Getting Tax-Exempt Status for Your Non-Profit When Your Annual Revenues Will be $50,000 or Less: IRS Form 1023-EZ

April 17, 2019 Comments Off on Getting Tax-Exempt Status for Your Non-Profit When Your Annual Revenues Will be $50,000 or Less: IRS Form 1023-EZ

Are you trying to start a non-profit on a shoe-string budget? Are you trying to figure out how to get tax-exempt status from the IRS, but think it will cost a lot to hire a lawyer or a CPA?

Many people with very good intentions want to start a non-profit, but are limited by a small or modest budget or believe that getting tax-exempt status from the IRS is too difficult. Fortunately, the IRS has developed an online “EZ” form that makes the process much easier and less time-consuming. To use the online Form 1023-EZ, the organization seeking a tax exemption must meet certain requirements. The most important of these is that the organization does not expect annual revenues that exceed $50,000 during the first three years of operation.

What Do I Need to Do to Start My Non-Profit?

Starting a non-profit involves two basic steps. First, a non-profit entity must be formed, which is usually done under state law. In most cases, the entity will be a non-profit corporation. Second, the entity must obtain tax-exempt status from the IRS. A non-profit corporation does not automatically have tax-exempt status, and a tax exemption must be requested from the IRS. Most organizations that have a charitable purpose are eligible to apply for tax-exempt status. If the IRS grants the exemption from taxation, most states will also recognize the organization as exempt from taxation.

How Do I Form a Non-Profit Entity?

Most non-profit entities are formed as a non-profit corporation under state law. We recommend that you consider using an attorney for this step because an attorney can provide valuable assistance with the articles of incorporation, which may need to include certain language necessary for tax-exempt status. In addition, the bylaws need to include a section on conflicts of interest affecting board members and employees, and attorneys have the training and expertise necessary to provide an appropriate conflicts-of-interest policy. Bylaws with an appropriate conflicts-of-interest policy are an important part of maintaining tax-exempt status because they help insure that board members and employees do not engage in self-dealing with the non-profit.

After your non-profit organization has been formed, you’ll need to get an employer identification number (EIN), also known as a taxpayer identification number (TIN). Don’t be concerned about the name. Every entity needs an EIN, even if it will not have any paid employees. An EIN can be obtained online from the IRS here.

How Do I Get Tax-Exempt Status from the IRS Using Online Form 1023-EZ?

After the non-profit organization is formed, you can request tax-exempt status from the IRS. If your organization qualifies, you can apply for a tax exemption using IRS Form 1023-EZ, but the EZ application procedure is an online-only process.

To use the online application process, we recommend that you start with the Eligibility Worksheet that is included in the IRS’s Instructions for Form 1023-EZ (see page 13 of the Instructions). Most small non-profit corporations will easily qualify for use of Form 1023-EZ if the organization does not expect annual revenues over $50,000 per year during its first three years of activity, and revenues during the past three years (if any) did not exceed $50,000. It’s still a good idea to complete the Eligibility Worksheet, however, because there is always a chance that something about your organization requires use of the standard Form 1023.

We also recommend that you complete a paper version of the Form 1023-EZ so you have your answers ready before using the online-application process. Using the paper version first will also allow you to identify and answer any questions you may discover before completing the online version.

To answer any questions that do come up, we recommend that you begin by looking at the Instructions for Form 1023-EZ. The webpage that is the starting point for the online Form 1023-EZ is available at pay.gov (you’ll need an account for your organization).

Still Have Question or Need Help?

We can help if you’re trying to determine if your organization qualifies to use Form 1023-EZ, or if you have questions about completing the Form 1023-EZ. We understand that many non-profit organizations start off very small and may have limited funds to pay for an attorney. We do try to keep costs to a minimum so that you and others in your organization can focus on achieving your organization’s mission.

The attorneys at Mangum, Wall, Stoops & Warden have the knowledge and expertise to advise employers, businesses, and non-profit organizations. If you have any questions or need assistance with forming a non-profit or applying for tax-exempt status, please contact James D. Griffith at (928) 779-6951 or jgriffith@mwswlaw.com.

