Hiring & recruiting
Fair, consistent hiring protects you from discrimination claims and gets the right people into mission-critical roles.
Important Every role has a current written job description
List the essential functions, reporting line, and whether the role is exempt or non-exempt. Essential functions matter later for disability accommodation decisions.
Important Interviews use the same questions and scoring for every candidate
Structured interviews are more predictive than casual conversations and give you a clear record of why one candidate was chosen over another.
Important Job postings include an EEO statement and only job-related requirements
Drop requirements like a degree when experience would do the job. It widens your pool and lowers disparate-impact risk.
Important Postings include a salary range
A growing number of states and cities require pay ranges in postings. Even where it is optional, mission-driven candidates screen themselves in or out faster.
Critical Background checks follow the Fair Credit Reporting Act
Use a standalone written disclosure, get signed consent, and send a pre-adverse action notice before rejecting anyone based on a report. Check state ban-the-box rules on timing.
Important Every hire gets a written offer letter
State the title, pay, exempt or non-exempt status, start date, and at-will employment. Avoid language that implies guaranteed employment or grant-funded permanence.
Onboarding
The first 90 days decide whether new staff stay. They are also when the most paperwork deadlines fall.
Critical Form I-9 is completed on time for every employee
Section 1 by the end of the first day of work and Section 2 within three business days. Never ask for specific documents; let the employee choose from the lists.
Critical Federal W-4 and state withholding forms are collected before first payroll
Without a W-4 you must withhold as if the employee is single with no adjustments, which surprises people on their first paycheck.
Critical New hires are reported to the state new-hire registry
Most states require the report within 20 days of hire. Many payroll providers do this for you, so confirm whether yours does.
Important Employees sign a handbook acknowledgment
Store the signed acknowledgment in the personnel file. It shows the employee received your policies, including how to report concerns.
Recommended New staff follow a 30, 60 and 90-day plan
Set goals for each checkpoint and schedule the check-ins on day one. Small teams benefit most because nobody else is watching for early warning signs.
Important Required trainings are scheduled in the first month
Cover harassment prevention (mandatory in states such as California, New York, Illinois and Connecticut), safety, and confidentiality of client and donor data.
Policies & employee handbook
Written policies set expectations, and several of them are asked about directly on IRS Form 990.
Important The employee handbook was reviewed in the last 12 months
Employment law changes every January and July. An outdated handbook can be worse than none if it promises leave or procedures you no longer follow.
Critical Anti-harassment and anti-discrimination policy offers more than one way to report
Employees must be able to go around their own supervisor, for example to the executive director or a board member. Include a clear no-retaliation promise.
Critical A whistleblower policy is adopted and shared
Form 990 Part VI asks whether you have one. Federal law already prohibits retaliation against nonprofit employees who report certain wrongdoing, so the policy explains how to report safely.
Important A document retention and destruction policy is in place
Also asked on Form 990. It sets how long you keep personnel, payroll and grant records and stops anyone destroying documents once litigation or an audit is expected.
Critical Conflict of interest policy covers staff and board, with annual disclosures
Form 990 asks whether you have one, whether people disclose annually, and how you monitor it. Hiring relatives of board members is a common trouble spot.
Critical Leave policies match federal, state and local requirements
Many states and cities mandate paid sick leave, and FMLA applies once you have 50 employees. Write down how PTO accrues, carries over and pays out.
Recommended Remote work and expense reimbursement are covered in writing
Spell out equipment, home-office costs and mileage. Some states, including California and Illinois, require reimbursing necessary work expenses.
Pay & worker classification
Misclassification is the most common and most expensive HR mistake small nonprofits make.
Critical Every role is classified exempt or non-exempt using the duties and salary tests
Being a nonprofit does not exempt you from the Fair Labor Standards Act. Most employees are individually covered. A job title or a salary alone does not make a role exempt; check the federal salary threshold and your state's, which may be higher.
Critical Non-exempt staff record all hours and are paid overtime past 40 hours a week
That includes evening events, travel between sites and answering email at home. Comp time in place of overtime pay is not allowed for private nonprofits.
Critical Independent contractors truly pass the contractor test
If you control how, when and where the work is done, the person is likely an employee. Issue Form 1099-NEC to contractors paid $600 or more by January 31.
Critical Volunteers are unpaid and staff never volunteer for their own job duties
Paid staff cannot volunteer to do the same kind of work they are paid for. Keep volunteer stipends small and tied to expenses, or the volunteer may count as an employee.
Important Salary ranges are based on nonprofit market data and reviewed every year
Use a nonprofit compensation survey for your region and budget size. Ranges make pay decisions consistent and easier to defend to funders.
Recommended Pay equity is reviewed at least every two years
Compare pay for similar roles across gender and race, and correct gaps you cannot explain by experience or performance.
