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Thread: Non-Profit Director with no contract New Mexico

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  1. #1
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    Default Non-Profit Director with no contract New Mexico

    Hello Everyone,

    I am hoping someone may have experience or be able to help me with this situation:

    I have been helping as the director of a non-profit and have been working for almost a year. The board decided to treat this as contract labor (1099) and has been paying as such:

    $10 an hour, payed once per month, based upon the hours that I report. I write the check to myself (from their account). I started doing this because the board was not responding to my questions about how I would get paid, so the president told me to just go for it.

    I just realized that I may need to start being classified as an employee. There is tax issues.. etc. (self employment tax, federal witholdings, etc.). This also would date back to the previous directors before me, for many years they have been treating what I would think are employees as contractors.

    Am I wrong to think that we have been taken advantage of(myself and previous directors)? I am going to have to pay self employment tax, as well as state gross receipts tax on the "contract labor".


    The other thing is that I dont have a contract. I asked for one about a month or two into the job and the board never got back to me. I asked for stuff like, what happens if I am terminated or resign, when can I get performance evals, etc. It is kind of like the board does not want to do anything or be involved. But they also want me to go through them for any/all decisions and nothing will get done.

    Would I be in any sort of legal situation if I decided to just quit working? Are they in any situation legally If I actually wanted to push anything?

    I like the work we do and some of the board members, it is decent part time income on the side (other than the tax issue, I will see how that works out come time), but I am worried this could become a mess and I need to know what could happen If I want out.

    Thanks in advance

  2. #2
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    How many hours a week do you work?
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    What duties do you perform for them specifically and in what way? Do they provide you an office or place to work, computer, etc.? Do you consult or manage any other non profits? Are you required to work a certain number of hours, or given a regular schedule of any kind?

    On it's face, it does not sound likely that a director of a non-profit paid only $10 an hour could legally be paid as an independent contractor, but we would need more information to be sure.

    If you and your predecessors are, in fact, employees, yes they could be in serious trouble.

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    recently I have been working 10 hrs per week. (2 hrs per night after my full time job). When I first started I was 16 hours per week. Recently I was given an assistant who also works about the same hours, who the board also decided was to be paid 1099.

    I work from home, but they pay all expenses. For example I have a printer they bought, all the paper and envelopes, stamps

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    Quote Originally Posted by ferretrick View Post
    What duties do you perform for them specifically and in what way? Do they provide you an office or place to work, computer, etc.? Do you consult or manage any other non profits? Are you required to work a certain number of hours, or given a regular schedule of any kind?

    On it's face, it does not sound likely that a director of a non-profit paid only $10 an hour could legally be paid as an independent contractor, but we would need more information to be sure.

    If you and your predecessors are, in fact, employees, yes they could be in serious trouble.

    -I respond to questions (emails) from our members. I mail invoices members to remind them it is time to renew, and take payments. I keep track of who are members, who is about to expire. I also set up locations for training events that we have, things like calling around to get meeting rooms. I also prepare financial statements from the board to review at the monthly meetings they have. I help guide the direction of where I think they should go as an organization.

    -I don't work for any other non-profits or do any contract work for anyone. I do have a full time job during the week at a regular business


    Recently though, after I brought this situation to their attention I feel that I may need to go separate ways with the association. I don't want to be involved with anything shady that they may be doing/ or may have been doing in the past and as the "director" I don't want any of that to fall on myself, which Is why I am asking, without a contract am I free to go so to speak, just tell them I am resigning.

    I am just concerned about the legal side as I know one of the board members has some high profile lawyer friends.

  6. #6
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    High profile lawyers aren't going to get around basic wage and hour law. It is still somewhat questionable that you are an employee. The title would tend to make one believe that you are but the number of hours and the fact that you have only ceremonial or peripheral duties, and spend so few hours on this would make me question the title "Director". You don't appear to be directing anything. From your description, it sounds like typical volunteer duties, and volunteers are permitted in the non-profit sector. It is also permissible to pay some expenses and a stipend or honorarium to a volunteer. I have not heard of paying a set hourly rate. You can always call the DOL and ask their opinion; theirs is the only one that counts anyway.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

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    Quote Originally Posted by rivert View Post
    ...which Is why I am asking, without a contract am I free to go so to speak, just tell them I am resigning.

    I am just concerned about the legal side as I know one of the board members has some high profile lawyer friends.
    Of course you are free to leave. You have no contract and even if you did I doubt very seriously that it would require you to continue to work for them. It might stop you from being affiliated with another competing organization.
    Last edited by Payroll Guy; 01-11-2017 at 07:37 AM.

  8. #8
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    "Shady" might be stretching it. Even if they are paying you erroneously as a contractor, that's, frankly not that uncommon among non-profits. Lots of them are run by volunteers or mostly volunteers who may know everything about the organization's purpose, but very little about their legal responsibilities. And they are usually operating on a shoe string budget, so they try to avoid the expenses of FICA match and hiring a payroll processor.

    In any case, from your perspective, I can't see where the minimal compensation is worth your time when you factor in the additional tax burden. Assuming you are in the 25% federal income tax bracket, and factoring in the self employment tax, etc. you are probably making about $50/week or less. If you care about the organization, I would honestly tell them to just skip the compensation and let you be a volunteer. If you don't, I would give them your resignation.

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