No Action on Legislation Proposing Major Changes to Navajo Preference in Employment Act

February 11, 2019 Comments Off on No Action on Legislation Proposing Major Changes to Navajo Preference in Employment Act

Early last fall, a bill was introduced in the Navajo Nation Tribal Council that proposed major changes to the Navajo Preference in Employment Act (“NPEA”). The bill moved through committees, but it was not enacted, and the bill has now “expired” because it was not enacted before the end of 2018. Nonetheless, the bill proposed many significant changes, and a review of the proposed changes is worthwhile because the bill or a revised version could be reintroduced this year. It’s important to emphasize, however, that the legislation has not been reintroduced as of the date of this post, and I do not know if it will be reintroduced.

No Change to Basic NPEA Rule Prohibiting Adverse Action without Just Cause

Overall, the proposed changes to the NPEA would still favor employees, but the revisions would provide more balance and encourage employers and employees to try “talking things out” before going to the Office of Navajo Labor Relations (“ONLR”) and the Navajo Nation Labor Commission (“NNLC”).

In addition, the NPEA’s key feature—the basic rule that an employer may not take any adverse action against an employee without just cause—would not change. But the proposed changes would add several definitions, and those definitions would have an important impact on the claims that can be asserted by employees. The legislation proposed the following definitions:

  • Harassment – Substantial emotional distress serving no legitimate purpose
  • Sexual harassment – Unwelcome or unwanted sexual conduct under defined circumstances in an employment context
  • Independent contractor – Employment under contract for work or services by contractor’s methods subject to the employer’s control only as to final product or result
  • Intimidation – Severe and pervasive affirmative acts that would cause a person of ordinary sensibilities to be fearful or threatened and that have a tangible, negative effect on employment
  • Adverse action – Involuntary termination, demotion, or discipline that results in a reduction of pay, wages, or salary
  • Prejudice – Severe and pervasive affirmative act of hostility against an employee, race, or group that has a tangible, negative effect on employment

If these changes were enacted into law, the use of terms like “substantial” and “severe and pervasive” would make it more difficult for employees to successfully assert a claim against an employer and would likely reduce the number of claims. Also, the definition of “adverse action” would require an action that results in a reduction of pay, wages, or salary, and again, this would likely reduce the number of claims.

Other Notable Changes in Last Year’s Proposed Amendment to NPEA

Limits on Application to Officers and Upper-Level Managers

Under the proposed changes, the NPEA would not apply to an officer or upper-level manager if the officer or manager is advised in writing that he/she will be subject to adverse action either with or without just cause. The written contract with the officer or manager would also need to specify the reasons or conditions that may result in adverse action. In addition, the Navajo Nation District Court (and not the NNLC) would have exclusive jurisdiction over lawsuits claiming an alleged breach of a contract between an employer and an officer or manager.

Changes to Time Limitations

Employees would also have less time to file individual charges with ONLR and to file suit at the NNLC. Under the proposed changes, an employee must file an individual charge with ONLR within sixty days after the alleged NPEA violation. Currently, employees have one year to file with ONLR. Under the proposed changes, after an individual charge is filed, ONLR would have ninety days to complete its investigation and issue a Notice of Right to Proceed. The Notice allows the employee to proceed with filing suit at the NNLC.

If the employee chooses to file suit at NNLC, the proposed changes would require that the lawsuit be filed within 180 days from the date the individual charge was filed. Currently, employees have 360 days from the date the individual charge was filed to file a complaint at NNLC.

Awards of Attorneys’ Fees Against Employees

Another change under the proposed amendment would allow the NNLC to award attorneys’ fees and costs to employers in certain cases. Currently, fees and costs can only be awarded to the employee if the employer’s defense was not substantially justified. The proposed change would allow fees and costs to be awarded against the losing party if that party’s position was not substantially justified.

Conclusion

Again, this was a proposed amendment, and as far as I can determine, it has not been reintroduced for 2019. If it is reintroduced, the proposed changes could be scaled back. But even if the changes are scaled back, the amendments could have a significant impact on the NPEA and the relationship between employers and employees on the Navajo Nation.

If you have any questions about this overview, or need assistance with an NPEA matter, please contact me at (928) 779-6951 or jgriffith@mwswlaw.com.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll-free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden, PLLC.

