Recently someone asked me about allowing employees to volunteer for free instead of being paid. I wanted to answer that more fully here because it might be something you have run into or might be considering in your own business.
For starters, here’s the DOL ruling on that. Let’s break it down and look at two broad categories: for-profit and non-profit organizations.
Employing volunteers at non-profits
The Fair Labor Standards Act (FLSA) defines employment very broadly, i.e., “to suffer or permit to work.” However, the Supreme Court has made it clear that the FLSA was not intended “to stamp all persons as employees who without any express or implied compensation agreement might work for their own advantage on the premises of another.” In administering the FLSA, the Department of Labor follows this judicial guidance in the case of individuals serving as unpaid volunteers in various community services. Individuals who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay, are not considered employees of the religious, charitable or similar non-profit organizations that receive their service.
As you might expect, non-profits have some leeway here. I talk again at the end of this article about a specific problem non-profits might run into with employees and volunteering. It’s when we get to the for-profit side of things that it really cracks down on what employers can do.
Can paid employees volunteer for their employer?
Under the FLSA, employees may not volunteer services to for-profit private sector employers. On the other hand, in the vast majority of circumstances, individuals can volunteer services to public sector employers. When Congress amended the FLSA in 1985, it made clear that people are allowed to volunteer their services to public agencies and their community with but one exception – public sector employers may not allow their employees to volunteer, without compensation, additional time to do the same work for which they are employed. There is no prohibition on anyone employed in the private sector from volunteering in any capacity or line of work in the public sector.
Okay, so that helps us understand if employees can volunteer their time.
- Private/for-profit=no
- Public/for-profit=yes, as long as the person isn’t an employee doing the same work they normally perform
Even if the employee wants to do it and offers, there is still the chance that the employer would be seen in a negative light. Remember my visit to the OFCCP a few years back? Here’s the highlight of the visit:
Ever heard the phrase “innocent until proven guilty?†Not the way of life with the OFCCP, apparently. During the seminar, the speaker reminded us that having interview notes and other data available could help in the event of an investigation. However, in the next second he casually mentioned, “If you don't have the data to back up your claims as to why person X was paid differently from person Y and one of them is a minority, we will assume the worst intentions.â€
I've been around the business world long enough to know that if you're looking for trouble, you'll find it. If you assume the worst, you'll find something to substantiate your claim, no matter how minuscule.
Even if the person is a good employee, there’s no guarantee that will always be the case. DOL audits aren’t started by employees who are happy with their work. They are started by people who are generally unhappy or even those who had a single rough day at work and are looking for a way to fight back. Keep that in mind–it happens to everyone.
Can employees volunteer to work fewer hours?
There is an interesting tangential discussion that I wanted to include here. One of our employees at a previous job was interested in reducing her work schedule to help get through lean times without eating up all of her vacation time. In that instance, exempt employees can voluntarily reduce their work hours, and their pay, without causing issues for the employer.
In that instance, I simply had her draft a short email to her manager and me stating that. The verbiage was something like:
To Whom It May Concern:Â
I realize that we are seeing tighter budgets and I would like to voluntarily request a 32 hour (4 days per week) schedule every other week until further notice. I understand that I will not be compensated for the additional 8 hours I take off and that those hours will not be deducted from my leave balance. I also understand that my manager can recall me to full time service at any time without notice.Â
Sincerely,Â
Jane Doe
Again, if we had simply told the person to stop coming one day every other week, that could have opened up some FLSA issues since technically the person could have said they were an exempt professional ready and willing to work (thus owed their full compensation).
Can volunteers be considered employees?
One final area to cover. Can volunteers be treated like employees? As we have seen, for-profit organizations would do well to stay away from the entire concept of volunteers. For that reason we’ll discuss nonprofits. If given the option, I would try to avoid having volunteers performing any work that other ordinary employees are doing. That helps to keep the “swim lanes” separate and can help to avoid any issues between staff. Imagine doing work for free that the other person next to you is being paid for and you’ll quickly understand that concept.
We used volunteers when I worked at a nonprofit organization and the screening process was handled outside of the normal employment process for the sake of simplicity. We didn’t want to clutter up an already busy hiring process with people who wouldn’t technically be employees.
What other thoughts do you have about employees and volunteering?Â
Just like regular employees, volunteers need to work under strict regulations. This is why it is important to know the law rather than assume that everything is possible. This is a great article, and I really like how this matter is explained.
Hi there,
I was wondering if it is illegal for someone to volunteer to help out a company for free, meaning, for instance, if I were to volunteer to help an employee of a company carry in a ladder because I see they are struggling, would that be illegal? The person volunteering to help is no employed by the company.
