Many Dallas nonprofits run on heart and volunteers, which is why employment law often feels like something that applies to everyone else. Leadership teams focus on feeding families, serving congregations, or mentoring kids, not on sorting out classifications, overtime rules, or documentation. It is easy to assume that because your people believe in the mission, formal employment rules can wait.
In reality, most nonprofits reach a point where they rely on a mix of volunteers, stipended workers, and paid staff, sometimes without clearly defining who is who. Maybe your board just approved your first full time hire, or you are paying regular “love offerings” to a worship leader at a Dallas church. These decisions feel like natural steps in growing your mission, but they also change how federal and Texas employment laws view your organization and what agencies expect from you as an employer.
At Perliski Law Group, we focus our practice on Texas nonprofits, including Dallas churches, charities, and social clubs, and we see the same patterns repeat. Informal arrangements work until a conflict, injury, or audit shines a light on them, then leaders find themselves scrambling. In this guide, we share what we have learned from decades of helping Texas nonprofits navigate employment law so you can protect your people, your tax exempt status, and your mission.
Why Employment Law Still Applies To Dallas Nonprofits
Nonprofit status changes how the IRS treats your organization for tax purposes, it does not remove your obligations as an employer. If your Dallas nonprofit hires even one employee, you are stepping into a legal framework that includes federal wage and hour laws, antidiscrimination rules, and Texas labor requirements. These rules exist whether you are a national charity or a small church with a single office administrator, and agencies focus on what your organization does, not only on its size or resources.
Some laws, such as the Fair Labor Standards Act (FLSA), focus on wages, hours, and overtime. Others, such as federal antidiscrimination laws and Texas Labor Code provisions, address hiring, firing, and workplace treatment. Many of these laws use headcount to determine when an organization is a “covered employer.” Nonprofit leaders are often surprised to learn that thresholds can be lower than they assumed, and that some wage rules apply even with very few employees or a limited budget.
Consider a Dallas food pantry that starts as an all volunteer effort. Over time, demand grows, and the board hires a part time coordinator to manage deliveries and volunteers. From the moment that person becomes an employee, the organization has wage and hour obligations, such as minimum wage and recordkeeping, regardless of its nonprofit status. As the pantry adds more staff, additional laws begin to apply, such as certain antidiscrimination protections that are tied to employee count and the nature of the work.
Because we work exclusively with Texas nonprofits, we routinely help Dallas organizations understand when they have crossed these legal thresholds. We have seen how an extra hire or a role change can quietly trigger new obligations, such as the need for written policies or more formal complaint procedures. With the right guidance, boards can plan for these transitions instead of discovering them after a complaint, agency inquiry, or grantor question about HR practices.
Employees, Contractors & Volunteers In A Nonprofit Context
For many nonprofits, the most confusing part of employment law is not the rules themselves, but who the rules cover. Titles like “volunteer,” “contractor,” or “stipend worker” can give leaders a false sense of security. What matters to regulators is the reality of the relationship, not the label your organization uses on a flyer or in a board report.
An employee is someone your nonprofit directs and controls. You set their schedule, assign their tasks, and expect ongoing work in exchange for pay. An independent contractor, by contrast, typically runs their own business, controls how the work is done, and offers similar services to other clients. Volunteers are different again. They donate their time freely for civic, charitable, or religious reasons, without an expectation of wages, and they can generally decide when and how they help.
Nonprofits often blur these lines. A Dallas church might pay a “volunteer” youth leader a regular monthly stipend and expect them to attend every service and event on a fixed schedule. A small arts nonprofit might hire a “contract” bookkeeper, but tell them when to come in, what software to use, and how to do the work, month after month. In each case, the person may actually be an employee under wage and hour law, even if they sign a contractor agreement or are called a volunteer in your newsletter.
