Many nonprofits rely on volunteers in addition to paid employees to achieve their goals. Few of these organizations, however, fully grasp the legal distinctions between these two types of workers. At its core, employees are paid and volunteers are not, but several factors affect the legal definitions.
Volunteer vs Employee: Who Qualifies?
The Department of Labor uses a variety of factors to determine whether a worker is an employee or a volunteer. These include:
- Does the volunteer’s work/services benefit a nonprofit?
- Does the individual volunteer fewer hours than a full-time job would demand?
- Is the individual volunteering of their own free will (i.e. no coercion or persuasion)?
- Is the individual performing typical volunteer work?
- Is the volunteer replacing a regular employee?
- Does the individual receive or expect to receive some kind of benefit from the nonprofit for their time?
While no individual factor is indicative of volunteerism, the Department of Labor (DOL) will usually regard volunteer work as ordinary if nonprofits can answer yes to the first four questions and no to the last two.
Understanding Legal Volunteer Status
Reimbursements and Stipends
Many nonprofits want to compensate their volunteers in some way. After all, volunteers are often vital to achieving a nonprofit’s mission. However, compensating volunteers can result in a loss of volunteer status as well as the associated legal protection for volunteers. To retain protections, the Volunteer Protection Act requires the individual to perform services for a nonprofit or government organization without receiving compensation.
However, nonprofits can reimburse volunteers for their expenses as well as provide stipends. The rule of thumb is not to exceed $500 in either annual compensation or benefits. While a nonprofit may think a $50 per month stipend does not sound like much, it can remove volunteer status from their unpaid workers. This means the volunteer would no longer be protected from liability claims.
Complicating the issue is the DOL’s Fair Labor Standards Act (FLSA), which describes nominal compensation allowances. The DOL’s Wage and Hour Division considers fees paid to a volunteer nominal so long as it does not surpass 20% of what an equivalent paid position would command. Purdham v. Fairfax County School Board exemplifies this situation. A paid school safety and security assistant also volunteered as the school golf coach. The coach received a stipend of $2114 per year. The 4th Circuit Court of Appeals upheld this stipend as nominal because the individual’s volunteer role was separate and different from his paid job. In addition, a paid part-time coach position existed, but the individual preferred to volunteer his time.
Nonprofits that wish to compensate their volunteers in some manner should take caution. While the DOL allows reasonable reimbursement and nominal compensation, it’s alarmingly easy to lose volunteer status and protections. However, losing status is not the only risk nonprofits assume regarding their volunteers.
Where the Differences Between Volunteers and Employees End
While nonprofits need to understand the difference between employees and volunteers for status and protection reasons, they also need to understand their similarities. For example, employment practices liability is not unique to paid employees. Even if a nonprofit manages to operate 100% with volunteers, they need employment practices liability insurance (EPLI). EPLI protects nonprofits from a variety of allegations including:
- Unfair hiring practices
- Hostile work environment
- Sexual harassment
- Wrongful termination
While some of the above seem to apply only to paid workers (i.e. wrongful termination, hostile work environment), that’s not the case.
For example, assume a volunteer sends an inappropriate joke via email to another volunteer only to discover they CC’d the entire staff by mistake. If the nonprofit later relieves a different volunteer of his or her position, that individual can sue the nonprofit for allowing a hostile work environment due to the crude email. While this situation may seem unlikely, numerous court cases of this nature provide evidence to the contrary.
Wrongful termination lawsuits lodged against nonprofits by former volunteers crop up with surprising regularity as well. Many of these arise as a result of improper documentation. For example, assume an under-performing volunteer submits a complaint of sexual harassment. The nonprofit does due diligence and investigates the claim but determines no wrongdoing occurred. The nonprofit then goes on to relieve the volunteer because of his or her poor performance. However, if the nonprofit did not document the meager performance, this situation looks very bad on paper. The terminated volunteer can sue for wrongful termination, alleging the nonprofit fired him or her due to the harassment claim.
Most nonprofits believe they have a good grasp on liability issues: avoid harassment, discrimination, and other severe workplace issues. Yet EPL claims occur at a staggering rate, creating a significant source of risk and liability for any nonprofit organization. Consult an expert to learn more.