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Wage and Hour Laws Restrict "Volunteer" Work

The appropriate classification of “volunteer” work has become increasingly important as cash-strapped not-for-profits seek to stretch their budgets and the United States Department of Labor (“DOL”) has stepped up its enforcement of the Fair Labor Standards Act (“FLSA”)1.  Significantly, volunteers are not subject to minimum wage, maximum hours, and recordkeeping requirements for the voluntary services they perform under FLSA Sections 6, 7, and 11.  29 C.F.R. § 553.101(a); 29 U.S.C. §§ 206-207, 211.  Improper classification of an employee providing services without pay as a “volunteer,” could give rise to significant liability for employers for unpaid wages, overtime, liquidated damages, and attorneys’ fees.  This article summarizes the treatment of volunteers under the FLSA and its implementing regulations, and raises issues that not-for-profit employers and counsel should take into account when determining whether to classify an individual providing services as an employee or volunteer.2

Who is a Volunteer?

The FLSA expressly provides that an “individual who volunteers to perform services for a public agency which is a State, a political subdivision of a State, or an interstate governmental agency” is not an employee so long as: (i) he or she receives no compensation, but can receive reimbursement for expenses, “reasonable benefits,” and “nominal fee[s]”; and (ii) “such services are not the same type of services which the individual is employed to perform for such a public agency.”  29 U.S.C. § 203(e)(4)(A).  In addition, DOL regulations implementing the FLSA clarify the statutory definition by requiring that such voluntary services be: (i)“for civic, charitable or humanitarian reasons, without promise, expectation or receipt of compensation for the services rendered”; (ii) “offered freely and without pressure or coercion, direct or implied, from an employer”; and (iii) not for “the same type of services” provided to the “same” employer with whom the individual seeks to volunteer.  29 C.F.R. §553.101(a)-(d).  Although the FLSA and the DOL’s implementing regulations, 29 C.F.R. § 553.100 et seq., on their face, appear to limit their rules concerning volunteers to “public agencies,” the DOL’s Wage and Hour Division has taken an expansive view and more generally applies the FLSA’s provisions concerning volunteers to “employees of religious, charitable, or nonprofit organizations who donate their services as volunteers to their employing organization.”  Wage and Hour Opinion Letter FLSA 2008-14 (Dec. 18, 2008) (citing Field Operations Handbook § 10b03(d)). 

Civic, Charitable or Humanitarian Purpose

Generally, neither the DOL, nor the courts have devoted much attention to the question of whether the work performed by a volunteer in a particular case was for a civic, charitable or humanitarian purpose.  The prevailing view, as articulated by the United States Court of Appeals for the Fifth Circuit in Cleveland v. City of Elmendorf, Tex., is that “a common-sense approach, supported by the statute, the regulations and their intended purpose, suggests that anyone who performs public services without the expectation of compensation, and with no tangible benefits for himself, is volunteering for civil, charitable and/or humanitarian reasons.”  388 F.3d 522, 528-29 (5th Cir. 2004).

Some Payments are Permitted

Generally, a volunteer must perform services without promise, expectation or receipt of compensation for services rendered.  However, volunteers are permitted to receive three types of payments—(i) reimbursement for “expenses,” (ii) “reasonable benefits,” and (iii) “nominal fee[s],” without loss of volunteer status.  29 U.S.C. § 203(e)(4)(A); 29 C.F.R. § 553.106(a).  The DOL permits reimbursements for the purchase of uniforms and cleaning costs as well as out-of-pocket expenses such as meals and transportation.  29 C.F.R. § 553.106(a).  Similarly, reimbursement is permitted for tuition, transportation, and meals attendant to courses individuals take in preparation for volunteering.  Id. § 553.106(c).  Organizations additionally may provide “reasonable benefits” including pension, health, disability, and life insurance as well as “length of service” awards. Id. § 553.106(d).