WHAT EMPLOYERS (AND OTHERS) NEED TO KNOW ABOUT THE NAVAJO NATION’S INDIVIDUALS WITH DISABILITIES LAW

December 15, 2018 Comments Off on WHAT EMPLOYERS (AND OTHERS) NEED TO KNOW ABOUT THE NAVAJO NATION’S INDIVIDUALS WITH DISABILITIES LAW

In July 2018, the Navajo Nation Tribal Council enacted a law to protect the rights of individuals with disabilities. The Civil Rights of Individuals with Disabilities Act of 2018 (“CRIDA”) is similar to the federal Americans with Disabilities Act and recognizes rights for disabled individuals in areas involving housing, employment, education, voting, government services, businesses and commercial operations, and incarcerated individuals. Many employers and businesses on the Navajo Nation are subject to the federal law, but business owners and supervisors must now be aware of the potential for liability under CRIDA. In this post, I will present a short overview of CRIDA for businesses, employers, and others to provide a basic understanding of CRIDA and the legal obligations it creates.

What Rules Do I Need to Follow?

To comply with CRIDA, a business or employer must follow one basic rule: A disabled person cannot be denied a right based on his/her disability if a reasonable accommodation will allow the person to exercise that right.

As a very simple example, think of a warehouse operation that employs an Inventory Control Specialist to store and keep track of products. The job requires standing at a counter and using a computer for several hours a day, but also requires lifting boxes and objects (up to 20 pounds) and using a ladder to reach shelving. Peter, a Navajo, applies for the job as Inventory Control Specialist. He is qualified, but has had a knee problem for his entire life and has had several knee surgeries. As a result, he cannot stand for more than two hours at a time.

Peter requests that he be allowed to use a stool when he is working at the computer. The stool would be an inexpensive and reasonable accommodation by the warehouse that would allow Peter to do the job. If it refused to hire Peter because of his knee problem, the warehouse would be in violation of CRIDA. On the other hand, if it did not hire Peter because, for example, another Navajo applicant had more experience, the warehouse would not be in violation of CRIDA. The difference is the basis for the hiring decision.

Who is Disabled?

Under CRIDA, a disability is “a physical or mental impairment that substantially limits an individual’s ability to engage in a major life activity.” The term “major life activity” can include many types of activities. As examples, CRIDA lists activities such as performing manual tasks, seeing, hearing, eating, walking, standing, lifting, bending, speaking, learning, reading, and concentrating. Although this is not a complete list, these activities identify many of the main activities that an employer or business might encounter in a job applicant, customer, tenant, or other member of the public.

What is a Reasonable Accommodation?

A reasonable accommodation is a change to a work environment, building, or procedure that will allow a disabled person to perform a job or task, but is not so expensive or difficult that it is a burden for the employer or business. The idea is to require a modification that is necessary for a disabled person to perform a job, access a building, or otherwise participate in a right or opportunity, but not create an “undue burden” on the employer, business owner, or other person.

When Does It Become an Undue Hardship?

The answer to this question will depend on the specific circumstances of the situation and accommodation requested. So, there is no one right answer to the question, but CRIDA lists a number of “factors” that should be considered in deciding whether an accommodation is an undue burden. These factors include: The nature and cost of the accommodation; the financial resources of the employer or business; the number of employees at the location; the impact on operations at the location; the type of operations; and other factors such as distance from the business’s main office and the administrative and financial relationship with the employer’s or business’s main office.

How Does CRIDA Find Balance Between Disability Rights and the Reasonableness of an Accommodation?

Basically, CRIDA balances the rights of a disabled individual and the rights of an employer or business through “shifting” burdens of proof. The balancing process begins with the individual claiming to be disable. This individual must establish that he/she has a disability through medical evidence or testimony from medical professionals or facilities or through traditional sources such as medicine men. The individual must show that the disability exists by a preponderance—in other words, that it is more likely than not that the disability exists.

If the individual shows that the disability exists, then the burden “shifts” to the employer or business that has been asked to provide some accommodation. If the employer or business can show that the request for accommodation is an undue burden, then the accommodation is not reasonable, and the employer or business does not need to provide the accommodation. Using the factors for undue hardship (see above), the employer or business must show that the accommodation is an undue burden by a preponderance—again, more than a 50% chance that it is an undue burden.

Who Decides If a Person is Disabled or Whether an Accommodation is Reasonable?

CRIDA does not create a court or agency that decides disability claims or enforces disability rights, but CRIDA does allow a disabled individual to file suit against an employer or business. Initially, an employer or business must determine if a person is disabled and if an accommodation is reasonable. Then, if the individual believes that his/her rights have been violated, he/she can file suit against the employer or business. If the disabled individual’s claim is against an employer, the claim falls under the Navajo Preference in Employment Act, and he/she can file a charge with the Office of Navajo Labor Relations. In all other cases, the disabled individual can file suit in the Navajo Nation District Court.

