What is a "Volunteer"?
According to the US Department of Labor, volunteers are individuals who perform hours of service for religious, charitable or similar non-profit organizations without promise, expectation, or receipt of compensation (note: if you live outside the US, check your country's labor laws). In addition, all of the following must also be true:
- The entity that benefits from the service is a nonprofit (or government agency)
- The activity is less than full time
- The services are not offered as a result of coercion
- The services are typically associated with volunteer work
- No regular employees have been displaced by the volunteer
- The volunteer does not expect to be compensated
It's important to understand this definition of a volunteer because it affects what protections a worker, paid or unpaid, is entitled to. In the United States, true “volunteers,” as defined by law, are not considered employees and, therefore, are not covered by the US Fair Labor Standards Act. Similarly, paid employees, as defined by law, are not protected by the federal Volunteer Protection Act.
Offering stipends to volunteers can get tricky because by doing so, you may inadvertently convert your “volunteer” into an “employee." According to the Department of Labor, if a volunteer is paid a stipend of over $500 a year or 20% more than what an employee would be paid, they must be treated as paid staff and are subject to the laws that govern employees.
If you decide to offer stipends, be sure you have the proper accounting system in place. Volunteers who receive stipends must be treated the same as paid staff, and payroll tax contributions must be withheld from their pay. This goes for in-kind benefits as well, which must be assigned fair market value.
Reimbursements for expenses incurred while volunteering are also, surprisingly, considered taxable income. Volunteer recogition gifts of limited value, fortunately, are considered a “de minimus benefit” and are not taxed.
If you decide to offer stipends to volunteers, keep the following in mind:
- Never pay more than a nominal 20% of what an employer would otherwise pay for the same service
- Do not offer benefits that other employees receive
- Make it clear if a volunteer receives more than $500 a year in compensation, they will no longer be protected from liability claims by the Federal Volunteer Protection Act
Trainees, such as school-to-work or internship program participants, may also be considered volunteers versus employees; however, the same rules apply as far as stipends go. In order to be considered a “trainee”, the following must also be true:
- The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
- The training is for the benefit of the trainees or students;
- The trainees or students do not displace paid employees, but work under close supervision;
- The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded;
- The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
- The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Public Sector Employees as Volunteers
If employees want to vounteer, there are also laws in place that are meant to protect them from exploitation, so be sure you know the parameters. Public sector employees may volunteer for their agencies, but by law may not volunteer additional time to do the same work for which they are already paid. Whenever paid staff wish to volunteer their time for the agency for which they also work, they should be subject to the same formal application process and supervision as other volunteers in the same role.
Your Due Diligence
To prevent misunderstandings, it is important for volunteers and staff alike to clearly delineate the difference between volunteer and staff duties. Developing distinct position descriptions, volunteer agreements, and program policies and procedures for the volunteer program can help decrease the chance of misunderstandings, and thus, risk to the organization. Also, be sure that any paid staff who also wish to volunteer their time are treated the same as other volunteers and agree on tasks that are different than their paid work.
For more info, check out the following:
- US Department of Labor Opinion on Stipends -- http://www.dol.gov/whd/opinion/FLSA/2006/2006_08_07_28_FLSA.pdf
- Info on Employees as Volunteers -- http://www.dol.gov/elaws/esa/flsa/docs/volunteers.asp
- The Definition of a Trainee -- http://www.dol.gov/elaws/esa/flsa/docs/trainees.asp
- The Difference Between Employees and Volunteers -- https://www.nonprofitrisk.org/library/articles/employee_or_volunteer.shtml
- The Federal Volunteer Protection Act -- http://www.gpo.gov/fdsys/pkg/PLAW-105publ19/pdf/PLAW-105publ19.pdf