An employer may provide “nominal fees,” which are payments not tied to productivity for service or intended as a substitute for compensation.  Id. § 553.106(a).  The DOL considers payment as a substitute for compensation or related to productivity where the fee varies, for example, based on the time spent volunteering.  Wage and Hour Opinion Letter FLSA2008-15 (Dec. 18, 2008) (citing Wage and Hour Opinion Letter FLSA2005-51 (Nov. 10, 2005)).  Further, as a “general rule,” any fees paid to a volunteer in excess of 20 percent of the wages paid to a regular employee performing the same tasks will be deemed by the DOL to be more than nominal.  Wage and Hour Opinion Letter FLSA2008-15 (citing Wage and Hour Opinion Letter FLSA 2006-28 (Aug. 7, 2006); Wage and Hour Opinion Letter FLSA2005-51)); see also Vonbrethorst v. Washington County, Idaho, No. CV06-03510-SEJL, 2008 WL 2785549 (D. Idaho July 15, 2008) (holding that 21 percent of full time wage was not nominal). 

Additional considerations as to whether a fee is nominal include: (i) “[t]he distance traveled and the time and effort expended by the volunteer”; (ii) “whether the volunteer has agreed to be available around-the-clock or only during certain specified time periods”; and (iii) “whether the volunteer provides services as needed or throughout the year.”  29 C.F.R. § 553.106(e).  DOL regulations provide that volunteers may maintain their status even if they receive monthly or yearly stipends where they provide services periodically throughout the year.  Id.  Moreover, volunteer firefighters may receive “per call” payments, as long as such payments are nominal.  Id.

Applying these principles, the DOL has considered whether monthly payment to volunteers at a fire department invalidated the employee’s volunteer status.  Wage and Hour Opinion Letter FLSA2008-15.  In the case under consideration, EMTs and firefighters received $175 per month, Firefighter/EMTs $200 per month, Traffic Control Officers: $250 per call, and Food Service volunteers $25 per call.  The employer provided no separate reimbursements for mileage, meals, and laundry expenses, which it  estimated to be $90 per month.  In its Opinion, the DOL noted that the payments were “relatively small,” but refused to conclude that the payments were non-nominal fees because the record before it lacked comparative market data.  The DOL could not apply its 20 percent rule without information regarding wages for area employees performing the same tasks.  The DOL observed that if the employer could not find comparative information regarding area employees’ wages, then it should consider data from “neighboring jurisdictions,” the state, or even the nation.  The DOL concluded that “[s]o long as the calculations are based on an approximation of the prevailing wages in that area, and the amount of the fee portion of the proposed stipends (monthly or per call) does not exceed 20 percent of the wages for the same services, we would find that such a fee is ‘nominal’ within the meaning of 29 C.F.R. § 553.106.”

Significantly, resolution of the nominal fee issue may have important implications in determining whether a class should be certified under the FLSA’s collective action provisions.  In Purdham v. Fairfax County Public Schools, the court denied conditional certification of a class of public school employees who “voluntarily” provided coaching services and served as ticket-takers at school events.  629 F. Supp. 2d 544 (E.D. Va. 2009).  In reaching its conclusion, the court considered, among other factors, the DOL’s “nominal fee” analysis.  The coaches and ticket-takers received varying flat fees for their “volunteer” work depending on the county school in which they provided their services.  The court concluded that whether the fees paid were “nominal” required an individualized analysis because each county school provided different payment amounts.  Id. at 550.  Accordingly, the court held that conditional class certification was not appropriate for these employees.

Services Offered Free of Coercion

The services performed by volunteers must be truly voluntary.  Employers may not directly or indirectly pressure employees to provide services without compensation by stating or otherwise implying that the provision of such “voluntary” services will enable the employee to avoid some adverse employment action or be otherwise beneficial to an employee’s career or employment prospects.  29 C.F.R. § 553.101(c).  