Conclusion

An employer or business that has received a request for an accommodation may have a difficult time deciding whether the request is reasonable and necessary for compliance with CRIDA. Complying with CRIDA and avoiding potential liability can take time and careful analysis, but the risk of liability can be reduced by focusing on the key legal concepts. An employer, business, or other party may need assistance sorting through facts, policies, legal obligations. I and other attorneys at Mangum, Wall, Stoops & Warden have the knowledge and expertise to advise employers and businesses in those situations.

If you have any questions about this overview, or need assistance with a reasonable accommodation request under CRIDA, please contact me at (928) 779-6951 or jgriffith@mwswlaw.com. I can also be available to give presentations on the NPEA.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll-free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden, PLLC.

Social and Economic Challenges on American Indian Reservations: Recent Statistical Study

October 24, 2017 Comments Off on Social and Economic Challenges on American Indian Reservations: Recent Statistical Study

Social and economic development on tribal land has always been difficult. The reasons for this are complex and rooted in historical and cultural conflict. But census and other survey data show that Indian tribes have made some gains in recent decades, while still lagging other minorities in the United States.

In 2014, Randall K.Q. Akee and Jonathan B. Taylor published a study entitled, Social and Economic Change on American Indian Reservations: A Databook of the U.S. Census and the American Community Survey, 1990-2010. Akee and Taylor concluded that, although American Indians living on reservations have a per capita income that is less than half the U.S. average, tribes have experience an increase in income and in other areas. A brief summary of their findings are:

  • By 2010, most tribes could be considered gaming tribes, and some 92% of Indians lived on reservations with gaming operations.
  • Per capita income and median household income increased in the 1990s, but slowed in the 2000s.
  • Gains in family and child poverty improved in the 1990s, but the improvement slowed in the 2000s.
  • Unemployment among Indians on tribal land fell in the 1990s and fell only slightly more in the 2000s, while labor force participation remained about the same from 1990 to 2010.
  • Housing improved on most Indian reservations, but remain worse than housing in the U.S. overall.
  • The number of Indians on tribal land with high school and college degrees has increased since 1990, but is not at parity with the U.S. average.

A summary of the Databook is available here. The full Databook is available here.

The improvement in these statistical measurements may well have been fostered by the policy of self-determination and the development of Indian gaming, but additional gains are necessary to improve social and economic conditions for Indians living on tribal land to a level on par with the U.S. average.

If you have any questions about federal Indian law, tribal law, or general business or employment law, please contact me at Mangum, Wall, Stoops & Warden, PLLC by using the contact information provided below.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden.

EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part 3: The Complaint Process and Litigation under the NPEA

May 5, 2017 Comments Off on EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part 3: The Complaint Process and Litigation under the NPEA

The purpose of the Navajo Preference in Employment Act (“NPEA”) is to promote economic development and jobs for Navajos on tribal land. Most employers on the Navajo Nation follow the requirements of the NPEA carefully, but compliance with the NPEA can involve considerable time and effort. This post is the third of three overviews of key aspects of the NPEA, and it focuses on complaints filed with the Office of Navajo Labor Relations and litigation before the Navajo Nation Labor Commission. Part 1 discussed the hiring process under the NPEA, and Part 2 discussed adverse action, just cause, and prejudice, intimidation, and harassment in the workplace.

These overviews provide only a brief introduction to some of the key rules that employers on the Navajo Nation must comply with under the NPEA. Some employers on the Navajo Nation may also need to comply with federal employment laws in addition to the NPEA. If you have questions about specific issues or a specific employment situation, we recommend that you seek legal advice.

THE COMPLAINT PROCESS AND LITIGATION UNDER THE NPEA

The NPEA follows a two-step process for resolving employment-related disputes and establishes two different governmental agencies—one for each step in the process. The Office of Navajo Labor Relations (“ONLR”) is responsible for processing “charges” filed by employees against employers. The Navajo Nation Labor Commission (“Labor Commission”) is responsible for processing disputes that were not resolved by ONLR, but its procedure is more like formal litigation in a court. Overall, this process for dispute resolution requires the employee and the employer to meet certain deadlines, and if the employee or employer do not meet the deadlines, a claim or a defense can be lost. The starting point for these deadlines is the event or situation that the employee believes violated the NPEA or affects his or her employment status.

