Nonprofit HR Question
June 22, 2010 12:03 PM   Subscribe

Is it legal for a nonprofit service-provider organization (adoption services in this case) to have all its staff being independent contractors, including the executive director?
posted by jmf2525 to Society & Culture (6 answers total)
Why wouldn't it be?

This would be a 501(c)(3) non-profit most likely and the laws that regulate it's operation would be IRS regulations and regulations from the state corporation commission for the state in which it was incorporated. Those regulations tend to govern the board of directors and membership (if any) of the organization. Those regulations require a set of by-laws (composed by the founders of the organization) which determine how the 501(c)(3) does business and articles of those bylaws would normally define whether the CEO would be an employee or a contractor.
posted by leafwoman at 12:13 PM on June 22, 2010

Nonprofits need to comply with the same employment laws as for-profit corporations. Thus, the answer to your question will depend on the factors defined by the IRS, here.
posted by miss tea at 12:22 PM on June 22, 2010 [1 favorite]

IANAL, but I do work in the nonprofit world, and I've known of several organizations that had consultants but no full-time, paid staff.
posted by lunasol at 1:30 PM on June 22, 2010

However, from a nonprofit management POV, I think it's probably ill-advised to have an ED who is a contractor, not a full-time staffer with benefits. It's hard enough to get and keep good EDs as it is. In order to get and keep one who is talented and competent, they would probably need to be paid enough as a contractor that it might just make more sense to hire them as a regular employee.
posted by lunasol at 1:32 PM on June 22, 2010

Depends on the work scenario...if your staff are all working 40 hours a week, Monday through Friday, 9-5, they are employees not contractors. Follow the IRS guidelins so you don't get dinged for back taxes later.
posted by MsKim at 3:07 PM on June 22, 2010

This comes up all the time in employment law questions: the IRS and only the IRS determines who is an independent contractor and who is not. This page lays out some guidelines. I find it highly implausible that all of the employees fit the IRS's guidelines above, and would be pretty sketched out working somewhere like this. It is possible they're breaking the law. For example, if they have any kind of receptionist, s/he does not fit the Behavioral Control standards of being an IC. IANAL, TINLA, etc.
posted by Aizkolari at 5:19 PM on June 22, 2010 [1 favorite]

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