It is that fun time for New Year’s resolutions. Right up there with promises to go to the gym and to try to get along with one’s in-laws, many will make plans to do more volunteer work in 2015. From an employer’s point of view, a worker who willingly agrees to give his or her time and effort to the company without expectation of pay may seem like the perfect belated holiday gift. However, as we have previously discussed, in the context of student interns and independent contractors, if an individual is a bona fide employee, he or she cannot waive the right to receive minimum wage under federal and state law. Accordingly, employers must carefully examine all the relevant circumstances (which will differ based on whether the employer is a for-profit or nonprofit entity) in considering an employee’s offer to volunteer.

For-Profit Companies – Employee Volunteering Is Prohibited

The U.S. Department of Labor (DOL) is clear on this issue — non-exempt employees may not volunteer services when the benefit of those services goes to for-profit, private sector employers. There are no exceptions, and such companies must refuse any non-exempt employee offer to spend some extra time working for the company without pay.

That said, there may be circumstances where the employer makes a New Year’s resolution of its own and decides to sponsor or participate in some sort of community or volunteer event, like helping out at a homeless shelter for a day or participating in a charity bike ride. Under such circumstances, employees may participate as long as:

(A) The event is unrelated to the company’s usual business and participation does not bring direct economic benefit to the company

(B) The event takes place outside of the employee’s regular working hours

(C) Participation is truly voluntary, meaning that employees who do participate should not be treated any more favorably than those who choose not to participate

(D) The company does not employ workers who are regularly paid for participating in the subject charity event, while permitting other employees to volunteer

Nonprofit Organizations — The Situation Is Much More Complicated

Unlike for-profit companies — which can never have volunteers to do the company’s work for nonprofits , there is an exception for volunteers. This exception to the wage laws applies where the individual undertakes the activity for his or her own “personal, civic, charitable, humanitarian, religious, or public service reasons.” To this end, the DOL has instructed that activities constituting “ordinary volunteerism” are not compensable. When determining whether an activity is “ordinary volunteerism,” the DOL and courts consider the following factors, in addition to ensuring that the work is truly voluntary:

(A) Nature of the entity receiving the services — is the volunteer directly involved in commerce?

For example, if an individual volunteers in a part of a nonprofit which sells goods or services to the public — for example, working in a restaurant operated by a nonprofit — the DOL may not recognize them as volunteers for Fair Labor Standards Act (FLSA) purposes. On the other hand, if the individual is involved in non-sales duties, such as assisting the elderly, tutoring children, or planting at a community garden, it is more likely they will be deemed a true volunteer, rather than an employee.

(B) Nature of compensation of any sort (such as money, room and board, perks, etc.) — do you ever pay this person?

Volunteers should be true volunteers. Giving significant gifts or a monetary stipend less than minimum wage to a volunteer makes it more likely that the individual will be deemed an employee. Likewise, if a person already is a paid employee of a nonprofit, that individual can never offer the same or similar services, or services related to those for which she is paid. Likewise, an employee of a nonprofit must always be paid for volunteer work during their regular working hours or at the employer’s request or direction.

(C) Are others being paid as employees for the same type of work?

This factor focuses on whether the volunteer is displacing a bona fide employee. If the services performed by the volunteer are the same or similar to those performed by paid workers, it is likely that your “volunteer” will be deemed an employee as well and entitled to minimum wage.

D) How much control does the company exert over the volunteers?

While any organization may have rules related to provision of services, the more restrictions placed on what volunteers may do and how they may do it, the more likely they may be considered an employee. On a similar note, an individual who volunteers on a part-time basis and chooses their hours freely is more likely to be deemed a true volunteer than one who is scheduled for forty hours a week and needs to go through a formal approval process before varying from that schedule.

None of these factors is a “sure thing” in determining whether someone is a true volunteer and, ultimately, whether an individual must be paid as an employee depends on the particular circumstances. In all circumstances, however, employers should tread cautiously when dealing with an individual who volunteers to do work for free.