Not knowing may be an expensive mistake
As you are all aware, volunteers are individuals who provide services to nonprofits without pay. They typically work part time, and they typically do something that the public expects to be done by volunteers and not by paid staff. We typically see volunteers as those who get some sort of “psychic income generated by the act of doing good [deeds].”1
You might be surprised then, to find that your volunteers might not be considered a volunteer by an agency of the government, an insurer, or an injured party. Under certain circumstances, they may be deemed to be engaged in working time rather than volunteerism. The classification as volunteer/ employee usually involves wage and hour laws, but it can be brought on by an injury at the workplace, a charge of harassment, or an act or omission that causes your organization to be held responsible.
As the word implies, volunteers must engage in an activity voluntarily. But as we know, people volunteer for different reasons, and those reasons matter. One who performs services “without promise or expectation of compensation, but solely for his [or her] personal purpose or pleasure” is not an employee.2
Those who get something more out of it may very well be deemed under the law to be an employee, even if no offer of employment was made or accepted.
There is a two-part test for volunteers that is useful to apply. First, the putative employer must control the work done under ordinary tests of agency. That is, if the worker is performing some task under the auspices of the organization, then he or she will be determined to be your agent under the principle of respondeat superior.3
Second, the putative employee must be “hired.” This part looks to whether or not some benefit is offered in exchange for the activity performed. The first part of this test is easy, as almost any volunteer will be engaged in some way that is or should be controlled by the organization. It is the second part that causes trouble. Let’s look at various examples that highlight the issue.
Volunteers In Training
Trainees who are not paid during their period of training are considered to be true volunteers and not subject to minimum wage or overtime. This is an old, old principle. The government considers the person as serving only his or her own interest, and you as their employer as providing aid and instruction with no immediate advantage from a trainee’s work.
DISCLAIMER
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This volunteer-in-training approach was enunciated by the U.S. Supreme Court in 1947, not long after the Fair Labor Standards Act came into existence.4 “The Act [FLSA] was not intended to penalize railroads for providing, free of charge, instruction that if taken at a public or private school would most greatly benefit the trainee, and where it could not reasonably be suggested that he was an employee,” said the court. “Otherwise, all students would be employees of the school or college they attended, and as such entitled to receive minimum wages.”5
This principle is alive today, so much so that some commentators worry that corporations exploit trainee programs to get cheap labor. In some industries an internship is the only way to get a foot in the door.6
Volunteers Who Receive Tangible Benefits
Volunteers who receive some benefit in return for their labor are the ones most likely to be reclassified as employees. The leading case in this area was decided by the U. S. Supreme Court in 1985. The Tony and Susan Alamo Foundation was held to be an employer of “associates” who they had classified as volunteers. These “associates” were former drug addicts, derelicts, or criminals who had been rehabilitated by the foundation and put to work in various commercial businesses. The business proceeds allowed them to live in a halfway house that the foundation owned.
The Alamo Foundation was charged with violations of minimum wage, overtime, and recordkeeping provisions of the FLSA. The U.S. Supreme Court agreed, holding that the “associates” were employees because, even though they did not expect compensation in the form of ordinary wages, they did expect the foundation to provide them with food, shelter, clothing, transportation, and medical benefits.7
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After the Alamo decision, the Department of Labor issued regulations that liberalize who a volunteer may be.8 The regulations provide that volunteers may be paid reasonable benefits (for example, tuition, transportation, or meal costs; and health insurance or pension costs under certain scenarios) or a nominal fee that is not tied to productivity, without losing volunteer status. Unfortunately, these regulations apply only to those public agencies that are specifically identified in them.9
Similar principles find other volunteers to be de facto employees (some commentators call them a “volunteer plus”): volunteer firemen who receive state mandated pensions, life insurance, death benefits, and disability insurance; interns who receive a cash stipend; au pairs who receive education assistance.
