Yes. It is important that organizations take the time to create written employee policies. It is easy to forget that an important component of an organization’s successful pursuit of its mission is a positive relationship with its employees. In addition to having responsibilities to their communities, nonprofits also have responsibilities to their employees. Drafting well-thought-out employee policies can prevent conflicts that arise from misunderstandings between employers and employees. The Minnesota Council of Nonprofits recommends drafting employee policies within the first year of hiring staff. Some common topics usually addressed in employee policies are: job descriptions and organizational structure, hiring and termination procedures, salaries and benefits, substance abuse and testing, sexual harassment, anti-discrimination, absences, vacations, and holidays, employee evaluations, and grievance procedures.

The fact that an organization is classified as a nonprofit does not excuse it from complying with federal employment laws. A nonprofit may also be subject to various state laws. Whether or not a law applies to a nonprofit may be determined by the nonprofit’s number of employees. Therefore, it is especially important that growing organizations keep abreast of employment laws and regulations. Although by no means an exhaustive list, the following is a representative sampling of potentially applicable employment laws: Americans with Disabilities Act (ADA), Civil Rights Act of 1964, Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), Health Insurance Portability and Accountability Act (HIPPA), Occupational Safety, and Health Administration (OSHA) Unemployment Compensation.

The Minnesota Council of Nonprofits stresses the importance of using an objective method to select which employees or positions will be eliminated. It recommends basing retention on seniority and positions that have been deemed essential as determined by a needs assessment, a lottery, or employee evaluations. It is also important for an organization to establish an oversight committee in charge of objectively establishing the process of implementing the reductions.

It is important to compile all employee policies and procedures into a handbook. The handbook should be explained to the employees as part of employee orientation, and employees should sign a form indicating that they have read and understood the handbook. To avoid some potentially sticky contract issues, the handbook should include a disclaimer indicating that nothing in the handbook is to be construed as a guarantee of continued employment and that employment is on an at-will basis.

The risk to the organization in a termination situation is a claim from an employee that discrimination played a role in determining who was to be laid off. The first precaution an organization should take is to consider alternatives to layoffs. Discussion of the alternatives should be carefully documented. The analysis should be outlined in a memorandum to the board, complete with reasons why the alternatives to layoffs are unsatisfactory and the rationale that was applied when selecting the employees to be laid off. The decision to cut a position must be supported by a legitimate operational reason.