@Reno If it is of no true value to the company (carrying a ladder, for instance) then it would not be an issue for the company. If you’re carrying a ladder 20 times a day to support painters at a variety of work sites, then it certainly would cross the threshold.
Hello,
I worked for a company back in 2014 who helped me gain some hours to become certified. Prior to gaining the hours to be certified I accepted a new position where I was in a supervisory role. The company was not able to bill any of my hours due to the fact I was not certified so some of my hours were unpaid, but I was able to count them toward my hours to be certified. Is this legal?
@Talia If you worked and completed tasks at the direction of the company, you should have been paid for those hours. The Department of Labor doesn’t care if you were certified, just that you were paid for any and all hours worked.
I work for a NP as a salaried Operations Manager. The two Artistic Directors are paid an annual amount of $20K and $25K. Due to cashflow problems I was asked to take a lower salary for 3 months, which put me into the hourly wage bracket, but expected to work the same amount of hours-as many as it takes and the 2 Artistic Directors were asked to furlough their entire pay for that amount of time. I’m not sure any of this is legal and if it is, do I book the furloughed pay as a liability? Should I pay the FICA in the Qtrs. the wages were earned(though not paid yet/).
@Tracy It’s hard to tell in your scenario if this pay was put off until a future date when it would be received or if it is never going to be paid (you’re basically working/volunteering for free). Being in a nonprofit gives them some flexibility that private employers do not have. If anyone is going to be going from paid to unpaid work, that needs to be very clear, and ideally signed off and agreed on paper by all parties involved. Otherwise one of the workers could come back later with a Department of Labor Wage and Hour investigator saying, “But I didn’t know they weren’t going to pay me.” You’re on shaky ground there.
Hi Ben,
I have a question. I am working for a Private Company in Canada. I am a part- time employee (15 hours a week). The company has a program (Passport – Program) that says if you are doing volunteer hours at the company, you will get some points. At the end of the year you will redeem your points for gift cards.
I don’t know if this is allow on the FLSA.
Moreover, My position is Volunteer Coordinator and that position is unionized. Two weeks ago, I was doing some volunteer hours and I answered a call. That is prohibited. I am aware of that.
They have filed a letter of verbal discipline for that reason. My question is :
Can they apply that sanction to my employee file while I was doing a volunteer work?
Please let me know if the situation is clear to you,
Thanks for your input,
Angela
hello — so can a for profit company have “volunteers” serving as in store sales people if they are on 1099 contracts?
Rachel, 1099 workers cannot be volunteers. I’m not sure I understand your question since it sounds like you’ve already classified these workers as contractors, which would then mean you’re compensating them based off of some preset agreement.
I run a nonprofit that provides therapeutic retreats. I have one counselor and one cook that are prohibited from working over a certain amount of hours monthly. They both are requesting to be able to work some retreats and to be able to volunteer some retreats and not be paid. Is this possible?
@Heather if you truly run a nonprofit, then you have some flexibility in how your employees can work. For instance, the Fair Labor Standards Act says individuals who provide services without any expectation of compensation are “volunteers.” These people are offering to work with no payment. However, some legal interpretations say that your employees cannot volunteer (even for a nonprofit) in the same role that they also work paid hours. See below:
The DOL has provided some guidance as to when an employee of a nonprofit organization may volunteer at the same organization where he or she is employed. Specifically, the DOL has taken the position that employees may not volunteer to provide services for the nonprofit organization that are “the same as, similar, or related to” their regular job duties. As a general example, a school custodian may not volunteer to empty the trash cans after a basketball game, but he or she may volunteer to coach the team. The DOL also has stated nonprofit organizations cannot request or direct employees to perform volunteer work during the employee’s normal working hours, even if the requested volunteer duties are not the same as or similar to the employee’s regular job duties.
Hope that helps!
Hi Ben, I have a slightly tangential question. We started a nonprofit a few months ago that offers a nature-based mentoring program (not yet ready to file for 501c3). A mom from one of the families involved has agreed to act as a program mentor and to help with social media. We are considering structuring this arrangement as a “work trade”so that no money changes hands …she serves as a program mentor and provides social media support (our benefit) and her kids participate in the program for free (her benefit). The other option we are considering is to officially hire her as an employee, setting up a compensation agreement that is essentially minimum wage, with a 40% discount on program fees for her kids. Do you know whether both are reasonable options from a legal perspective?
@Shawna The best way to be above board is your second option. Setting her up at minimum wage and then giving her other things in lieu of pay to help make it worth her time and effort.
Thanks so much Ben, I appreciate your timely and straightforward response! We’ll pursue the second option.