ONLR and Employee Charges

When an event occurs that relates to an employment relationship or a workplace, and an employee believes that the event negatively affects his or her employment, the employee has one year from the date of the event to file a charge with ONLR. If the situation involves a series of events, the employee has one year from the last event to file a charge with ONLR. The employee is not required to complete the employer’s grievance process before filing with ONLR.

The employee’s charge must raise all issues or potential NPEA violations that the employee can claim within the one-year period. An employee can amend his or her charge to add new issues or potential violations if asserted within the one-year period, but if not raised at the ONLR stage within the one-year period, the employee may not assert them at all.

Once the employee has filed a charge, ONLR must give written notification to the employer and has six months to investigate the charge. ONLR is authorized to assist the employee and employer in resolving the dispute. Typically, however, ONLR investigates the charge, and the employer or an attorney acting for the employer responds to a request from ONLR for information and documents.

If the case cannot be resolved, ONLR’s investigation will result in one of four possible outcomes, but regardless of the outcome, the employee then gets the right to file a complaint with the Labor Commission. The possible outcomes include: (a) dismissal of the charge without issuance of a right-to-sue letter; (b) issuance of a probable cause notice and a right-to-sue letter; (c) issuance of a right-to-sue letter, but based only on ONLR’s inability to complete the investigation within six months; or (d) ONLR does nothing and a right-to-sue letter is issued.

Again, no matter which of the four outcomes occurs, the employee then has the right to file a complaint with the Labor Commission—even if no right-to-sue letter is issued. ONLR’s dismissal without a right-to-sue letter is not common, but may indicate that the employee’s case is weak.

The Labor Commission and Hearings on Alleged Violations of the NPEA

After the ONLR process is completed, the employee may file a complaint with the Labor Commission. The complaint must be filed within 360 days after the date the employee’s charge was filed with ONLR. The 360-day period does not run from the date a right-to-sue letter is issued or the date the process at ONLR is completed, but instead starts on the day the ONLR charge is filed. The 360-day period can be extended by the Labor Commission if the employee can show unusual circumstances that delayed his or her filing with the Labor Commission.

The Labor Commission has sixty days from the date the complaint is filed to issue a notice of hearing. The hearing does not need to take place within sixty days, but the notice setting the date and time for the hearing must be issued within sixty days. The notice of hearing and a copy of the complaint are then sent to the employer by certified mail.

The employer must file an answer within twenty days of receipt of the complaint and, in certain limited situations, may file a motion to dismiss. We recommend that an employer hire an attorney or advocate who is admitted to practice law in the Navajo Nation to represent him or her when responding to a complaint. Under Navajo case law, the employer must hire an attorney or advocate admitted in the Navajo Nation if the employer is a business entity.

Pre-hearing activities, such as depositions, are permitted but discouraged by the Labor Commission. In other words, the Labor Commission prefers that the employee and employer move ahead with the hearing rather than time-consuming depositions and other fact investigations. About two weeks before the hearing, the parties must file copies of any documents they intend to use at the hearing and a list of witnesses they intend to call at the hearing.

The hearing itself is a formal meeting of the Labor Commission. At least three commissioners must be present for a quorum, and those commissioners will listen to the case presented by each party and decide the case. Even if represented by an attorney or advocate, both the employee and the employer (or an authorized employee of the employer) must attend the hearing in person. If either the employee or employer do not attend the hearing, the Labor Commission will rule in against of the side that did not attend.

On the day of the hearing, the commissioners often ask the parties to discuss settlement. If a settlement is reached, the parties return to the hearing room and inform the commissioners of the terms of the settlement. The commissioners may refuse to accept the settlement if they do not consider the terms reasonable. If a settlement is not reached, the hearing goes forward and follows a format that is similar to a court case.

In the hearing, each side has an opportunity to take testimony from witnesses, present evidence, and cross-examine the other side’s witnesses. The burden of proof is shared equally by the employee and the employer. The employee must prove a violation of the NPEA by a “preponderance,” which means it must be “more likely than not” that the employer violated the NPEA. But the employer then has the burden of proof to present evidence that overcomes the employee’s evidence.

