Checking Up on Work Applicants

 Each summer, thousands of volunteers join with employees at youth-centered nonprofit organizations – running sports camps, leading Vacation Bible School programs, and providing childcare.  Throughout the rest of the year, nonprofits regularly rely on both paid staff and volunteers as the bedrock of their religious, educational, and charitable programs.  Before serving in these positions, many applicants consent to background checks – perhaps by signing an application with only a sentence-long disclosure or by checking a box to mark their assent.  Although these background checks may appear to be simply another administrative step, they are an important element for nonprofits to minimize liability and to make wise hiring decisions.  What background checks are warranted, and how should a nonprofit proceed in carrying them out?  This article explains key distinctions and provides important guidance for handling background checks.

Criminal Background Checks

Criminal background checks are integral for hiring employees and selecting volunteers to work with children or other vulnerable populations.  An organization may be held liable under a "negligent hiring" or "negligent retention" legal theory for harm resulting from a person for whom a criminal background check was warranted but not performed.  Accordingly, nonprofit leaders should consider conducting background checks on a broad scope.  Background checks may vary in terms of time (how many years to check), geography (which states to check, federal checks), and cost, so organizations should follow discernible “industry standard” guidelines as much as possible.   

End of IRS’s Health Insurance Reprieve?

Since the Affordable Care Act (ACA)’s enactment, the IRS and the U.S. Department of Labor have delivered a rather unpleasant surprise to many, namely, that it now treats employers’ reimbursement or payment of employees’ individual health insurance premiums as taxable income to such employees (also known as health reimbursement arrangements or “HRAs”).  This new rule, which essentially is an interpretation of “plan” under the ACA’s so-called market reforms, applies to small employers that are otherwise exempt under the ACA.  The interpretation constitutes an about-face from the longstanding treatment of HRAs as a pre-tax employee benefit.

Transitional relief was granted when the IRS issued a notice in early 2015, providing that employers who provided such pre-tax benefit would not owe any penalties or be required to include such benefit as taxable income – at least through June 30, 2015. Such relief was extremely helpful (even though quite late), since the penalty for noncompliance is extreme: $100 fine per employee, per day (!).  

At this point, no further tax relief for HRAs is on the horizon.  Legislative rumblings of relief developed earlier this year but failed to produce any helpful result.  Now that the U.S. Supreme Court upheld the ACA’s federal subsidy programs in its recent King v. Burwell ruling (and therefore its core elements), perhaps legislators will focus again on modifying such ACA aspects as this HRA issue.   Instituting such relief would be both consistent with the fervent opposition of many politicians and greatly welcomed by many. 

Religious Liberty After Obergefell v. Hodges

Now that that Supreme Court has determined that “[t]he Fourteenth Amendment requires a State to license a marriage between two people of the same sex,”[1] how will the Court’s decision impact religious organizations and individuals?  According to the four dissenting justices, the ruling means trouble ahead for religious organizations and individuals with conflicting religious beliefs.  In particular, the ruling portends new court battles between their constitutional religious liberty interests and developing laws that provide increasing sexual orientation and gender identity (“SOGI”) protection in areas such as employment, education, facility usage, and housing.

In Obergefell, a majority of five Justices determined that same-sex couples have a “fundamental right to marry,” arising out of liberty protections under the Due Process and Equal Protection clauses of the Fourteenth Amendment.  In so ruling, the Court reversed the Sixth Circuit Court of Appeal’s ruling[2] that states may define “marriage” as they wish.  Instead the Court sided with other federal courts that ruled unconstitutional state laws that limited marriage to unions between one man and one woman.    

Speaking for the majority, Justice Kennedy only briefly touched on religious liberty considerations, saying, “The First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths.”  Notably, there was mention of neither religious exercise, as guaranteed under the First Amendment’s free exercise clause, nor broader protections to be recognized for faith-based organizations beyond churches.