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c. Posting Requirements

Nearly every statute or ordinance—federal, state or local—designed to

protect employees contains a provision requiring employers to have an official
poster in a location accessible to employees that describes the provisions of the
particular law. Even if an employer is otherwise in compliance with substantive
requirements of an employment law, it may be in violation if posters are not
present in the workplace.

CHAPTER 68. Setting Executive Compensation

One of the most important tasks facing the board of directors of a nonprofit
is setting the compensation for the executive director or chief executive officer and
other senior management. A salary which is set too low may fail to attract the
talent necessary to best achieve the goals of the entity. But there also are clear
dangers to approving an excessive compensation package. Executive
compensation that is unreasonably high can result in penalties imposed by the
Internal Revenue Service (“IRS”), as well as distrust by members, potential donors
and the general public. Moreover, setting appropriate compensation is a fiduciary
function, involving decisions regarding the appropriate use of entity assets.

The IRS recommends that nonprofits follow a three-step process in setting
executive compensation that is reasonable. Following and documenting
compliance with such a process creates a rebuttable presumption that the
compensation package is reasonable, shifting the burden of proving otherwise to
the IRS. In addition, 501(c)(3) organizations required to describe the process used
to approve executive compensation and provide compensation information
regarding executives in the annual filing of the Form 990. The three steps are
summarized as follows:

1. The board should arrange for a comparability review by an
independent body. In this case, an independent body can be a
committee of the board, provided that the person to be receiving the
compensation is not a member of the committee.

2. The independent body should review comparable salary and benefits
data. Data is comparable if it reflects nonprofit entities of similar size
and mission, and the same geographic region.

3. The independent body should document (a) the persons who
participated in the review, (b) the independence of the participants,

WASHINGTON NONPROFIT HANDBOOK -242- 2018