After each side has presented its case, the commissioners will consider all of the evidence presented and decide whether the employer is liable for a violation of the NPEA. This decision, however, relates only to whether the employer has violated the NPEA and does not determine the “remedy” or dollar amount that the employer must pay to the employee. Instead, the Labor Commission will set another hearing to consider the remedy or amount that will appropriately compensate the employee.

Once it has determined the remedy or dollar amount that should be paid, the Labor Commission will enter a judgment. A party may appeal the judgment to the Navajo Nation Supreme Court within ten days of receipt, but if it is not appealed, the judgment becomes final. If a final judgment against an employer is not paid or “satisfied,” the employee may file a case in the Navajo Nation District Court to collect the amount due.

CONCLUSION

Complying with the NPEA can take a great deal of time and effort, but the risk of financial liability can be reduced by focusing on the employer’s key legal obligations. This third of three articles provides only a brief overview of the complaint and litigation process under the NPEA, and employers can still face difficult situations and may need assistance sorting through facts, policies, legal obligations. I and other attorneys at Mangum, Wall, Stoops & Warden have the knowledge and expertise to advise employers in those situations.

If you have any questions about this overview, or need assistance with an employment matter under the NPEA, please contact me at Mangum, Wall, Stoops & Warden, PLLC by using the contact information provided below. I can also be available to give presentations on the NPEA.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden.

EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part II: Adverse Action, Just Cause, and Prejudice, Intimidation, and Harassment

April 6, 2017 Comments Off on EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part II: Adverse Action, Just Cause, and Prejudice, Intimidation, and Harassment

The purpose of the Navajo Preference in Employment Act (“NPEA”) is to promote economic development and jobs for Navajos on tribal land. Most employers on the Navajo Nation follow the requirements of the NPEA carefully, but compliance with the NPEA can involve considerable time and effort. This post is the second of three overviews of key aspects of the NPEA, and it focuses on adverse actions, just cause, and prejudice, intimidation, and harassment issues. Part 1 discussed the hiring process under the NPEA, and Part 3 will discuss the process for resolving disputes between employees and employers.

These overviews provide only a brief introduction to some of the key rules that employers on the Navajo Nation must comply with under the NPEA. Some employers on the Navajo Nation may also need to comply with federal employment laws in addition to the NPEA. If you have questions about specific issues or a specific employment situation, we recommend that you seek legal advice.

ADVERSE ACTION AND JUST CAUSE UNDER THE NPEA

A basic requirement of the NPEA is a rule that prevents employers from taking any adverse action against an employee unless the employer has just cause. This general rule is often summed up in the catch phrase, “No adverse action without just cause.” This rule usually applies in situations where discipline or termination is involved, but it can apply to any adverse action against an employee.

This requirement of the NPEA is very different from state law. Under Arizona law, most employment arrangements are considered “at-will employment,” and both the employee and the employer may terminate the employment at any time. It is generally thought that the NPEA prohibits at-will employment since ending the employment arrangement without just cause would be an adverse action.

So, what exactly are “adverse action” and “just cause”?

What is “adverse action”?

Under Navajo case law, the term “action” refers to almost any act by an employer that relates to the employment relationship with an employee. An employment action is “adverse” if the result of the action has some tangible, negative effect on the employee’s employment. For example, an action is likely adverse if an employer puts an employee on an improvement plan since a failure to improve work performance could result in termination.

What is “just cause”?

The term “just cause” is not defined in the NPEA, and the case law discussing the term considers just cause to be a broad concept that must be evaluated on a case-by-case basis. But the Navajo Nation Supreme Court has stated that just cause must be substantial and cannot be based on small or minor problems. For example, an employer will not have just cause for an adverse action if the action is based on an employee’s minor neglect of duty, an excused absence, a minor false statement, or mere rudeness.

Here are some tips for complying with the adverse action/just cause requirements:

Tip #1: Use and Follow Written Employment Policies and Procedures.

Just cause for an adverse action can be easier to support if the employer relies on written policies and procedures and a written job description. Under Navajo law, an employee manual creates obligations or rules that both the employer and the employee are expected to follow. Employers must recognize that employees have a reasonable expectation that employers will follow their own written policies and procedures. By closely following written policies and procedures, an employer has a better chance of showing just cause when an employee does not follow policy.

Tip #2: Always Notify the Employee in Writing when Just Cause is Substantial and Include a Clear Statement of the Facts.