These choices do not just affect payroll. They can also raise IRS concerns about private benefit or inurement if insiders receive compensation that is not handled correctly. The IRS looks at the substance of relationships, including whether pay is reasonable, properly reported, and consistent with your exempt purpose. Our attorneys have over 30 years of combined experience working with Texas nonprofits, and we regularly review worker classifications to spot when a “volunteer” role has drifted into employment, or when a contractor is functionally a staff member with different legal protections.
By taking time to map who is doing what for your Dallas nonprofit and how they are treated, you gain a clearer view of your true workforce. That clarity allows you to apply employment rules correctly, identify where written agreements would help, and adjust arrangements before an auditor, employee, or volunteer questions them.
Recruiting & Hiring Staff For Dallas Nonprofits
Hiring your first staff members is a milestone for any nonprofit. It is also the point where informal practices can cause the most trouble. Many Dallas organizations start with a handshake agreement or a brief email about pay and hours, only to discover later that nothing clearly describes the role, expectations, or terms of employment when a board member or employee asks for clarity.
A thoughtful hiring process begins with a clear job description. This document should reflect the actual duties, reporting lines, and whether the role is full time or part time. Accurate descriptions help with everything from setting pay and evaluating performance to deciding whether a position might qualify as exempt from overtime. Generic or outdated descriptions make it harder to show that you are treating employees consistently and fairly, and they can create confusion when positions evolve but documents do not.
When you advertise a position, the language you use can create risk if it appears to exclude certain groups. Job postings and interviews need to focus on qualifications and essential functions, not assumptions about age, family status, or other protected characteristics. For example, a Dallas charity seeking a program coordinator would be safer saying “must be able to lift 25 pounds and stand for extended periods” than “looking for young, energetic staff.” The first describes job demands, while the second can raise age discrimination concerns or suggest bias.
Religious organizations in Dallas often have additional questions about faith based hiring. There are narrow circumstances where churches and certain religious nonprofits may consider religious criteria, but there are limits and overlapping rules that require careful analysis. In our work with churches and faith based groups across Texas, we help tailor job postings and offer letters so they align with both the mission and applicable laws, instead of relying on assumptions about broad exemptions that may not apply to every role.
Once you choose a candidate, a written offer letter sets expectations on pay, schedule, reporting structure, and at will status. It should match what you told the candidate and what the board approved, and it should avoid promising long term employment or automatic raises. We frequently see nonprofits run into conflict because verbal promises about future pay or job security conflict with written terms. Taking time at the hiring stage to document the arrangement can prevent painful conversations later and gives your board a clear record of what was agreed.
Managing Volunteers, Interns & Board Members Safely
Volunteers, interns, and board members are the backbone of many Dallas nonprofits. They also sit in legal gray areas where misunderstandings can easily arise. Understanding what each role truly involves helps you honor their contributions without accidentally creating employment relationships or governance problems that could distract from your mission.
True volunteers offer their services freely, with no expectation of wages. They might receive limited reimbursements or occasional small tokens of appreciation, but regular, fixed payments can start to look like wages. If your nonprofit requires a “volunteer” to work set shifts each week, tracks their hours like staff, and pays a standard stipend, regulators may view them as an employee, regardless of what you call them. Clarifying time commitments and any reimbursements in a written volunteer agreement helps set expectations on both sides and can reduce conflicts.
Unpaid interns present another challenge. If interns perform work that primarily benefits your organization, such as handling routine office tasks or running programs, and they replace what a paid staff member would otherwise do, they may be treated as employees under wage and hour rules. On the other hand, educational internships that genuinely focus on the intern’s training and are closely connected to an academic program may be structured differently. Many nonprofits in Dallas overlook this distinction and assume that calling someone an “intern” is enough, which can lead to wage claims later.
Board members occupy a unique position. Their primary role is governance, not day to day operations. When board members regularly fill in as unpaid staff, coordinate programs, or supervise employees, they can blur the line between oversight and management. In some cases, a board member may also hold a paid staff role. Without clear policies, these dual roles can raise conflict of interest questions, confuse reporting lines, and complicate decisions about pay and performance in the eyes of your stakeholders.
