Insights | Articles

For-Profits and Non-Profits are More Similar Than You Think

While it may at first glance seem that a non-profit organization’s philanthropic nature would set it apart from profit-driven business models, the legal reality of running a non-profit is actually often similar to that of a for-profit business. This is especially true regarding employer-employee relations, and the employer’s obligations to the employee under federal, state, and local employment laws and ordinances.  It is very rare indeed that employment-related, legal requirements are different for non-profit employers than that of companies. 

For instance, just like for-profit businesses, non-profits are obligated to obey the dictates of the Fair Labor Standards Act (FLSA). The FLSA establishes the fundamental guidelines of employee rights. It prohibits child labor, for example, and mandates overtime pay for employees who have worked more than 40 hours in one week. Moreover, Title VII which protects employees from discrimination based on race, religion, and sex treats non-profit employers in most cases like other corporations. Similarly, the Family Medical Leave Act requirements are the same. Because non-profits are not asking employees to work for the profit of the business, they can fail to consider that they have essentially the same obligations to their employees as for-profit groups.

Non-profit organizations also need to understand state and local employment laws. State and local laws can vary greatly and are subject to change depending on local government administration. Therefore, non-profits would be well advised to work with a local attorney to ensure the non-profit’s compliance with state- and local-level employment law. Problems for non-profits sometimes arise when the non-profit’s management does not understand that sometimes state or local employment laws have more stringent requirements than federal law.

A non-profit organization should be able to focus all of its time and effort exclusively to the issues for which it works—hiring a lawyer to worry about the minutiae of employment law compliance can save an organization valuable time and effort and ensure that it does not run afoul of federal, state or local requirements.

Subscribe to JGL Insights

With our attorneys’ wealth of industry knowledge, we specialize in providing leading information to our clients.

Let’s Talk.