The NPEA requires that employees be notified in writing when just cause exists for adverse action. Although a verbal warning may be appropriate for minor problems, an employer must provide written notification when an employee’s work performance is below expectations or an employee’s conduct is a significant violation of policy. In addition, the written notice must include specific facts that are the basis for the adverse action. The facts must be reasonably clear and specific because the facts will be relied upon to show how just cause exists by comparing the facts to the employer’s written policies and/or the job description.

Tip #3: Improvement Plans and Progressive Discipline May Help Minimize Claims.

Many employers on the Navajo Nation use progressive discipline and improvement plans, which can be helpful in minimizing employee claims under the NPEA. Progressive discipline and improvement plans involve an approach that gives an employee a second chance while also protecting the employer since everything about the adverse action is documented. If the employee again violates the employer’s policies or continues work performance that is below expectations, then the employer can take additional steps to help an employee meet expectations under the employer’s policies. If termination becomes necessary after a second or third chance, the written notifications (and following all policies and procedures) can be used as evidence that the employer made a strong effort work with the employee, but the employee did not adjust to required standards of conduct and/or meet work performance expectations.

Tip #4: “Term” Contracts Do Not Violate the NPEA.

Under the NPEA, a “term” contract may be used to create an employment arrangement. A “term” contract is a contract that is effective only for a specific time period (the “term” of the contract). Under a term contract, the contract ends when the term has been completed, and there is no contractual obligation to renew or continue the arrangement after the contract has ended. If an employment contract simply ends because the contract was written that way, and if the employer does nothing to extend the contract or replace it with another, then the employer has not taken any adverse action. Thus, an employer can use a term contract, let the contract expire at the end of the term, and the employment arrangement will end, but the employer remains in compliance with the NPEA. Even so, an employer cannot use a term contract if, at the time the contract was entered, it was structured to avoid compliance with the NPEA.

PREJUDICE, INTIMIDATION, AND HARASSMENT UNDER THE NPEA

The NPEA also places an obligation on employers to prevent prejudice, intimidation, and harassment against employees. This obligation covers employer-initiated situations as well as employee-on-employee prejudice, intimidation, and harassment. Although sexual harassment was not originally covered, the NPEA was amended in the spring of 2016 to include sexual harassment as a prohibited form of harassment. Employees often make claims of prejudice, intimidation, and harassment, especially when they believe the employer is not following its own policies or others in the workplace are being treated differently.

CONCLUSION

Complying with the NPEA can take a great deal of time and effort, especially in the areas of hiring and discipline, but the risk of financial liability can be reduced by focusing on the employer’s key legal obligations. This second of three articles provides only a brief overview of common claims that an employee can make against an employer, and employers can still face difficult situations and may need assistance sorting through facts, policies, legal obligations. I and other attorneys at Mangum, Wall, Stoops & Warden have the knowledge and expertise to advise employers in those situations.

If you have any questions about this overview, or need assistance with an employment matter under the NPEA, please contact me at Mangum, Wall, Stoops & Warden by using the contact information provided below. I can also be available to give presentations on the NPEA.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden.

EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part 1: Navajo Preference in Hiring

February 18, 2017 Comments Off on EMPLOYER COMPLIANCE WITH THE NAVAJO PREFERENCE IN EMPLOYMENT ACT: Part 1: Navajo Preference in Hiring

Employers on the Navajo Nation spend a great deal of time and effort on complying with the Navajo Preference in Employment Act (“NPEA”). The NPEA is an employment-preference law that promotes economic development and jobs for Navajos on tribal land. This overview is the first of three introductory articles on key aspects of the NPEA. The next article will address adverse actions, just cause, and prejudice, intimidation, and harassment issues. The third article will discuss the process for resolving disputes between employees and employers.

These overviews provide only a brief introduction to some of the key rules that employers on the Navajo Nation must comply with under the NPEA. Some employers on the Navajo Nation may also need to comply with federal employment laws in addition to the NPEA. If you have questions about specific issues or a specific employment situation, we recommend that you seek legal advice.

THE HIRING PREFERENCE RULES UNDER THE NPEA

Every employer hires employees and makes employment-related decisions, but the NPEA has some very specific hiring procedures that must be followed. For example, the NPEA has rules that cover advertising, job announcements, and most importantly, the hiring process. The hiring-process rules are important because they require employers to hire the most-qualified applicant after sorting all applicants into three prioritized pools.

