Nonprofit Report - July 2016
Let's Discuss Employee Probationary Periods
By: Steven E. Bers
Originally published in Association TRENDS, May-June 2016.
When advising associations on employment policies, I’m often asked, “How long should the probationary period be?” My answer:“It really doesn’t matter,” followed by, “. . . so long as it is actually utilized.” Whether a probationary period is 30 days or 6 months, whatever period is adequate to demonstrate skill acquisition and work habits, the most important issue is whether the employer actually uses the time to review the work and make a reasoned go or no-go forward employment decision. Another comment I hear when defending termination cases is, “That employee should have been terminated long ago.” Typically, the deficiencies leading to termination were observed when the individual was a new employee. Often employers create probationary periods, yet fail to reap the intended benefit.
So what are the benefits? First, basic fairness: the employee is placed on notice not to rush out and make big purchases – the job is not a bird in hand. Also, there is a popular opinion that an employer has more “right” to end employment early on. In termination litigation, employers are generally given far wider latitude by courts to make subjective judgment calls as to an employee’s capability, when the employment period has been short.
Another benefit is the ability to early determine whether the employer has made a good investment. I use the word “investment,” because the hiring of a single clerical employee (assume a $45,000.00 annual salary) with an average employment period of three years, represents at least a $150,000.00 investment, inclusive of taxes and benefits. It just makes sense to early and decisively determine whether the investment is well made.
For many associations, the end of the probationary period passes without any analysis as to the employee’s performance. This is understandable since once an employee has been hired, associations naturally want to avoid the hassle of recruiting another employee. There is a natural bias against repeating the hiring process, even if the first hire was clearly marginal. Some front line supervisors default to accepting a mediocre employee, rather than deal with the interpersonal discomfort of terminating an employee. These behaviors allow mediocre employees to stumble into permanent status.
The best solution is an association’s resolve for decisive and early decision-making; that employees demonstrating only a B- or merely C+ performance during the probationary period should not continue, even if the employee has “not done anything wrong.” Front line supervisors should be required to affirmatively justify why an employee should continue past probation. The short term reluctance to engage in a second job search should not override the long term benefit of decisive association action.
Sometimes associations engage in the process of “extending probation.” It seldom works, and usually delays the inevitable. Admittedly, there are isolated examples of employees who went from poor to better. However, this is usually a long shot, and the odds of beneficial employment are enhanced by early and decisive probation decisions.
Form 990-Schedule B
Can states demand your confidential donor information - even if they do not need and cannot protect this information?
By: Jeffrey P. Altman
Originally published in Association TRENDS, May-June 2016.
In the case of California, a federal judge recently ruled NO! The Court held that requiring nonprofits to file their confidential Schedule B donor information in order to register to solicit contributions unduly burdened First Amendment rights and was unconstitutional “as-applied” to the organization that challenged this requirement.
Generally speaking, nonprofit organizations annually must file IRS Form 990-Schedule B in which they must disclose – on a confidential basis – the names of their donors that contribute $5000 or more. Groups may redact the names of their donors in their Public Inspection version of IRS Form 990 and the IRS does not provide Schedule B to online services like Guidestar. Although the IRS is required by statute to maintain this confidential donor information in strict confidence, there have been reported instances of inadvertent and unlawful disclosures by the IRS in the past few years. No similar statutory or legal authority exists to protect Schedule B information at the state level.
In the California case, after a full bench trial, the Court concluded that the record “lack[ed] even a single, concrete instance in which pre-investigation collection of a Schedule B did anything to advance the Attorney General’s investigative, regulatory or enforcement efforts.” The Court also found that the Attorney General’s “current confidentiality policy cannot effectively avoid inadvertent disclosure.” At the same time, the Court “heard ample evidence” that the group and its “employees, supporters and donors face public threats, harassment, intimidation and retaliation once their support and affiliation with the organization becomes publicly known.”
The growing trend to require confidential Schedule B donor information by states like California and New York is of grave concern to organizations whose individual and corporate donors may decline to provide support if they fear their identities can become public. This decision also comes in the wake of a broader debate whether advocacy and political groups should be required to publicly disclose their donors or whether they are entitled to the same constitutional protections. Such disclosure requirements oftentimes are unknown to nonprofits and may be contrary representations to protect the identities of both individual and corporate supporters, so organizations should always check carefully before commencing new activities at the state and local level.
For now, the immediate question is whether California and other states can continue to broadly request confidential Schedule B donor information that they do not need and cannot protect. Should organizations have to protest and litigate to protect their constitutional rights on a case-by-case basis?
IRS officials have indicated publicly that the IRS is considering doing away with Schedule B and there is a bill pending in Congress that would make sure this happens. If the IRS or Congress eliminates Schedule B, that will resolve the problem!