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If you benefit from volunteer labor, prepare to pay for it

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in Compensation and Benefits,Human Resources

Nonprofits and employers in highly competitive fields often use volunteers to ease labor budgets and try out employees “before they buy.” But unless you structure those situations just right, you’re likely to run afoul of the Fair Labor Standards Act (FLSA) and the New York Minimum Wage Act.

Under the FLSA, you must pay for time when you “suffer or permit” someone to perform work that benefits your organization. Employers should pay at least the minimum wage to those whom they “permit to work.”

Recent case: Kelly Hallissey and 10 other volunteers filed suit under the FLSA and the New York Minimum Wage Act, claiming America Online should have paid them for their services.

All the volunteers ran online chat rooms and forums for AOL, an integral part of the AOL experience that subscribers came to expect. AOL set strict guidelines for their work and required them to complete administrative tasks.

Volunteers were told that if they worked hard at making forums popular, they might get a crack at paid positions. Internal documents showed that AOL depended heavily on volunteers to free up paid employees for other tasks.

The court considered whether the volunteer positions felt more like a job or a hobby. It concluded that while the volunteers may have enjoyed part of their activities, the amount of administrative work they performed made AOL the primary beneficiary, not them.

To determine their back wages, those volunteers will have to show how many hours they “worked” for AOL. The company stopped using volunteers in 2005. (Hallissey v. America Online, No. 99-CV-3785, SD NY, 2006)   

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