Because we work closely with Texas nonprofits on governance and compliance, we often help organizations build simple, tailored volunteer agreements and board policies. These documents clarify roles, address reimbursement and expectations, and protect both the individual and the organization. They also provide evidence to regulators, funders, and auditors that your nonprofit takes its responsibilities seriously, even when you rely heavily on unpaid help to deliver services in Dallas neighborhoods.
Wage, Hour & Benefit Rules For Nonprofit Employees
Once your Dallas nonprofit has employees, you must decide who is hourly, who is salaried, and who might be exempt from overtime. A common mistake is to assume that paying a fixed salary automatically makes someone exempt. In reality, exemption depends on both how you pay and what the employee does, based on duties tests set out in federal law and interpreted by agencies and courts.
Many nonprofit roles, such as executive directors, certain program directors, or high level administrators, may qualify as exempt if they meet both the salary threshold and the required duties. Others, like office managers, coordinators, and support staff, are often nonexempt, even if they are salaried. Misclassifying a nonexempt employee as exempt can create liability for unpaid overtime, especially if the person routinely works more than 40 hours per week for a fixed salary and is expected to attend evening events or weekend programs.
Small nonprofits also struggle with basic recordkeeping. Busy leaders may not track hours for salaried staff, or may allow employees to “volunteer” extra time off the clock for events, fundraisers, or worship services. Wage and hour rules generally expect you to keep accurate time records for nonexempt employees and to pay for all hours worked. Practices like answering emails at night, helping at weekend events, or setting up before services can add up quickly if they are not handled correctly and can be difficult to reconstruct if a dispute arises.
Benefits bring another layer of complexity. Some organizations offer health stipends, housing allowances, or informal bonuses. Each of these has potential wage and tax implications, particularly when provided to insiders such as founders or pastors. Without a clear structure, what feels like generosity can raise questions in an audit about reasonableness of compensation or undocumented perks, and it can create confusion for employees about what they can expect in future years.
At Perliski Law Group, part of our nonprofit compliance support includes reviewing job descriptions, pay structures, and timesheets to identify wage and hour risks in advance. By adjusting classifications, tightening time tracking, and documenting benefit decisions, Dallas nonprofits can reduce exposure to wage claims and align their practices with both legal requirements and sound governance expectations.
Policies, Agreements & Documentation Your Nonprofit Needs
Even small nonprofits benefit from having the right written policies and agreements. Documentation does more than satisfy regulators. It sets expectations, helps you treat people consistently, and shows boards, funders, and auditors that your organization is well managed and prepared for growth.
At a minimum, most Dallas nonprofits with staff and volunteers should consider written offer letters, current job descriptions, volunteer agreements, a basic employee handbook, and a conflict of interest policy. Offer letters capture key terms such as position, pay, schedule, and at will status. Job descriptions outline duties and reporting lines and support classification decisions. Volunteer agreements clarify that volunteers are not employees, describe the nature of their service, and address topics like confidentiality and safety.
An employee handbook does not need to be a thick corporate manual. For a smaller nonprofit, a concise handbook that covers key policies, such as anti harassment expectations, timekeeping, overtime approval, use of technology, and complaint procedures, can be more effective and easier to follow. Conflict of interest policies help boards and staff understand when to disclose relationships or step back from decisions, which is especially important in close knit communities where people often wear multiple hats.
Many organizations start with templates found online, but generic documents often fail to reflect Texas law or the realities of nonprofit work. Corporate policies can be overly complex, include benefits your nonprofit does not offer, or promise procedures you cannot realistically follow. In our practice at Perliski Law Group, we create document packages tailored to each Texas nonprofit’s size, culture, and staffing model. This approach gives leaders tools they can actually use, instead of binders that sit on a shelf or policies that create risk by not matching daily practice.
