NONPROFIT MATTERSPublic Law Center
A Bulletin for Nonprofit Organizations
by the Public Law Center                                                      February
 2011, Volume 6, Issue 1
In This Issue
Interns: The Potential Cost of Free Help
An Employer's Guide to Expense Reimbursements & Wage Deductions
Legal Developments Affecting Your Clients
Legal Developments Affecting Your Organization
IRS Updates
Workshop Schedule

Thank you to the Access to Justice Annual Fund Donors 


PLC's work is life-changing for thousands of children, families, adults and seniors each year. They depend upon PLC for assistance in civil matters that threaten their safety and security in basic areas of living. PLC in turn depends upon the financial support of the Access to Justice Annual Fund to ensure that Orange County's low-income residents receive vitally needed legal assistance. Make your contribution to the 2011 Access to Justice Annual Fund today.

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Community Organizations Legal Assistance Project (COLAP)

PLC's Community Organizations Legal Assistance Project (COLAP), through staff and volunteer attorneys, provides free legal assistance to local nonprofit organizations that face a variety of business law issues in areas such as contract law, employment law, fundraising law, corporate governance law, and real estate law. For instance, COLAP can match organizations with attorneys to review and draft bylaws, employment handbooks, service provider contracts, and commercial leases. COLAP also provides free legal assistance to those interested in starting new nonprofit organizations that benefit Orange County's low-income population.

 

In addition to providing direct representation on a number of business law-related issues, COLAP assists organizations through a legal check-up program. Through this program, volunteer attorneys and law students conduct legal checkups of organizations to make sure they are complying with various state and federal laws. The service allows organizations to address legal issues before they become a problem. If nonprofits do not comply with legal requirements, they may be subject to administrative fines or they can even lose their tax-exempt status. This project helps organizations avoid these consequences.

 

For more information, please visit PLC's website, or contact Diamond Tran.

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Interns:  The Potential Cost of Free Help

By Laura Fleming, Stradling Yocca Carlson & Rauth

 

The Potential Cost of Free Help

HopeWell (a fictional nonprofit agency) assists homeless women and children.  It also operates a small thrift store.  Sandra offers to volunteer one day a week.  She does not expect payment, although she is excited about having "first dibs" on donated clothing.  Can HopeWell accept Sandra's offer? 

 

The Definition of "Volunteer"

Although volunteers are sometimes called "interns," this term can be confusing.  Some internships are paid, while others (that meet the criteria for volunteer or trainee work) are not.  Thus, for the sake of clarity, this article will refer to "volunteers."  The California Division of Labor Standards Enforcement (DLSE) defines volunteers as those "who intend to donate their services to religious, charitable, or similar non-profit corporations without contemplation of pay and for public service, religious or humanitarian objectives."  Federal law defines volunteers in a similar manner.  READ MORE... 

An Employer's Guide to Expense Reimbursements & Wage Deductions

By Julie M. Davis, Irell & Manella LLP

Employers often have questions about what deductions they are allowed to make from their employees' paychecks and what work-related expenses they must reimburse their employees for.  Correctly answering these questions is important because making improper pay deductions or failing to reimburse required expenses subjects employers to potential liability, including the possibility of being a class action defendant.  This article addresses some of the most common questions regarding employee pay deductions and reimbursement.  The article is not exhaustive.  It also does not address specific rules that may be applicable to certain industries.

 

Employee Pay Deductions

California law requires payment of all wages due.  Employee pay deductions are usually disallowed, with few exceptions.  READ MORE...

Legal Developments Affecting Your Clients 

Domestic Violence

SB 782 prohibits landlords from evicting tenants who are victims of domestic violence, sexual assault or stalking.  Under this new law, the landlord must also, upon written request, change the locks when there is a restraining order. If not changed within 24 hours, the protected tenant can do so.

 

Foster Children

Under the California Fostering Connections to Success Act (AB 12), foster youth are now eligible for state services until they turn 21.  Previously, they lost all benefits when they turned 18. The new law uses federal funding to help foster youths stay with relatives, in group homes or with a foster family.  For additional information, visit the California Fostering Connections to Success website.