“Same Type of Services”

Employees who volunteer to provide services for their not-for profit employers must perform services that are different from the services they provide as an employee in order to be properly classified as a “volunteer.”  DOL regulations provide guidance in determining whether an individual is performing the “same type of services” in his or her capacity as a volunteer as the services otherwise performed by that individual in his or her capacity as an employee.3  29 C.F.R. § 553.103.  Determining whether an individual performs the same type of services is fact intensive and case-specific.  29 C.F.R. § 553.103(a).  The DOL examines “whether the volunteer services are ‘closely related to the actual duties performed or responsibilities assigned to the [paid] employee.’”  Wage and Hour Opinion Letter FLSA2008-16 (citing Wage and Hour Opinion Letter FLSA2004-6 (July 12, 2004)).  In addition, the DOL considers the similarities and differences of duties described for both the paid and “volunteer” positions in the three-digit categories of jobs contained in the Dictionary of Occupational Titles (“DOT”) and the O*NET supplement to determine whether the jobs involve the same types of services.  Id. § 553.103(a); Wage and Hour Opinion Letter FLSA2008-16 (Dec. 18, 2008).

In applying the above analysis, the DOL considered whether an individual employed by a police department as a Latino Victim Specialist (“LVS”) was a “volunteer” under the FLSA when the LVS volunteered as a Reserve Police Officer.  Wage and Hour Opinion Letter FLSA2008-16.  The DOL considered the O*NET description of police officers with the relevant O*NET description for a LVS, and concluded that these occupations are not related based on their respective O*NET descriptions.  Id.  Additionally, relying upon its own regulations, the DOL stated that civil employees—like an LVS—are not regarded as performing law enforcement duties.  Id.  Ultimately, the DOL concluded that the individual when volunteering as a Reserve Police Officer did not perform the same tasks as an LVS, the individual’s regular occupation.

A recent case arising in the Unites States District Court for the Eastern District of Virginia concerned whether a security guard employed by a school, performed the same tasks when he volunteered to coach golf.  Purdham v. Fairfax County Sch. Bd., Civil Action No. 1:09-cv-50, 2009 WL 4730713, at *4 (E.D. Va. Dec. 9, 2009).  Not surprisingly, the court concluded that coaching golf and acting as a security guard involved different types of services. 

DOL regulations provide additional examples of individuals who are not performing the “same type of services.”  Thus, under DOL regulations, a parks department employee who serves as a volunteer firefighter does not perform the “same type of services,” but a nurse at a state hospital, who volunteers to complete nursing tasks at a state-operated clinic does perform the “same type of services.”  29 C.F.R. §§ 553.103(b)-(c).

Conclusion

While the legal and regulatory scheme governing the provision of volunteer services in the not-for-profit sector recognizes and indeed, encourages the provision of such volunteer services, it is nevertheless designed to prevent abuse and the invention of subterfuge to evade the minimum wage and overtime requirements of the wage and hour laws.  Not-for-profit employers are well-advised to proceed cautiously and seek the advice of counsel when permitting their employees to perform voluntary services.  To do otherwise, risks the possibility that they will incur significant liability as a result of their improper classification of such employees as “volunteers.”

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Reprinted with permission from the August 10, 2010 edition of the New York Law Journal© 2010 ALM media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.



[1] The proposed Fiscal Year 2011 Budget seeks an increase of $20 million for the Wage and Hour Division from fiscal year 2010, and includes funding to hire 90 additional investigators.   See OASAM News Release, Secretary Hilda L. Solis Presents US Department of Labor Budget Request for Fiscal Year 2011 (Feb. 1, 2010), available at http://www.dol.gov/opa/media/press/oasam/OASAM20100145.htm.

[2] This article does not address other significant labor, employment and tax law implications of improperly classifying employees as “volunteers.”

[3] The “same type of services” factor  is irrelevant when an individual provides services for a public agency or not-for-profit organization other than his or her employer.  Wage and Hour Opinion Letter FLSA2006-28 (Aug. 7, 2006) (citation omitted).

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