Benefits & leave
Benefits are where nonprofits compete for talent they cannot match on salary.
Critical Workers' compensation insurance is in place
Required for employees in nearly every state, even with only one or two staff. Volunteers are usually not covered unless you add them.
Important You have chosen how to handle state unemployment insurance
501(c)(3) organizations are exempt from federal unemployment tax (FUTA). Most states let them choose between paying state unemployment tax or reimbursing actual claims.
Important A retirement option is offered and administered correctly
A 403(b) plan is the usual choice. Several states now require employers without a plan to enroll staff in a state auto-IRA, and plans with 100+ participants usually need an audited Form 5500.
Important Health coverage and ACA reporting are handled
Employers with 50 or more full-time equivalent employees must offer affordable coverage or risk penalties, and must file Forms 1094-C and 1095-C each year.
Recommended Staff get a plain-language benefits summary at hire and open enrollment
Many employees underestimate their total compensation. A one-page summary showing the dollar value of benefits helps retention.
Important Leave balances and FMLA eligibility are tracked accurately
Track paid sick leave accrual where your state or city requires it. Once you reach 50 employees, train managers to spot leave that may qualify for FMLA.
Performance & development
Small teams cannot afford a poor performer, and they cannot afford to lose a strong one either.
Important Every employee gets a written review at least once a year
Measure people against goals and expectations they knew in advance. A review that only happens when there is a problem looks retaliatory.
Recommended Managers hold regular one-on-ones with each direct report
Short, frequent check-ins catch workload and morale problems before they turn into resignations.
Important Performance problems follow a documented, consistent process
Coach first, then a written improvement plan with clear goals and dates. Consistency across employees is your best defense against discrimination claims.
Recommended Each employee has a development plan or training budget
Even a small budget for conferences, courses or mentoring signals growth. It is often fundable through capacity-building grants.
Important Managers are trained on feedback, documentation and bias
Many nonprofit managers were promoted for program skill, not management. A few hours of training reduces both turnover and legal risk.
Critical The board reviews the executive director every year
The ED is the board's only direct employee. An annual written review protects both sides and supports any compensation decision.
Workplace culture & safety
Mission-driven work carries real burnout and safety risks. Good practice here keeps people healthy and staying.
Critical Complaints are investigated promptly, confidentially and in writing
Decide in advance who investigates, including an outside option when the complaint involves the ED. Document what you found and what you did.
Critical There is a process for reasonable accommodations
Cover disability (ADA), pregnancy and related conditions (Pregnant Workers Fairness Act) and religion. These apply once you have 15 employees, and state laws often apply sooner.
Important A safety plan covers staff who work off-site or alone with clients
Home visits, outreach and evening programs need check-in procedures, emergency contacts and clear rules for when to leave.
Recommended Staff are surveyed about engagement at least once a year
Anonymous surveys of even five or six questions show trends before they appear in exit interviews.
Recommended Workloads and time off are monitored to prevent burnout
Watch for unused PTO and constant after-hours work. Leaders taking their own time off sets the norm for everyone else.
Recommended Staff, volunteer and board roles are clearly separated
People should know who directs their work. Blurred lines create conflict and, for volunteers, possible employment claims.
Volunteers & interns
Volunteers multiply your capacity, but they need the same clarity and screening as staff.
Recommended Each volunteer role has a written description
Describe the tasks, time commitment, supervisor and any skills needed. It helps recruitment and keeps volunteers from drifting into staff work.
Critical Volunteer screening matches the risk of the role
Roles with children, older adults or people with disabilities need background checks, references and supervision rules. Many insurers require this.
Important Volunteers sign an agreement and attend an orientation
Cover confidentiality, safety, boundaries with clients, and the fact that the role is unpaid.
Recommended Volunteer hours are tracked
Hours support grant reports, in-kind match requirements and impact stories. Independent Sector publishes an hourly value you can use.
Important Unpaid internships are structured as volunteer or educational roles
Interns should not displace paid staff. Tie the role to learning goals and, where possible, academic credit.
Important Insurance covers volunteer activities
Confirm general liability, volunteer accident coverage, and auto liability for volunteers who drive clients or deliver goods.
Records & compliance
Paperwork is unglamorous, but it is what an auditor, a funder or a lawyer will ask for first.
Critical Medical information and I-9s are stored separately from personnel files
The ADA requires medical information to be kept confidential and apart. Separate I-9 storage limits what an immigration audit can see.
Critical Payroll records are kept at least three years and timecards at least two
These are the FLSA minimums. Keep I-9s for three years after hire or one year after employment ends, whichever is later. Many states require longer.
Critical Required federal and state labor law posters are displayed
Post them where staff can see them and share electronic copies with remote employees. Update them when your state's minimum wage changes.
