Organizations of all types are challenged with retaining and recruiting employees, including the nonprofit sector. Employee retention and recruitment requires a multi-faceted approach, involving a deliberate organization strategy, organization culture, and employee engagement in the mission of the organization. As nonprofits seek creative solutions to their human resource needs, those solutions can have implications beyond impacts on employee headcount. Some key matters to consider:
REMOTE ONLY WORKERS: If your organization has positions that can be filled by fully remote individuals, your pool of eligible applicants greatly expands, and highly prized talent can be obtained. That remote hire in another state or major metropolitan area is likely to bring requirements for filing of related state and local taxes employment taxes. They also can require conformity to any state or local municipal employee pay, leave, or workers compensation regulations. In addition, such a hire can trigger the need for business registration and business taxes in that new remote hire’s area as well as charitable entity registration. State and local municipal approaches to remote workers and the types of filings required vary by state to state and locale to locale. To protect your organization, review the filing requirements via the appropriate state and local municipal websites and be prepared to file/register as needed within 30 days of the remote employee’s start date (best practice). Consultation with legal counsel on these matters could be advisable.
BONUSES: No matter how an organization labels them, payments of cash and cash equivalents (gift cards, gift certificates, use of a credit card, etc.) to employees are never excluded from tax and should be processed through the organization’s payroll cycle and taxed accordingly. IRS Publication 15 is a good place to start when considering tax implications of payments to employees. Don’t forget your employee benefit plan provisions. Consider how bonuses and other “out of the ordinary” payments to employees are treated for purposes of your employee benefit plan and ensure the appropriate processing for contribution purposes (both employee and employer) are followed.
FRINGE BENEFITS: There are a wide array of fringe benefits that can be provided to employees that are excluded from employment taxes including educational assistance, employer provided cell phones, HSAs, and working condition benefits, etc. Consult IRS Publication 15-B for further discussion.
TRAINING AND DEVELOPMENT: Employer provided training and development directly related to maintaining and improving employee skills for their current positions (not a new type of work) are NOT taxable. Review “education required by employer or by law” and “education to maintain or improve skills” at the IRS tax benefits for education information center .