Thoughtful documentation also supports your story when something goes wrong. Clear policies and signed agreements make it easier to explain and defend decisions, respond to agency questions, and reassure donors that you handle your people fairly. For Dallas nonprofits that hope to grow, these materials become part of the foundation that makes expansion sustainable and less dependent on any one individual’s memory or intentions.
Connecting Employment Practices To Your Tax Exempt Status
Most boards worry, at least in the back of their minds, about protecting tax exempt status. Employment decisions play a larger role in that picture than many Dallas nonprofits realize. The IRS cares not only that you pursue a charitable or religious purpose, but also that you avoid providing unfair private benefit or inurement to insiders through compensation and perks.
Private inurement occurs when insiders, such as founders, officers, or key employees, receive benefits from the nonprofit’s income that go beyond reasonable compensation. This can include above market salaries that are not supported by comparability data, unexplained bonuses, or perks like housing or vehicles that are not documented and tied to job duties. Informal practices, like giving a founder additional “thank you” payments or using nonprofit staff to handle personal errands, can also raise questions if they become routine and are not approved by the board.
Employment and compensation policies help show that your nonprofit approaches these issues thoughtfully. Written job descriptions, documented salary decisions, and board minutes that reflect how compensation was set can all support a conclusion that pay is reasonable. Clear boundaries around staff roles and use of nonprofit resources also demonstrate that the organization, not any one individual, is at the center of decision making and that resources are being used to further the mission.
Because we handle formation and IRS compliance for Texas nonprofits, we regularly integrate employment and compensation reviews into broader exempt status planning. For a Dallas organization that is maturing, this might mean comparing staff pay to similar roles in the local market, clarifying which benefits are taxable, and ensuring that insiders are not receiving unapproved advantages. The goal is not to make your nonprofit feel corporate, but to protect the mission from avoidable tax and governance problems that can distract from your work in the community.
When Your Dallas Nonprofit Should Call An Employment Attorney
Knowing that employment law applies is one thing, deciding when to seek outside help is another. Many Dallas nonprofits wait until a problem surfaces, such as a wage complaint, a demand letter, or an inquiry from a state or federal agency. By that point, leaders often feel rushed and defensive, and options can be more limited than they would have been with earlier planning.
There are predictable moments when a proactive conversation with an attorney pays off. Hiring your first employee, shifting frequent volunteers into regular stipended roles, expanding programs that run on large volunteer teams, or receiving your first grant that requires specific HR policies are all natural trigger points. So are changes in leadership, such as a new executive director or pastor who wants to update how the organization manages people and document expectations more clearly.
In our work with nonprofits, we see that a planned employment and documentation review often costs less, in time and money, than responding to a dispute. For example, catching a misclassified role and adjusting overtime practices quietly today is easier than defending a multi year back pay claim later. Building clear volunteer agreements now makes it simpler to handle a conflict about expectations next season, and a short policy review can often prevent misunderstandings that could grow into formal complaints.
At Perliski Law Group, we offer flat fee packages and discounted rates for Texas nonprofits, including churches and charities. That means your board can budget for a comprehensive policy and classification review, handbook and agreement drafting, or an annual compliance check, without worrying about unpredictable hourly bills. Our goal is to partner with you so your organization can focus on its mission while we handle the complex legal framework around employment and IRS compliance.
Strengthening Your Dallas Nonprofit Through Better Employment Practices
Handled well, employment and volunteer practices do more than keep agencies satisfied, they strengthen your nonprofit’s culture and resilience. Clear roles, fair pay structures, and practical policies make it easier for staff and volunteers to serve, and they reassure boards and donors that your Dallas organization is built to last. Compliance becomes part of how you care for your people and protect the work you were created to do across North Texas.
If you are unsure where your nonprofit stands, you do not need to sort it out alone. We at Perliski Law Group work every day with Texas nonprofits to connect employment law, governance, and tax exempt considerations into a single, workable plan. We can review your current practices, identify gaps, and help you implement right sized solutions that match your mission and resources so you can move forward with confidence.
Call (214) 865-7542 to talk with our team about employment law for your Dallas nonprofit.