Tip #1: Prepare and File an Affirmative Action Plan.

To begin, an employer on the Navajo Nation must have a Navajo affirmative action plan on file with the Office of Navajo Labor Relations (“ONLR”). The NPEA specifically requires the preparation and filing of an affirmative action plan. The plan must establish the employer’s approach to affirmative action in employment that is specific to Navajos. In addition, the plan must include “timetables for all phases of employment to achieve the tribal goals of employing Navajos in all job classifications including supervisory and management positions.” ONLR has specific regulations describing the details that must be covered in the affirmative action plan. A copy of those regulations is available here.

Tip #2: In Job Announcements, State that Preference is Given to Qualified Applicants in Accordance with the Navajo Preference in Employment Act.

Every employer needs to find employees, and to find those employees, the employer typically needs to prepare a job announcement. Under the NPEA, job announcements must state that an employment preference is given to Navajos under the NPEA. For example, the job announcement might say: “[Employer name] gives preference to eligible and qualified applicants pursuant to the Navajo Preference in Employment Act.” Of course, this statement would be in addition to other statements that may be necessary or permitted, such as a preference for veterans.

Tip #3: Advertise Job Openings on Radio Stations and in Newspapers that Will Reach Navajo Job Seekers.

Once the job announcement is written, the employer needs to distribute the announcement where potential job seekers will see or hear about it. Under the NPEA, employers must advertise job openings on radio stations and in newspapers that will reach Navajo job seekers. Employers are not limited to media that will reach Navajo job seekers, but must include radio and newspapers that will reach Navajo job seekers.

Tip #4: After All Applications Have Been Received, Identify the Qualified Applicants.

Once all applications for the job have been received, an employer must first review the applications and screen out any applicants who do not meet the minimum qualifications for the job. The remaining applicants—those who meet the minimum qualifications—may be interviewed and ranked according to their qualifications. To determine how well qualified each candidate is, the employer may use interviewing, credential checking, reference checking, and other hiring techniques. Employers have at least some flexibility in this area as long as the process does not discriminate based on status as a Navajo.

Tip #5: Sort the Applicants into Three Preference Categories:  (1) Navajo Applicants; (2) Non-Navajo Indians and Spouses of Navajos; and (3) All Other Applicants.

Then, hire the most-qualified Navajo, non-Navajo Indian or Spouse of a Navajo, or Other Applicant in that Order of Preference.

After ranking the candidates through interviewing and qualifications, the applicants must be sorted into the following categories, which are listed in order of preference: (1) Navajo applicants; (2) non-Navajo Indians and spouses of Navajos; and (3) all other applicants. The basic rule under the NPEA is that the most-qualified Navajo must be hired, since this category has the highest level of preference. If there are no qualified Navajo applicants, then the employer must hire the most-qualified non-Navajo Indian or spouse of a Navajo. If there are no qualified applicants in this second preference category, then the employer may hire the most qualified of the remaining applicants.

This process for sorting applicants into three prioritized pools and hiring the most-qualified applicant starting with the first pool is a basic requirement of the NPEA. All employers on the Navajo Nation must follow this process although some employers with federal contracts may be required to substitute an Indian preference for the Navajo preference.

CONCLUSION

Complying with the NPEA can take a great deal of time and effort, especially in the areas of hiring and discipline, but the risk of financial liability can be reduced by focusing on the employer’s key legal obligations. This brief article is the first of three articles on some of the basic rules of the NPEA. The hiring process rules discussed in this first article provide a basic introduction, but employers can still face difficult situations and may need assistance sorting through facts, policies, legal obligations. I and other attorneys at Mangum, Wall, Stoops & Warden have the knowledge and expertise to advise employers in those situations.

If you have any questions about this overview, or need assistance with an employment matter under the NPEA, please contact me at Mangum, Wall, Stoops & Warden by using the contact information provided below. I can also be available to give presentations on the NPEA.

James D. Griffith is an Associate Attorney at Mangum, Wall, Stoops & Warden, PLLC. He is licensed as an attorney in Arizona, the Navajo Nation, and the Hopi tribal courts. For more information on the legal services offered by Mr. Griffith, please call (928) 779-6951 or toll free at (800) 514-6064 or through the “Contact Us” page at the website for Mangum, Wall, Stoops & Warden.