Social enterprises, cooperatives groceries, non-profit businesses, organic farms, and eco-villages are the wave of the future, so it is sad to say that the law often prevents us from volunteering our time to create and sustain them.  Many people feel moved to volunteer for enterprises of all kinds, especially if they make our communities a better place.  But our labor laws allow us be moved only so far, and limit volunteering to government entities and nonprofit organizations conventionally recognized as charitable, religious, civic, and humanitarian. 1

Here is the federal law on volunteering, as summed up by one Department of Labor Opinion Letter (numbering added):

“Individuals may work for charitable, civic or religious nonprofit enterprises without expectation of compensation and be considered a ‘volunteer’ not included in the definition of ‘employee’ subject to the requirements of the Act. Such activities have been described as ‘ordinary volunteerism.’ Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 303 (1985). In determining whether a particular activity involves “ordinary volunteerism,” the Department considers a variety of factors, including

1)     the nature of the entity receiving the services,
2)     the receipt by the worker (or expectation thereof) of any benefits from those for whom the services are performed,
3)     whether the activity is less than a full-time occupation,
4)     whether regular employees are displaced,
5)     whether the services are offered freely without pressure or coercion, and
6)     whether the services are of the kind typically associated with volunteer work.” 2

It’s also important to emphasize that someone can be determined to be an employee, even if they “vehemently” feel that they are volunteers.  In the case of Tony & Susan Alamo Foundation, where volunteer associates helped operate commercial businesses in support of a nonprofit religious foundation, the Supreme Court stated:

“That the associates themselves vehemently protest coverage under the Act makes this case unusual, but the purposes of the Act require that it be applied even to those who would decline its protections.  If an exception to the Act were carved out for employees willing to testify that they performed work “voluntarily,” employers might be able to use superior bargaining power to coerce employees to make such assertions, or to waive their protections under the Act.” 3

The Nature of the Entity

One question to ponder is how choice of entity makes a difference for the purposes of applying employment law to volunteers.  Laws that govern the formation, operation, and taxation of entities are entirely separate bodies of law from employment law, and the two bodies of law have yet to get together and discuss how employment law applies in new hybrid entities, such as Low-Profit Limited Liability Companies (L3Cs) and Benefit Corporations, or in regular for-profit businesses that operate charitable projects separate from their business activities.

FLSA specifically allows people to volunteer for governmental agencies under certain circumstances 4 and the ability to volunteer for nonprofit charities and religious organizations has been clearly established by courts along the way.  As a general rule, people cannot volunteer for “ordinary commercial activities,” even if those activities are operated by and for the benefit of charities and religious organizations. 5

Protecting workers is also not the only motivation behind FLSA, as acknowledged in Tony & Susan Alamo Foundation.   Another purpose is to prevent unfair competition between businesses, by ensuring that some businesses do not gain an edge by using volunteer labor.  The Court noted in Tony & Susan Alamo Foundation that “the Foundation’s businesses serve the general public in competition with ordinary commercial enterprises,” and allowing people to volunteer would “give petitioners and similar organizations an advantage over their competitors.”  The Court declared:

“It is exactly this kind of “unfair method of competition” that the Act was intended to prevent, see 29 U. S. C. § 202(a)(3), and the admixture of religious motivations does not alter a business’ effect on commerce.” 6

As we’ve explained elsewhere in this e-resource library, in connection to the Hmong and Lao farmer example, business practices and market conditions tip the scales of competition so far in favor of large companies that it’s simply not practical to try to compare businesses for the purposes of the “unfair competition” argument.  In the meantime, it is worth doing more research to understand what courts mean by “ordinary commercial enterprise,” and to question whether people may volunteer for a somewhat unordinary commercial enterprises, if those enterprises are designed to directly serve charitable purposes.

For example, imagine that a cooperative of 100 low-income people is formed and each member pays, on a sliding scale, to have rotating teams of members install energy-saving retrofits in each other’s homes.  The income is used to purchase supplies, teach classes on sustainable living, and to expand the cooperative’s purposes to serve members in other ways.  Even if this cooperative is not structured as a nonprofit corporation, because it does not distribute profits to members, this entity might be considered non-profitable under some definitions, and it is arguably serving charitable aims by serving low-income members.  At the same time, it might be considered an enterprise operating in competition with similar businesses.  Part of this last determination may turn on whether the services are offered to the general public.  One California Division of Labor Standards Enforcement (DLSE) Opinion Letter states that people cannot volunteer for a nonprofit if that nonprofit is operating a business that serves the general public:

“[W]hen religious, charitable, or nonprofit organizations operate commercial enterprises which serve the general public, such as restaurants or thrift stores, or when they contract to provide personal services to businesses, such enterprises are subject to the Industrial Welfare Commission Orders and volunteers may not be utilized.” 7

Such a rule would seem to make it illegal for Girl Scouts to sell cookies, so it’s not entirely clear how far this rule is actually intended to extend.  However, it is significant that this prohibition applies only to enterprises that serve the “general public,” which might indicate that people could sometimes volunteer for charitable enterprises that are serving a limited group of disadvantaged people, such in the energy retrofit example above.

