Under the Fair Labor Standards Act (FLSA), a volunteer is an individual who provides services, without any expectation of compensation and without any coercion. For example, a volunteer might be someone donating services for public service, religious, charitable, humanitarian or other non-profit work. In order to qualify as a volunteer who does not need to be paid wages, the federal Department of Labor adds the following criteria:
- The entity that benefits from the service must be a non-profit;
- The activity must be less than full-time;
- The services must not be offered as a result of coercion;
- The services are typically associated with volunteer work;
- No regular employees have been displaced by the volunteer; and
- The volunteer does not expect to be compensated.
Employees may not volunteer to do things for their employer that are “the same as, similar, or related to” their normal job duties AND may not volunteer during their normal work hours even if the duties being done are dissimilar from their regular employment duties.
The Fair Labor Standards Act permits volunteers to be paid a nominal fee, which we believe is the same as an incidental or insubstantial fee. Congress has determined that “occasional and incidental” activities are those that are no more than 20 percent of an employee’s work time in a workweek. If, for example, an employer pays a volunteer a stipend that is no more than 20 percent of what the employer would otherwise pay to hire someone to perform those same services, it would be a permissible “nominal fee.” In other words, when an employee volunteers, the Department of Labor will presume that the fee paid is nominal as long as the fee does not exceed 20 percent of what the employer otherwise would pay to hire a full-time employee for the same services.
A Note on Trainees and Interns:
Trainees or interns may also be considered volunteers; however, the same rules apply as far as stipends go (see below). A person is a “trainee” if:
- The training is similar to that which would be given in a vocational school;
- The training is for the benefit of the trainees or students;
- The trainees or students do not displace paid employees, but work under close supervision;
- The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, her/his operations may even be impeded;
- The trainees or students are not entitled to a job period; and
- The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Compensating Volunteers/Interns/Trainees: Are You “Creating” an Employee?
“Indirect compensation” more for the convenience of the nonprofit (to encourage volunteers to volunteer) than as “compensation” for the volunteer, including:
- Free parking
- Discounts at the cafeteria
- Gifts of limited value
- Nominal fees not tied to productivity
- Other “reasonable benefits,” including tuition, transportation, meal costs; and health insurance or pension costs under certain scenarios with public agencies.
The applicable regulations do a nice job of providing illustrative examples and practical explanations. See 29 CFR 553.106. If you would like a copy of those, we can send them to you. For example, as the regulations explain, “a school guard does not become an employee because he or she receives a uniform allowance, or reimbursement for reasonable cleaning expenses or for wear and tear on personal clothing worn while performing hours of volunteer service. . . . Such individuals would not lose their volunteer status because they are reimbursed for the approximate out-of-pocket expenses incurred incidental to providing volunteer services, for example, payment for the cost of meals and transportation expenses.”
Other types if indirect compensation with a real dollar value that may be considered as a “quid pro quo” for volunteering, including:
- Free membership to a fitness center provided to volunteer instructors;
- Payment of a stipend over $500 per year; or
- More than 20% of what an employee would be paid.
- Reimbursements for expenses are considered taxable income.
If the person is doing the work in expectation of receiving something of value in return, that person is more likely an employee rather than a volunteer, intern, or trainee.
This article is not legal advice but should be considered as general guidance in the area of employment and corporate law. Rebecca Webber is an employment attorney; others at the firm handle business and other matters. You can contact us at (207) 784-3200 (telephone). Skelton Taintor & Abbott is a full service law firm providing legal services to individuals, companies, and municipalities throughout Maine. It has been in operation since its founding in 1853.