What about a start-up for-profit business that can’t yet afford employees? Is it legal to have “volunteers”? Is it legal for these volunteers to be compensated with product? How do minimum wage laws impact this strategy? How do individual State laws impact this (New Mexico in particular)?
@Brian For profit=no go. Can’t compensate with product in lieu of AT LEAST paying minimum wage. If you can talk someone into accepting min wage AND product, equity, something else as the rest of their pay, then you should be compliant.
Thanks!
Hi Ben – as a follow up to the question above re: can a for-profit have volunteers paid with product – we have a situation in our small business where there are four owners with varying percentages of ownership. Three of the owners started out as paid employees, but since opening we had to stop paying one of those three owners and merged her duties into another owner (myself). We stopped paying her because the company was and is still not profitable and we could no longer afford to pay her. She still “volunteers” by planning events and helping members (we are a fitness facility in NC) and she does not pay to come train here, so she has a free membership if you will as an owner. Does her single digit ownership percentage allow her to volunteer without compensation? Is the free membership legal? Can we stop her from doing work based on employment laws? Thanks for any feedback.
I am writing from Minnesota–I don’t know if that makes a difference. I have a question concerning a 501c3 library. The library through the city will employee two substitutes who will be at-will on-call subs. They will work only when a staff member is ill or there is a need for an additional staff person for programming and only if they are able. There is no set schedule and no demand that they come in if called. They are hired as subs so they will have the required screenings, etc., and so they can be paid if they are called in to work. This will be very part-time. On the days that they are not working as employees, can they volunteer for the Friends organization, but work in the library?–some of what they might do as a volunteer might happen to be what they would do on a day they had been called in as an employee; other work would be different. Since they might not be needed to sub for periods of time, they would like to come in to sub.
Ben,
I work for a local government. Our Parks Department is hosting a PGA golf tournment where we are seeking volunteers. We have Parks employees that will be working the event and getting paid. However, should other government employees wish to volunteer their time to help with the event, our current option is to allow them to 4 hours Community Service time and any hours over 4 they would need to use their paid time off.
In summary, we have some employees getting paid while others need to use their personal time.
Note: it is very unlikely the work would be the same work the employee currently performs.
Thanks!
Ben, thanks so much for your advice. Our situation is this. We are a church that is looking to hire a part-time director of children’s ministry. We have found an excellent candidate who wants the job but wants to give her time to the church. Should we require her to receive the pay even if she is just going to give it back, or can we just ‘hire’ her with the understanding that she has agreed to forsake any salary? Thank you for any advice you have.
My husband was hired for a gas station in Arizona. The manager had him sign a paper saying that he would not be trained for his training. He is now working for this place 5 days and the employer has yet to put him on the payroll. Technically this violates laws based on working off the clock, correct? Or does signing something make it okay? Please help! I would like to know our rights based on this situation. It states in the paperwork that training isn’t paid for unless they work for a year, then it would be reimbursed. For those who work less than that, I assume they haven’t been paid.
@Stephanie you can’t sign away your right to compensation. If the training is mandatory, and it sounds like it is, then it must be paid.
Great article here – my question concerns small family owned wineries and farms that are for-profit businesses, but also have long history of involvement from very willing volunteers.
If customers insist on wanting to volunteer, I suppose we could come up with a standard Independent Contractor Agreement – as the payments would likely be less than the $600 reporting threshold, this doesn’t add any additional reporting requirements to our business but would add reporting requirements to the individuals income taxes…
Thoughts on the dangers of structuring the volunteer relationship as an independent contractor relationship?
Ben,
I work for a small NP in Tennessee and have some contract employees who would like to volunteer some of their time with the program. Is this legal? In this regard do “contract” employees differ from regular employees of a NP?
Thanks for the article.
I have a friend who hired a woman for 20 hrs/week. After hiring her, this woman told him that she only wanted to be paid for 10 of those hours so that her pay didn’t limit her ability to get some government benefit (I’m a little fuzzy on the details here.) I told my friend that that may be illegal but he says it’s her idea and she wants it so it should be fine.
Is it?
Thanks
I am on the Board of a non-profit that has not been paying its office assistant when she staffs the registration table at off-site events. They claim that she can “volunteer” as long as they don’t ask her to do so. Is that true?
Asking for a friend…really! :)
My friend is a hairstylist at a salon. She is not an hourly employee, but gets paid commission on the hair services she provides to her clients. The owner of the salon requires the hairstylists to clean the salon (bathrooms, waiting area, sinks, floors) when they do not have clients. Is this legal? The owner does not provide any compensation to the stylists for the cleaning that she requires them to do.