While it is generally not permissible for people to volunteer for commercial activities operated by charities, what is the rule for charitable activities operated by commercial businesses?  Under what circumstances people may volunteer under the umbrella of a for-profit to engage in a project that is primarily charitable?  Some courts have hinted that incorporation as a nonprofit is important, 8 but there otherwise does not seem to be strong precedent requiring this.  For example, if a restaurant converts to a charitable “soup kitchen” once per month and offers meals for free to the public, can individuals volunteer their time for that project?  Granted, the “soup kitchen” event brings good PR to the restaurant, but the primary purpose of the restaurant and the primary motivation of people volunteering is likely charitable.  We believe that volunteering should be allowed under these circumstances, but more case law research is necessary to flesh out the exact limits and possibilities for this.  Note, however, that if the café has regular employees, those employees probably could not volunteer on “soup kitchen” day, because the work may be too similar to the work they normally do for pay.

Can Volunteer Receive Benefits?

Another interesting question is: what kinds of incentives and material gratitude can you offer people when they volunteer?  Many nonprofit community gardens “pay” their volunteers in food, for example.  Does such compensation lend to the argument that they are actually economically dependent on the garden and therefore should be treated as employees ?

The rule expressed by the Department of Labor and in FLSA is that people are allowed to volunteer so long as it is “without promise, expectation, or receipt of compensation for the services rendered, although a volunteer can be paid expenses, reasonable benefits, or a nominal fee to perform such services.” 9  The FLSA does explicitly allow people to volunteer for a private nonprofit food bank, even if the volunteer receives groceries in return. 10  It is hard to know whether that is a narrow rule applicable only to food banks, or whether that rule can be extrapolated to similar types organizations, like community gardens.

One interesting case on this is Hoste v. Shanty Creek Management, Inc., 11 where a volunteer ski patroller was injured and made a claim for workers’ compensation.  The court decided that he was a volunteer, not an employee, even though he received free lift tickets, skiing privileges for family members, free hot beverages, and discounts on meals and merchandise.  Court found that these benefits were “an accommodation” to the claimant rather than a payment intended as wages.

In one Opinion Letter, the Department of Labor (DOL) employed a “20 percent test” to determine the acceptability of fees paid to volunteers in a public agency. 12  In that case, high school sports coaches were paid small stipends, and the DOL decided that such stipends may be paid to volunteers, as long as the amount is no more than 20 percent of what would normally be paid to a person employed in the same position.  The irony of this rule is that it acknowledges that employees might normally fill such a position, and seems to go against the rule that volunteers should not replace regular employees.  Note also that this opinion applied to a public agency, and not to a nonprofit organization.  Nevertheless, the 20 percent test offers helpful guidance in determining what is or is not considered nominal.

Other Resources on Volunteers and Employment Law

Footnotes

  1. The word “humanitarian” is only sometimes included in the list of purposes for which someone may volunteer. See Department of Labor Opinion Letter, FLSA2008-13, December 18, 2008.
  2. Department of Labor Opinion Letter, “Nurses and volunteer hours / training time,” FLSA2001-18, July 31, 2001.
  3. Tony & Susan Alamo Foundation v. Sec’y of Labor, 471 U.S. 290, 302 (1985).
  4. The FLSA provides that “{t}he term ‘employee’ does not include any individual who volunteers to perform services for a public agency . . . if – (i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and (ii) such services are not the same type of services which the individual is employed to perform for such public agency.”  29 U.S.C. § 203(e)(4)(A) (2006).
  5. Tony & Susan Alamo Foundation v. Sec’y of Labor, 471 U.S. 290, 302 (1985).
  6. Tony & Susan Alamo Foundation v. Sec’y of Labor, 471 U.S. 290, 299 (1985).
  7. See California Division of Labor Standards Enforcement Opinion Letter dated October 27, 1988, available at http://www.dir.ca.gov/dlse/opinions/1988-10-27.pdf
  8. See Isaacson v. Penn Community Services, Inc., 450 F.2d 1306, 1310 (4th Cir 1971), stating: “Penn Community is a non-profit corporation and its corporate purposes are the public good in the community in which it operates.  In the broad sense, therefore, any benefit to Penn Community was benefit to the public at large — a benefit of a different nature than that of a for-profit enterprise.”
  9. See Department of Labor Opinion Letter, “Volunteer emergency crew as separate and independent agency under section 3(e)(4)(A),” FLSA 2008-13, December 18, 2008, and FLSA, which notes that volunteers may receive “nominal fees” and “reasonable benefits” (29 U.S.C. § 203(e)(4)(A)) 
  10. 29 U.S.C. § 203 (e)(5)
  11. Hoste v. Shanty Creek Management, Inc.,  592 N.E.2d 360 (Mich. 1999).
  12. Department of Labor Opinion Letter, “Nonexempt employees who volunteer as coaches/advisors and nominal fees under section 3(e)(4)(A),” FLSA 2005-51 (November 10, 2005)