What HR rules apply to California nonprofits?

Nonprofits are a core part of who I serve, and nonprofit HR is where I see the same mistakes most often. The most common misunderstanding I hear is that 501(c)(3) status loosens employment law. It does not. Tax exemption is about income tax. Wage, leave, discrimination and safety laws apply the same way to a food bank as to a software company.

Who can be a volunteer?

A person can volunteer for a nonprofit when they give time for civic, charitable or humanitarian reasons, with no promise or expectation of pay. The lines that turn a volunteer into an employee:

• Doing the same work, on the same schedule, as paid staff, or filling a paid position that is vacant.
• Receiving stipends, gift cards or “reimbursements” that track hours worked rather than actual expenses.
• Being a current employee who “volunteers” for the same kind of work they are paid to do.

A board member who volunteers time is fine. A program coordinator who “volunteers” 20 hours a week in exchange for a monthly stipend is usually an employee owed minimum wage, overtime and breaks. Classification trips up nonprofits too, see the ABC test. Home care programs should read caregiver overtime rules.

Are your exempt employees really exempt?

To be exempt from overtime in California, an employee must meet a duties test and earn at least twice the state minimum wage for full-time work: $70,304 a year in 2026, rising to $72,384 on January 1, 2027 with the $17.40 minimum wage. Program managers and coordinators at small nonprofits often fall below that figure, which makes them nonexempt no matter what their title says. They need time records, overtime after 8 hours in a day or 40 in a week, and meal and rest breaks. Training rules are in who can deliver harassment prevention training.

Grant-funded positions

A grant ending is a legitimate business reason for a layoff, but it does not change the process. Final pay is due on the last day, accrued vacation is paid out, and required separation notices still apply. Put the funding source in the offer letter so no one is surprised, and do not describe a grant-funded job as guaranteed for the grant period unless you mean it. Many nonprofits also need a workplace violence prevention plan.

Rules by size that apply to nonprofits

• From the first employee: minimum wage and overtime, paid sick leave, final pay rules and a workplace violence prevention plan, unless you qualify for the narrow exception for sites closed to the public with fewer than 10 employees.
• At 5 employees: harassment prevention training and CFRA family leave. Nonprofit teams can find the training side in facilitation training for nonprofits.
• At 15 employees: pay ranges in every job posting.
• In San Francisco, nonprofits are exempt from the Health Care Security Ordinance until 50 employees, higher than the 20 for-profit threshold. See the San Francisco page.

The full threshold list is in California HR laws by headcount.

Where nonprofits get the most value from HR help

Classification and pay structure. Most small nonprofits I review have at least one role misclassified as exempt and no written pay ranges, which becomes a problem the first time they post a job at 15 employees. Fractional HR is usually the right size for an organization with 10 to 75 staff and no HR director.

Nonprofit HR below about 50 people rarely needs a full-time hire. Fractional HR or a single project usually covers it, and the cost math is published.

Once compliance is in place, retention is the next issue, and I cover it in five structures that help a nonprofit keep its staff.

McKinley holds a J.D. but is not a licensed attorney. Articles here are general information, not legal advice. For your specific situation, talk with an employment attorney.

Data current as of September 2026. Sources are linked where each figure appears.