Federal Employment related laws for NPOs

The compliance requirements of a nonprofit organization multiply manifold the moment it becomes an employee.

Most of these laws apply to employees only and would not apply to volunteers unless otherwise noted.

Federal Laws

Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. 2000e

  • Applies to all private and government employers with fifteen (15) or more employees.
  • Purpose: Prohibit discrimination based on race, color, religion, sex, or national origin.
  • “It shall be unlawful … for an employer
  1. To fail or refuse to hire, discharge, or otherwise discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, or national origin, or
  2. To limit, segregate, or classify employees or applicants in any way which would deprive or tend to deprive any individual of employment opportunities because of race, color, religion, sex, or national origin.”

Pregnancy Discrimination Act amended Title VII and provided that pregnant women must be treated as other employees on the basis of their ability or inability to work.

This law includes a prohibition on harassment of employees.

Civil Rights Act of 1991, 42 U.S.C. § 1981

  • Applies to all private and government employers with fifteen (15) or more employees.
  • Purpose: To provide appropriate remedies for intentional discrimination and unlawful harassment in the workplace.

Equal Pay Act of 1963 (EPA), 29 U.S.C. 206(d)

  • Purpose: To protect men and women who perform substantially equal work in the same establishment from pay differentials based on sex.
  • “No employer … shall discriminate … between employees on the basis of sex by paying wages to employees … at a rate less than the rate at which he pays wages to employees of the opposite sex for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.”

Applies to all employers who are “covered enterprises” under the Fair Labor Standards Act because they are:

  • a federal, state, or local government agency;
  • a hospital or institution primarily engaged in the care of the sick, the aged, the mentally ill, or developmentally disabled who live on the premises;
  • a pre-school, an elementary or secondary school, an institution of higher learning or a school for mentally or physically handicapped or gifted children; or
  • an organization with annual dollar volume of sales or receipts in the amount of $500,000 or more.

* For more information refer to www.eeoc.gov.

Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. 621

  • Applies to employers with twenty (20) or more employees.
  • Purpose: “Promote employment of older persons based on their ability rather than age and prohibit arbitrary age discrimination in employment.”
  • “It shall be unlawful for an employer
  1. To fail or refuse to hire or to discharge or otherwise discriminate … with respect to compensation, terms, conditions, or privileges of employment, because of an individual’s age;
  2. To limit, segregate, or classify employees in any way which would deprive or tend to deprive any individual of employment opportunities because of such individual’s age; or
  3. To reduce the wage rate of any employee in order to comply with this Act.”

These prohibitions are limited to individuals who are at least forty (40) years of age.

For more information refer to www.eeoc.gov/types/age.html

Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. 12101

  • Applies to all private and government employers with fifteen (15) or more employees.
  • Purpose: “To provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.”
  • “No entity shall discriminate against a qualified individual with a disability because of the disability … in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.”
  • Reasonable accommodations must be provided unless they will result in undue hardship on the employer.
  • For more information refer to www.eeoc.gov/types/ada.html.

Vocational Rehabilitation Act of 1973, 29 U.S.C. 791

  • Applies to federal government contractors and subcontractors with contracts of $10,000 or more and to employers receiving federal assistance.
  • “No otherwise qualified individual with a disability … shall, solely by reason of disability, be excluded from the participation in, be denied benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.”

* For more information refer to www.eeoc.gov.

Fair Labor Standards Act, 29 U.S.C. 201

• Applies to all employers who are “covered enterprises” under the statute because they are:

  1. a federal, state, or local government agency;
  2. a hospital or institution primarily engaged in the care of the sick, the aged, the mentally ill, or developmentally disable who live on the premises;
  3. a pre-school, an elementary or secondary school, an institution of higher learning or a school for mentally or physically handicapped or gifted children; or
  4. a organization/organization with annual dollar volume of sales or receipts in the amount of $500,000 or more.

• Does not apply to independent contractors.

• Purpose: To remedy and eliminate labor conditions that are harmful to employees.

• Requires employers to pay minimum wage and overtime pay to employees and bars child labor.

• In addition, applies separately to employees of employers providing contract services to the United States.

• Some exemptions apply including an exemption for administrative, executive and professional employees.

* For more information refer to www.dol.gov/esa.

Immigration Reform and Control Act of 1986; 8 U.S.C. 1324(b)

• Applies to employers with four (4) or more employees.

• Purpose: Ban intentional discrimination on the basis of citizenship or national origin.