How can you distinguish between these situations? It’s tough. Everyone agrees that the lines are not clear and that the difference is merely a matter of degree: Trainees are not expected to be trainees forever, while ex-drug addicts could work for years while living under the protective shelter of a halfway house.
Workfare Programs
Workers receiving welfare benefits but required to engage in a community work experience program are not employees under the FLSA. Even though the work may be mandated and recipients can lose benefits or even be penalized if they fail to work, this is not considered to be employment.
This is a policy decision. As the Minnesota Supreme Court noted, ruling otherwise “would distort the nature of [the county’s] role in the program … The [county] program is designed to engage participants in meaningful work activities that will enhance the participant’s employability.
If … participants are permitted to bring workers’ compensation actions against non-governmental placement sites, a substantial negative impact on the availability of worksites willing to host [county] participants who need work experience is predictable.”10
Employees Who Volunteer During Off-Hours
Employees who volunteer to work off-hours must be carefully managed. First, the law is clear that any employee who volunteers to work overtime in the same capacity as he or she works during the week must be paid overtime. This is standard practice and accepted law. You must instruct your employees not to work overtime if you are not prepared to offer overtime pay. And, if your employees do work overtime without authorization, you must take steps to discipline the employee and even the supervisor in order to make it clear that they are not working at your sufferance.11
However, if one of your employees who works 40 hours during the week truly volunteers to help in another capacity on his or her days off, you may consider that employee to be a volunteer. But be aware that the Department of Labor will be skeptical of the arrangement, and you must be prepared to defend it. See the sidebar for a sample policy that would help clarify this so that a true volunteer will not be later reclassified under FLSA. The lesson: Be careful when you work with volunteers.
ENDNOTES
1. McAdoo v. Diaz, 884 P.2d 1385, 1390 n.5 (Alaska 1994).
2. Walling v. Portland Terminal Co., 330 U.S. 148 (1947).
3. Latin for “let the master answer.” This master-servant rule is why an employee who causes a car accident while discussing company business will be covered by the employer’s policy.
4. The FLSA was created in 1938 and is found at 29 U.S.C. '210-219.
5. Walling v. Portland Terminal Co., 330 U.S. 148 (1947).
6. See Rubenstein, Mitchell, “Our Nation’s Forgotten Workers: The Unprotected Volunteers” 9 U. Pa. J. Lab. & Emp. L. 147 (Fall, 2006).
7. The associates had vigorously asserted that they considered themselves volunteers who were working only for religious and evangelical reasons. “It would be difficult to conclude that the extensive commercial enterprise operated and controlled by the foundation was nothing but a religious liturgy engaged in bringing good news to a pagan world,” responded the court. “The fact that the compensation is primarily in the form of benefits rather than cash is immaterial in this context, such benefits simply being wages in another form.”
8. 29 C.F.R. '553.106.
9. This has been upheld recently in a case against America Online by “community leaders” who had provided services to various “communities” online. Hallissey v. Am. Online, Inc., 2006 U.S. Dist LEXIS 1294.
10. Alcozer v. North Country Food Bank, 635 N.W. 2d
11. The FLSA defines an employee as “any individual employed by an employer.” 29 U.S.C. '203(e). The term ‘employ’ includes: to suffer or permit to work.” 29 U.S.C. '203(g).
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Kathryn Vanden Berk practiced law for nine years before serving as the president of two residential treatment centers for children. Now practicing in Chicago, she focuses on nonprofit start-ups, corporate and tax law, and employment issues. She serves as adjunct faculty at several Chicago universities, and is a member of the Advisory Board of the Axelson Center for Nonprofit Management at North Park University. She authored a handbook on starting nonprofits that is available from the Nonprofit Financial Center, Chicago, and a chapter in the Illinois attorney’s handbook Not-for-Profit Corporations, 2004 Ed., Illinois Institute of Continuing Legal Education. In 2004 she authored Retooling Employment Standards for the Future, a publication of the First Nonprofit Educational Foundation, Chicago. She can be reached by e-mail or at 312-558-1690. |
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