation.
what should you know?
Key Employment Law Concepts Board Members Should Know
Board members don’t need to be legal experts, but they should have a foundational understanding of employment law to make informed decisions. A lack of knowledge can lead to legal risks, financial penalties, and ethical concerns that undermine both staff well-being and the nonprofit’s mission. By learning the basics, board members can foster a fair and compliant workplace while building trust with leadership and employees.
Fair Labor Standards Act (FLSA)
The FLSA sets federal wage and hour laws, including:
Minimum Wage & Overtime
Nonprofits must pay non-exempt employees at least the federal minimum wage and overtime for hours over 40 per week.
Exempt vs. Non-Exempt Status
Many nonprofit roles are misclassified. Exempt employees must meet strict salary and job duty tests.
Volunteer Restrictions
Employees cannot “volunteer” to do the same work they are paid for, even if they want to.
Employee vs. Independent Contractor
Some nonprofits misclassify workers as independent contractors to avoid payroll taxes and benefits. The IRS and Department of Labor (DOL) use tests to determine classification, considering:
Control
Does the nonprofit dictate work schedules, tasks, and methods? If so, the worker is likely an employee.
Economic Dependency
If a worker relies on the nonprofit for most of their income, they are probably an employee.
Misclassification can lead to fines, back wages, and tax penalties.
Workplace Protections
Board members must also understand laws protecting nonprofit employees, such as:
Anti-Discrimination Laws
Title VII of the Civil Rights Act, ADA, and ADEA protect employees from discrimination based on race, gender, disability, and age.
Family and Medical Leave Act (FMLA)
Larger nonprofits (50+ employees) must provide unpaid leave for medical and family reasons.
Retaliation Protections
Employees cannot be punished for reporting legal violations, including wage theft or harassment.
Preventing Staff Burnout and Exploitation
While board members often emphasize mission over money, nonprofit employees are workers, not martyrs. Burnout leads to high turnover, poor program outcomes, and reputational damage. Ethical board leadership includes:
Trusting the ED and Leadership Team
Micromanaging or undermining staff decisions erodes morale.
Recognizing Work-Life Balance
Employees should not be guilted into overwork for the “greater good.”
Respecting HR Policies
Staff protections exist for a reason—boards should reinforce, not weaken, them.
get to learnin’
How Can Board Members Learn Employment Law?
Many board members come from backgrounds where employment law isn’t their primary focus. However, understanding these regulations is essential to making informed decisions that support both staff and the nonprofit’s mission. While legal nuances can be complex, there are accessible ways for board members to gain the knowledge they need without becoming legal experts.?
Board Training Sessions
Nonprofits should provide annual legal training for board members, covering key employment laws and ethical management.
Consult Employment Attorneys
Even if a board lacks a lawyer, hiring an employment law attorney for periodic reviews ensures compliance and mitigates risk.
Engage with HR Experts
Having HR professionals present at board meetings or serve on committees strengthens understanding and accountability.
Use Online Resources
Websites like the Department of Labor (DOL), IRS, and nonprofit legal advocacy groups offer free resources on employment laws.
take action now
Building a Legally Sound and Ethical Nonprofit Workplace
Board members play a vital role in shaping a nonprofit’s work environment. Understanding employment law is not just about compliance—it’s about fostering an ethical, sustainable workplace where staff and volunteers feel valued. By staying informed, consulting experts, and respecting labor protections, board members can support their organization’s mission while ensuring fair treatment of employees.
For further reading, consider these resources:
- U.S. Department of Labor – Wage and Hour Division
- IRS – Worker Classification
- National Council of Nonprofits – Employment Law
Keep in mind:
Define Clear Volunteer Roles
Structuring roles to support, not replace, paid staff is key to compliance and sustainability.
Recognize and Appreciate Volunteers
Ensuring volunteers feel valued encourages long-term engagement and advocacy.
Integrate Paid Employees and Volunteers for a Happy Team
Fostering collaboration between staff and volunteers strengthens organizational culture.