The United States Department of Labor (“DOL”) recently issued an opinion letter providing guidance to school districts whose employees volunteer for extracurricular responsibilities in addition to their normal job duties. As a general rule, workers who volunteer their time for charitable, humanitarian or public purposes are not “employees” within the meaning of the Fair Labor Standards Act (“FLSA”) and need not be compensated for such volunteer time. The issue of whether a worker is truly a volunteer, or rather an employee who must be compensated, is not a simple one. The issue is even more complicated when an employee of a school district also volunteers unpaid time to provide services to the school district outside of his or her normal work activity.

In these situations, the DOL examines several factors to determine whether the employee is acting in a true volunteer capacity. If the DOL determines that the purported “volunteer” is actually an employee, then the worker must be paid for all time spent in the outside activity. In determining this issue, the DOL looks at factors including whether the volunteer work is being performed without coercion from the employer, whether the volunteer work occurs outside of the employee’s normal working hours, and most importantly, whether the volunteer is performing the same or similar type of work for which he or she is paid by the school district. When an employee volunteers to perform work that is similar to that for which he or she receives pay, the DOL will find that the employee is not a true volunteer and in fact must be compensated for all such time (even if the employee truly volunteers to provide this service without pay).

The specific issue addressed in the recent DOL opinion letter involved nonexempt, non-instructional employees of a district who volunteered to participate in student-orientated extracurricular activities after their normal working hours. The opinion letter addressed the example of a nonexempt school custodian who volunteered to coach the high school track team. In return for his services, the coach received a stipend of $3,675. For purposes of its opinion letter, the DOL assumed that the custodian had agreed to volunteer without pressure or coercion from the district and that there was a bona fide humanitarian nature to the volunteer service. In addition, the employee’s custodial duties were distinct from his volunteer coaching duties.

The key issue addressed by the DOL was whether it was permissible for the district to pay the volunteer coach an annual stipend for his efforts. Although the federal regulations do not permit volunteers to be compensated, they do allow small fees or stipends to be paid to volunteers so long as they are not a substitute for compensation or in any way tied to productivity. For example, as explained by the DOL, if the amount of the stipend varied based on the amount of time the volunteer spends engaged in volunteer activities or upon the success or failure of the team he is coaching, the payment would be an invalid compensation payment rather than a lawful stipend.

In addition, a stipend paid to a volunteer is only lawful if it is “nominal” when compared with what would be paid if someone were hired to perform the same job on a full-time basis. The opinion letter provides useful guidance in determining whether a stipend paid to a school district volunteer is permissibly “nominal” within the meaning of the federal regulations. In making this determination, the DOL cited a 20 percent test for determining the “nominal” issue. Pursuant to this test, if the coach-volunteer was offered a stipend of more than 20 percent of what a full-time coach of the same team would be paid by the district, the stipend would not be viewed as nominal and the DOL would deem the coaching activities as employment rather than volunteering. The DOL will also compare a stipend to the distance traveled, the time and effort expended, and the portion of the year during which the volunteer provides services in order to determine whether it can be classified as “nominal.” In the situation addressed in the opinion letter, the DOL was unable to make a determination on the “nominal” question because it did not have information regarding what the school district would otherwise pay a full-time coach for the same services.

School districts whose employees volunteer to perform extracurricular activities should take time to review their current practices for compliance. If an employee is misclassified as a volunteer for extracurricular activities, and is not paid for that time, this misclassification could result in substantial overtime liability if the employee/volunteer at issue is a non-exempt employee. In addition, districts that provide stipends for volunteer service should carefully review those payments to ensure that they meet the “nominal test” cited by the DOL.

If you have any questions about this Legal Alert or any other legal issue, please contact James A. Spitz, Jr. at (585) 419-8640, Edward A. Trevvett at (585) 419-8643, or the Harris Beach attorney with whom you usually work.

This Legal Alert provides a brief analysis or comments on matters of labor and employment law. This alert does not purport to be a substitute for advice of counsel on specific matters.