Volunteering Can Be Risky (For) Business

When it comes to business expenses, what manager or owner doesn’t want to save money? There are a lot of ways to go about cutting expenses. IF you’re a for-profit company, though, asking employees to volunteer their services generally speaking isn’t one of them.

Does this mean your company can never sponsor volunteer opportunities or participate in volunteer events as a group? Not at all… but the Department of Labor has very strict rules about when and how employees of for-profit enterprises can legitimately be treated as volunteers (as opposed to employees who are entitled to be paid for their work time).

What does a legitimate volunteer opportunity look like?

In order for an event to be considered a real volunteer opportunity, it must meet the following criteria:

  • The event must be unrelated to the company’s usual line of business.
  • The tasks the employee is performing must be unrelated to their usual job duties.
  • The employee’s participation must not bring any economic benefit to the company.
  • The event must take place outside the employee’s normal working hours (and, ideally, off the employer’s premises).
  • The company cannot treat those who volunteer more favorably, coerce employees to participate, or punish those who decline.
  • The company cannot pay some people for participating while others are treated as unpaid volunteers.

So, for instance, if a software development company wants to put together a team to help with a Habitat for Humanity construction project, this would probably be OK — as long as the criteria above are met. On the other hand, a wholesale distributor that requests non-exempt workers to “volunteer” to stick around after hours (unpaid) to package products for shipment to clear a backlog… well, they would be on very thin ice indeed.

It’s not just your own workers you need to be concerned with.

The potential volunteers don’t need to be your own employees to get you in trouble. Remember from the criteria above that volunteer participation must not bring any economic benefit to the company and must be unrelated to the company’s usual line of business.

In 1996, the Department of Labor issued an Opinion Letter to a mail-order company. The company normally offered gift-wrapping services during the Christmas holidays. Normally, they hired seasonal temps to provide the gift-wrapping services. One year they were approached by several area non-profits that wanted to supply volunteers to provide the gift-wrapping services for the mail-order company, in exchange for contributions to the non-profits’ causes. Wisely, the mail-order company consulted with the Department of Labor to see if this would be considered a legitimate volunteer situation.

According to the Department of Labor’s Opinion Letter, the gift-wrappers should be treated as employees and paid at least minimum wage. The reason was that the gift-wrapping was within the normal business of the company, and the gift-wrapping services would provide economic benefit to the company.

It works the other way around, too. A high school tried running a charity event where students would provide weekend grocery bagging services at area supermarkets. The students would collect tips and donations from store patrons in exchange for the bagging services, but were not paid by the grocery stores themselves.

Eventually, one of the supermarkets discontinued their participation in the program, expressing concern that the students participation was covered by wage & hour and child labor regulations. The principal of the high school queried the Department of Labor, and in a 2002 Opinion Letter, the DOL decided the students should have been treated as employees.

Why? The student’s bagging activities provided economic benefit to the grocery stores — as the Opinion Latter stated, the students’ “services were not in themselves devoted to their community programs, but instead were being provided directly to a commercial for-profit business enterprise that derived an economic benefit from their services.” Some stores had even cut the hours of their normal baggers during the charity event weekend, which served to further prove the economic benefit provided by the event.

Volunteering can be very hard.

For a profit-making enterprise, it’s virtually impossible to use volunteer labor to do anything to benefit the organization itself. (Yet another reason why unpaid internships are a risky idea.) There are strict rules that have to be met when encouraging or organizing a volunteer effort to benefit outside charitable organizations, as well.

Bottom line, if you’re a for-profit organization, by all means save money when and where you can… but not by asking your employees to volunteer their time or by replacing paid workers with outside volunteers.

Next time: we’ll take a look at how the rules differ for non-profits.

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