I'm doing a site for a non-profit organization. My client (the lady who runs the organization) was wondering if it was legal to have pictures that we scanned of people at the organization's events on the web site.

For example, we have a picture of an easter-egg hunt and there are 10-20 kids collecting easter eggs.

What are the laws regarding this. It would be unreasonable to go to all 20 people and have them sign waivers. Is it ok to put them on the site?

Some other pics contain only a few people (1-5).

I'm not sure, but when our transit agency takes photos, we general tell the persons in the photo that it may be used for marketing purposes and if they object to it to let us know.

Most people, if asked would be happy to let you use a pic.
However i would suggest you at least ask/tell them what you plan to do... Just my HO

It would be advisable that you inform whoever's in the picture that they would be displayed on your website. However, especially since your site is for a non-profit cause, I really don't see any reason why you'd run into trouble.

Okay, IANAL but I do run a not for profit website with many thousands of pictures of people at public events, nearly all taken and posted without their permission.

As I understand it, so long as you're not using the pictures for marketing you're safe. For example, the Girls Gone Wild videos are pretty much untouchable and the people on them have no recourse. But if they use your picture on the cover of the video or in one of their commercials, they need your release.

I think sense and sensitivity are called for. When we take pictures for our site we try to hand out cards with the site URL to as many people as we can. On each web page I have a statement that any picture will be removed on request (and I honor that). But in 3 years I've never had any trouble or threats and trust me when I say my pictures are potentially a lot more embarassing than some kids hunting Easter eggs!

I was recently asked for permission for images of my daughter (she volunteers there) to be used on an animal shelter's website (and any other publications they saw fit). They gave me a permission slip to sign, which I refused.
Why?
They wanted "absolute and irrevocable right and permission", "to copyright the same in the organization's name or otherwise" for "any purpose whatsoever".
Can you see why I refused?
Had they not asked for the world, I might not have been against it. If you do seek permission, especially in the case of minors, use careful wording.