• “It is an unfair employment practice for an entity to discriminate against any individual … with respect to the hiring for or discharging of an individual from employment

  1. Because of such individual’s national origin, or
  2. Because of such individual’s citizenship status.”

• It is also an unfair employment practice to request documentation other than that required under 8 U.S.C. §1324a(b) if done for the purpose of with the intent of discriminating against an individual.

* For more information refer to http://www.usda.gov/oce/oce/labor-affairs/ircasumm.htm.

The Family and Medical Leave Act; 5 U.S.C. 6381

• Applies to employers with fifty or more employees.

• Purpose: To provide eligible employees with the right to take unpaid leave.

• “An employee shall be entitled to a total of twelve (12) weeks of leave during any twelve (12) month period for one or more of the following:

  1. Because of the birth of a child of the employee.
  2. Because of the placement of a child with the employee for adoption or foster care.
  3. In order to care for the spouse, child, or parent of the employee, if such spouse, child, or parent has a serious health condition.
  4. Because of a serious health condition that makes the employee unable to perform the functions of the employee’s position.”

* For more information refer to http://www.dol.gov/esa/whd/fmla.

Occupational Safety and Health Act, 29 U.S.C. 651

• Applies to all employers.

• Purpose: to assure safe and healthful working conditions.

• “Each employer

  1. Shall furnish to each employee employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees;
  2. Shall comply with occupational safety and health standards promulgated under this Act.”

• Many states voluntarily assume enforcement responsibilities for this Act. Please refer to the State and Local Laws section of this manual for details regarding State’s OSHA program.

* For more information refer to www.osha.gov.

Volunteer Protection Act of 1997, 42 U.S.C. 14501

• Purpose: “Promote the interests of social service program beneficiaries and taxpayers and sustain the availability of programs, nonprofit organizations..… by reforming the laws to provide certain protections from liability abuses related to volunteers serving nonprofit organizations and governmental entities.”

• “No volunteer of a nonprofit organization or governmental entity shall be liable for harm caused by an act or omission of the volunteer on behalf of the organization or entity if—

  • the volunteer was acting within the scope of the volunteer’s responsibilities in the nonprofit organization … at the time of the act or omission;
  • if appropriate or required, the volunteer was properly licensed, certified, or authorized … for the activities… in which the harm occurred…;
  • the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifferent to the rights or safety of the individual harmed by the volunteer; and
  • the harm was not caused by the volunteer operating a motor vehicle, vessel, aircraft, or other vehicle for which the State requires the operator or the owner of the vehicle, craft, or vessel to—

• possess an operator’s license; or

• maintain insurance.”

Drug Free Workplace Act, 21 U.S.C. 1501

• Requires federal grantees to certify that they maintain a drug-free workplace.

• Grantees must publish a statement (e.g., as part of a personnel policy or manual) that informs employees that the manufacture, distribution, possession or use of a controlled substance in the grantee’s workplace is prohibited.

• Grantees must establish a drug-free awareness program to inform employees of the dangers of drug abuse in the workplace, the grantee’s policy of maintaining a drug-free workplace, and any available drug rehabilitation and employee assistance programs.

* For more information refer to http://www.dol.gov/elaws/drugfree.htm.

Employee Retirement Income Security Act, 29 U.S.C. 1001

• Applies to any employment benefit plan.

• Purpose: “To encourage the maintenance and growth of single-employer defined benefit pension plans and increase the likelihood that participants and beneficiaries … will receive their full benefits.”

• ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.

* For more information refer to http://www.dol.gov/dol/topic/health-plans/erisa.htm.

Consolidated Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C. 1161

• Purpose: Continuation of health care for certain individuals.

• Applies to employers with twenty (20) or more employees.

• Requires that a group health plan sponsor shall provide “that each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled, under the plan, to elect … continuation coverage,” at employee expense.

• A qualifying event includes death of the employee, termination of employment, divorce, etc.

• For more information refer to http://www.dol.gov/dol/topic/health-plans/cobra.htm.

Federal Unemployment Tax Act, 26 U.S.C. 3301

• Purpose: To provide payments to workers who have lost their jobs.

• Applies to nonprofit organizations with four (4) or more employees.

• Sets forth the rates of an excise tax to be paid by the employer.

Federal Insurance Contributions Act (FICA), 26 U.S.C. 3101

• Purpose: Old age, survivors, and disability insurance

• Applies to every individual and employer.

• Sets forth the rates of tax imposed on the income of the individual. Also sets forth the rates of an excise tax to be paid by every employer.


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