Non Profit Report - October 2014

Date: October 28, 2014

Is Retirement In Your Future?
By: Eileen Morgan Johnson, Esq.

This article appeared in the Special Focus: Employment Law section of Association TRENDS, June 2014, and is reprinted with permission of the publisher.

Baby boomers filling association C-suite offices have begun to retire. We can expect an increasing wave of retirements in the next 10 years as boomers trade board meetings for club meetings and move on to the next phase of their lives. Is your association ready?

Succession planning is like insurance. You don’t realize how important it is until you need it. There are different ways to approach succession planning. A popular approach is to focus on the chief staff officer position and only develop a succession plan for that employee. A broader view is to look at all essential personnel in your association and develop an individual succession plan for each employee. Depending upon your association, the essential personnel could be your executive staff team or it could include other lower level employees who are essential to the success of your association. And it’s not just retirements that you need to plan for. Employees can get sick, die unexpectedly, or change jobs. Having a plan in place to deal with the departure of essential personnel is critical to a successful transition to new leadership, whether it’s the head of the association or the head of a department.

Here are seven steps to help your association get started on succession planning.

  1. Decide if you will develop the succession plans yourself or if you will hire a consultant with expertise in this area to walk you through the process. An experienced consultant can be of great benefit to your association by providing an independent assessment and identifying key tasks that must be covered when essential personnel depart.
  2. Determine what level of involvement the board of directors will have in developing and implementing the succession plans. Normally the board is only involved in planning the succession of the chief staff officer.
  3. Identify those essential personnel whose absence, whether unexpected or planned, could have a significant impact on your association. Anyone with “chief” in their title should be on the list – CEO, COO, CIO, etc. Review the remaining management staff and identify any others whose duties would need to be quickly assumed by someone else, either within or outside of the association, in the event that employee leaves.
  4. Update the position descriptions of all essential personnel. This will provide anyone charged with filling a vacancy with the information they need to recruit and identify likely candidates. These position descriptions should be reviewed and updated as necessary on an annual basis.
  5. Question whether there is anyone currently on staff who could temporarily step up and assume the responsibilities of each essential employee. Your current essential personnel can help with identifying employees who would be in the best position to temporarily take over their duties. This temporary assignment would last until the association hired a replacement for the departed employee or promoted from within. If there is no one currently in position to take over, the essential personnel should each mentor one or more staff members to position them for possible succession.
  6. Identify a search firm that specializes in association management positions. Meet with the principals of the firm and discuss your expected needs with them. Having a search firm already identified and vetted can relieve anxiety among the senior staff and the board.
  7. Write the succession plan and distribute it to the essential personnel and the board leadership. A succession plan in the CEO’s head does no good if the CEO is hit by the proverbial bus. Review the succession plan at least annually and make any necessary adjustments.

Once you complete these steps you can rest easy knowing that your association is positioned to continue with minimal disruption should you or another essential employee depart. And you can look forward to your retirement knowing that you have put a plan in place to handle your departure and provide a smooth transition to your successor.

The "Unpaid" Intern
By: A. Ari Ghosal, Esq.

This article appeared in the Special Focus: Employment Law section of Association TRENDS, June 2014, and is reprinted with permission of the publisher.

You are contemplating hiring an “intern” for your organization. You have budget constraints, but you could sure use the extra help. What should you do? Should the intern be classified as an unpaid volunteer or paid employee? Recently, the US Department of Labor (“DOL”) issued guidelines on how to structure an internship program in compliance with the Fair Labor Standards Act.

The DOL guidelines present a six-factor test for identifying a valid internship:

  1. The internship is similar to training that would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer providing the training derives no immediate advantage from the activities of the intern;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship

Internships allow students to gain valuable skills that bridge the gap between education and employment, and at the same time benefit employers with reduced labor costs. At issue is whether employers can simply use labels such as “intern” to avoid paying individuals who perform work for the employer. In one such recent case, Glatt v. Fox Searchlight Pictures, Inc., the Second Circuit applied the DOL’s six factor test and found that former “interns” were actually employees who were entitled to be paid for the work that they performed.

Organizations should be wary of this decision. In Moore et al. v. NBCUniversal Inc., a former Saturday Night Live intern filed a class action lawsuit against NBCUniversal. Even though Moore is pending, should the court rule in favor of former unpaid interns, it will provide an important indicator of the court’s policy interest in the area of internships and willingness to protect a new class of “employees” not previously considered by employers.

Internships in the public sector and for nonprofit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. However, under the FLSA and DOL guidelines, the best practice for compliance for a nonprofit would be to clarify any ambiguity in the terms of the internship opportunity and to create and ensure an unpaid internship program that benefits the intern, rather than answering an immediate need of the organization.

From the outset, an organization should clarify that the intern is a “volunteer” and expects no pay. Adherence to these guidelines can help eliminate possible liability under the FLSA. Structuring an internship program to coincide with an academic institution for credit is an additional avenue to avoid liability. Above all, the employer should consult local law regarding the definition of a “volunteer” versus an “employee” in an effort to proceed with the least ambiguous approach.