Critical Payroll taxes are deposited and Form 941 is filed every quarter
Unpaid withholding is the fastest way to personal liability. The IRS can hold board members and executives personally responsible for trust fund taxes.
Important Access to HR files is limited to people who need it
Lock paper files, restrict shared drives, and remove access when someone changes roles.
Important You know which laws apply at your headcount
Title VII, ADA and PWFA apply at 15 employees, age discrimination rules at 20, COBRA at 20, FMLA and ACA employer rules at 50, and EEO-1 reporting at 100. State thresholds are often lower.
Offboarding
How people leave affects your reputation with future hires, donors and the community you serve.
Critical Final paychecks follow your state's deadline
Some states require final pay on the last day for involuntary terminations. Check whether accrued PTO must be paid out.
Important Terminations are reviewed for consistency before you act
Check that the reasons are documented, that similar cases were handled the same way, and that the timing does not follow a complaint or leave request.
Recommended Departing employees are offered an exit interview
Ask what would have kept them. Patterns across several exits are among your most useful retention data.
Critical Access to systems, donor data and client files ends on the last day
Disable email, CRM and shared drive accounts, change shared passwords, and collect keys, laptops and phones.
Critical COBRA or state continuation notices are sent on time
Federal COBRA applies once you have 20 employees, and many states have their own continuation rules for smaller employers.
Important Reference requests follow a written policy
Many nonprofits confirm only dates and title. Whatever you choose, make it consistent and route requests to one person.
Board oversight
The board's HR job is narrow but important: hire, review and pay the executive director well, and make sure policies exist.
Critical Executive compensation is approved using comparable data and documented
Following the IRS rebuttable presumption steps (approval by board members without conflicts, comparability data, and same-meeting documentation) protects against excess benefit penalties.
Important The board reviews HR-related policies and the minutes show it
Whistleblower, conflict of interest and compensation policies should be reviewed regularly and the review recorded.
Important There is a succession plan for the executive director and key roles
Include an emergency plan naming who leads if the ED is suddenly unavailable. Funders increasingly ask about it.
Recommended The board gets a short annual HR report
Headcount, turnover, open positions, pay equity and any compliance issues on one page keeps the board informed without micromanaging.
Recommended Board members direct staff only through the executive director
When board members give instructions to staff, accountability breaks down and complaints follow.
Important EPLI and D&O insurance are reviewed every year
Employment practices liability insurance covers claims like wrongful termination and harassment, which are the most common lawsuits against nonprofits.
Your HR action plan
Everything you marked Not yet or Partly, with critical items first. Work from the top.
Nothing here yet. As you mark items Not yet or Partly, they appear here, sorted by priority.
Nonprofit HR compliance calendar
Recurring HR tasks for an organization on a calendar fiscal year. Tick them off as you go; checkmarks reset each January. If your fiscal year ends in June, shift the Form 990 deadline to November 15.
JanuaryThis month
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Nonprofit HR best practices: common questions
What are the most important HR best practices for nonprofits?
Start with the practices that carry legal risk: classify every role correctly as exempt or non-exempt, keep volunteers and contractors truly separate from employees, complete Form I-9 on time, deposit payroll taxes, and adopt whistleblower, conflict of interest and anti-harassment policies. After that, focus on retention: written job descriptions, annual reviews, fair pay ranges and a manageable workload.
Do nonprofits have to pay overtime?
Usually yes. Nonprofit status does not exempt an organization from the Fair Labor Standards Act. Most employees are covered individually because their work involves interstate commerce, such as using email, phones or processing credit card donations. Non-exempt employees must be paid time and a half for hours over 40 in a workweek, and private nonprofits cannot give comp time instead.
Can our employees volunteer for our nonprofit?
They can volunteer for work that is clearly different from their paid job, done freely and outside their normal hours. They cannot volunteer to do the same type of work they are paid to do. For example, a paid program coordinator who staffs a weekend event as part of the program should be paid for that time.
What HR policies does the IRS ask about on Form 990?
Form 990 Part VI asks whether the organization has a written conflict of interest policy (and whether it is monitored), a written whistleblower policy, a written document retention and destruction policy, and a process for reviewing and approving executive compensation. Answering no is not illegal, but donors, funders and watchdog groups read these answers.
How often should a nonprofit update its employee handbook?
Review it at least once a year, ideally in December and June, because many state and local employment laws take effect on January 1 and July 1. Update it immediately when you cross a headcount threshold, such as 15, 20 or 50 employees, since new federal laws begin to apply.
Does a small nonprofit need an HR department?
No, but someone has to own HR. In most small nonprofits that is the executive director or an operations manager, often supported by a payroll provider, a PEO, or an HR consultant for policy reviews and difficult situations. A checklist like this one helps that person see what is covered and what is not.
