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Employer sponsorship of volunteer work: compensable under FLSA?

finley-garyEmployers have many reasons for wanting to encourage volunteer work among their employees. Involvement in volunteer community service activities can help to foster a sense of camaraderie and shared purpose among employees, boosting workplace morale and leading to greater productivity.

Employee volunteer work can also create bonds between a business and the broader community it serves.

However, for-profit and nonprofit organizations alike should be aware of federal and state wage and hour laws that define when services performed by employees must be treated as compensable work, and that provide for hefty penalties for employers that fail to pay employees for all of their working time.

The DOL recently issued an opinion letter responding to an employer’s query as to whether the FLSA requires that it compensate employees for time devoted to volunteer activities under the employer’s optional community service program.

While the line between compensable work and non-compensable volunteer activities is not always clear, the U.S. Department of Labor recently issued an opinion letter that highlights the DOL’s views as to when services performed by employees may be treated as non-compensable volunteer work under the federal Fair Labor Standards Act.

Legal framework

The FLSA provides, in part, that non-exempt employees must be paid a minimum hourly wage and be compensated at no less than a “time-and-a-half” rate for all hours worked over 40 in a week. (Numerous state and municipal laws establish even more employee-friendly requirements in these areas.)

Under the FLSA, for overtime purposes, compensable time includes all time during which an employee is “suffer[ed]” or “permit” to work by his or her employer.

However, employers are not required to pay their employees for time spent performing volunteer services on behalf of outside organizations, so long as employees engage in that volunteer work “freely” and “without coercion or undue pressure” from their employer.

In addition, employees of nonprofit entities can perform volunteer work on behalf of their own organizations, provided that the volunteer services are of a different nature from the work they are paid to carry out. (For instance, a school administrative assistant could volunteer to chaperone a student field trip, but could not “volunteer” to perform additional filing over a weekend.)

Employers who run afoul of the FLSA may be subject to liquidated damages and attorneys’ fees in a civil lawsuit. Willful violations may also subject an employer to potential criminal prosecution and civil fines.

Background to DOL’s opinion letter

Against that backdrop, the DOL recently issued an opinion letter responding to an employer’s query as to whether the FLSA requires that it compensate employees for time devoted to volunteer activities under the employer’s optional community service program.

Under the community service program at issue, employees are given the opportunity to engage in various volunteer activities, which may be sponsored by the employer or selected independently by employees. To the extent that employees engage in volunteer activities either during normal working hours or while they are required to be on the employer’s premises, the employer compensates the workers for that time.

However, the employer does not compensate employees for time spent in volunteer activities outside of normal working hours or other periods when they are expected to be on the employer’s premises.

To encourage participation in the volunteer program, at the end of the year, the employer presents a monetary award to the group of employees who, in the employer’s assessment, had the “greatest community impact.” A supervisor decides how to distribute the monetary award among employees in the winning group, based on, among other factors, how many hours each employee spent volunteering.

Finally, as part of its request for guidance from the DOL, the employer asked whether any FLSA concerns would be raised by its using a smartphone app to track employees’ volunteer hours.

DOL’s conclusions

Based on those facts, the DOL concluded that “employee participation in [the employer’s] program is charitable and voluntary,” and that, accordingly, the time spent by employees in such activities does not constitute compensable work time under the FLSA.

In support of its determination, the DOL emphasized that (1) the employer does not require employees to participate in the program, or control or direct the volunteer work of employees who choose to participate; (2) employees who opt not to participate in the program do not suffer any adverse consequences in their working conditions or future job prospects; and (3) employees who participate in the program are not guaranteed any bonus or other additional compensation.

The DOL also noted that the fact that the employer compensated employees for time they spent in volunteer activities during normal working hours did not obligate the employer to compensate them for volunteer work they engaged in outside of working hours.

As to the employer’s proposed use of an app to track employees’ participation in volunteer activities, the DOL opined that that would not render such time compensable under the FLSA, so long as the employer did not use the app to “direct or control the employee’s activities by, for example, giving specific instructions about what volunteer work he or she should do or how he or she should do it.”

As part of its determination, the DOL also summarized its prior guidance on the general issue of volunteer work, highlighting some important guiding principles for employers to consider in evaluating similar programs.

In particular, the DOL noted, the FLSA is not intended to “discourage or impede volunteer activities,” as the statute “recognizes the generosity and public benefits of volunteering and allows people to freely volunteer time for religious, charitable, civic, humanitarian, or similar public services.” Rather, the FLSA aims to “prevent manipulation or abuse of minimum wage or overtime requirements through coercion or undue pressure upon individuals to ‘volunteer’ their services.”

The DOL also quoted from previous opinion letters stating that employers may “actively promote participation in volunteer activities” as long as non-participation “d[oes] not adversely affect [employees’] working conditions or employment prospects.”

Implications for employers

The DOL’s opinion letter offers valuable guidance for employers who seek to promote volunteerism among their employees. Although employers must be careful that sponsorship of volunteer service does not cross the line into “coercion” or “undue pressure,” the opinion letter underscores the fact that employers may actively encourage volunteer work, and even provide financial awards to employees who choose to participate, without making time spent on volunteer service compensable under the FLSA.

Gary D. Finley is an attorney at Schwartz Hannum in Andover, Massachusetts. The firm represents management in labor and employment law matter.

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