Volunteers and the FLSA: When Non-Profit Employers Must Pay for Volunteer Work

In yesterday’s post, we discussed the rules governing when for-profit, private sector employers can accept “volunteer” services.  In short, the answer is not very often.

However, public sector and nonprofit employers have more flexibility when under the Fair Labor Standards Act (FLSA) when working with volunteers, as you might expect.  Unlike for-profit, private businesses, nonprofit employers and public employers can more readily accept volunteer services without running afoul of the FLSA’s minimum wage and overtime requirements. The FLSA regulations contain an exception for individuals who undertake volunteer activities for their own “personal, civic, charitable, humanitarian, religious, or public service reasons.”  There is also no prohibition on anyone employed in the private sector from volunteering in any capacity or line of work in the public sector, a topic we’ll address in our third and final post in this series.  If your employees want to support the Redlands Christian Migrant Association (a charity that my wife and I support), the YMCA, or their local government, they are (generally) free to do so within a few, broadly defined boundaries.

The DOL has recognized that “ordinary volunteerism” to religious, charitable, and nonprofit organizations and schools does not create an employment relationship. Unlike “volunteering” for more work at work, individuals engage in true volunteer services without expecting any remuneration of any type and without coercion. To determine whether an individual is truly volunteering, the DOL and federal courts look to:

1. The nature of the entity receiving the services
2. The character of the services themselves
3. The amount of control the employer exerts over the volunteer
4. Compensation or benefits provided to the individual, or that the individual expects
5. Whether the volunteer work displaces paid work by regular employees

The first factor examines what the volunteers do. In some situations, “volunteers” might be operating a business selling goods or services.  The fact that the business, like a resale shop, a newsstand, or a restaurant, might be not-for-profit does not mean that the “volunteers” are not selling goods or services to the public and thereby directly participating in commerce.  Therefore, the DOL and courts will generally look more favorably on volunteers working in non-sales roles, such as the docents at the hospital in my hometown who give information to visitors or servers at a soup kitchen or food bank who serve or pass out food.

Similarly, a person who already performs the same or related services for a non-profit on a paid basis cannot perform those services on a volunteer basis at any time, no matter when they provide those services.  For example, a non-profit entity’s employee who drives a shuttle bus cannot “volunteer” to drive the bus for an annual gala or other special events.  The DOL is likely to consider non-employees who receive significant stipends or monetary gifts to be employees, too.

The third factor should look familiar to employers who grapple with independent contractors.  A non-profit that offers a volunteer a part-time schedule with no set hours will likely run into fewer enforcement issues than a non-profit that offers a “volunteer” regularly scheduled, full-time hours or that requires “volunteers” to seek approval for schedule changes.  The fact that the “volunteer” makes less than minimum wage is not a benefit here, only a liability.  The DOL’s past FLSA opinion letters have explained that the more restrictions nonprofit employers put on volunteers, the more likely those “volunteers” would be deemed employees.

Of course, a non-profit should not offer regular and significant benefits to “volunteers,” either.  Volunteers should be just that—people who offer their time with no expectation of payment, whether that payment is disguised as wages, barters, stipends, allowances or something else.   Again, whether the benefits amount to less than minimum wage is not a positive factor.  It can only be a liability.

Finally, the last factor examines whether the “volunteer” displaces a paid employee.  Logically, an employee cannot provide “volunteer” services to a non-profit, even outside of regular working hours.  For the same reason, non-profit employers cannot use “volunteers” to provide the same or similar services as regular employees.

Upshot for Employers

As I mentioned yesterday, no single factor is determinative here. The unique facts of your situation will determine whether your “volunteer” is an employee or a true volunteer.  In our final post in this series, we’ll take one last look at this issue for public sector employers, including a recent decision from the Second Circuit.