 

AB 743 encourages keeping siblings together in the foster care system byclearly defining a required timeframe of ten days that the child welfare system must notify the child's attorney before a planned separation of siblings. AB 1933 allows foster children to continue attending their school of origin and, if applicable, secondary schools in the same attendance area, when placed with a family in a different neighborhood. SB 1353 requires consideration of the proximity to the school in which a child is enrolled at the time of placement in foster care is one indicator of the best interests of the child with respect to educational stability. For more information, visit the Children's Law Center of Los Angeles website.

 

Mental Health

The Mental Health Services for At-Risk Youth Act (SB 543) makes it easier for youth to obtain needed mental health counseling. The new law allows children ages 12 and older to consent to their own mental health care if a mental health professional deems them mature enough to intelligently participate in treatment.  For additional information, visit the Youth Law Center website.  

 

Nursing Homes

California nursing homes are now required under AB 215 to post federal ratings of their facilities starting Jan. 1, 2011. The federal program gives ratings from one to five stars, depending on quality of care, and nursing homes that fail to post the ratings can be fined.  For further information, visit the CA Department of Public Health website.  

 

For text and status updates of state law, visit the Official CA Legislative Information website.  

Legal Developments Affecting Your Organization

New CA Form 199-N

Effective Jan. 1, 2011, CA requires tax-exempt organizations that normally have annual gross receipts of $25,000 or less to e-file an annual informational notice, Form 199-N (also known as the "California e-Postcard"), with the Franchise Tax Board (FTB).  As with the IRS 990-N, the 199-N is due by the 15th day of the 5th month after the close of the organization's tax year.  For example, an organization with a tax year ending on December 31, 2010 is required to file its first Form 199-N by May 15, 2011.  There is no penalty for failure to file the notice, but an organization that fails to file for three consecutive years will automatically lose its CA tax-exemption and be subject to the $800 minimum franchise tax.  An organization that loses its CA tax-exempt status must file FTB Form 3500, pay a $25 application fee and obtain approval to regain its tax-exempt status.  Furthermore, any income received between the revocation date and the renewed exemption date may be taxable.  For more information, visit the Franchise Tax Board's website.

IRS Updates
New 990 Filing Thresholds for 2010 Tax Year

Do you know which Form 990-series return you are required to file for the 2010 tax year?  The 990 filing thresholds for the year 2010 and later (filed in 2011 and later) will change as follows for all organizations required to file a 990-series return:

  • Organizations with gross receipts normally < $50,000 must file Form 990-N (but may choose to file a complete Form 990 or Form 990-EZ).  In prior years only organizations with gross receipts normally < $25,000 could file the Form 990-N ("e-postcard").
  • Organizations with gross receipts > $50,000 and < $200,000 and total assets < $500,000 must file Form 990-EZ or a complete Form 990.
  • Organizations with gross receipts > $200,000 or total assets > $500,000 must file Form 990.
  • Private foundations must file Form 990-PF.
An updated Publication 557, Tax-Exempt Status for Your Organization, is now available.
Workshop Schedule
Nonprofits & Enterprise 
February 3, 10am-4pm

Nonprofits & Bylaws

February 8, 9am-12pm

Info/Register
 

Legal Topics in Starting a Small Business in CA
February 9, 6-8:30pm
Info/Register

Starting a New Nonprofit- The Reality Checklist
March 8, 9am-12pm
May 3, 9am-12pm
Info/Register

Intellectual Property
April 6, 9am-12pm
Info/Register

Volunteers & the Law
June 15, 9am-12pm
Info
 
Employees, Social Media & the Law
August 10, 9am-12pm
Info 
 
Employees vs. Independent Contractors 
September 14, 9am-12pm

Fundraising & the Law
October 4, 9am-12pm
Legal Disclaimer

Nothing in this bulletin should be construed as legal advice. For more information about complying with the laws mentioned in this bulletin, please consult a legal or tax professional.