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Tufts, Suzanne; And OthersLegal Barriers to Volunteer Service: A CommunityService Brief.Nonprofit Risk Management Center, Washington, DC.94

34p.Nonprofit Risk Management Center, 1001 ConnecticutAvenue, N.W., Suite 900, Washington, DC 20036 ($1plus $3 shipping and handling for the first item plus$.50 for each additional item, $5 maximum).Guides Non-Classroom Use (055)

MF01/PCO2 Plus Postage.Compensation (Remuneration); Court Litigation;.*Definitions; *Employees; Federal Regulation; *LaborLegislation; *Legal Problems: Minimum WageLegislation; Public Agencies; State Standards;Voluntary Agencies; *Volunteers

IDENTIFIERS *Davis Bacon Act; *Fair Labor Standards Act

ABSTRACTThis booklet is designed to help public and private

community service organizations understand the applicability of wageand hour 1.aws to volunteers used in their activities. It considersvarious legal interpretations of the differences between "volunteers"and "employees," and reviews the provisions of the federal Fair LaborStandards Act (FLSA), adopted in the 1930s to prevent theexploitation of workers by public and private enterprises. Thebooklet lists five FLSA criteria that may indicate a volunteerqualifies as an employee for the purposes of FLSA wage and hourprotection: (1) receipt of compensation for services provided; (2)

displacement of paid workers; (3) voluntary work for an employer thatis essentially the same work as that performed for compensation; (4)economic dependency on the organization :cor which the volunteerservice is provided; and (5) the performance of tasks for the benefitof the organization itself rather than the community the organizationserves. The booklet also reviews the applicability of the Davis-BaconAct for volunteers engaged in construction, maintenance, repair,painting, and decorating of certain federally funded projects.Specific court cases and examples are cited. (Contains 36 legalcitations.) (MDM)

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Reproductions supplied by EDRS are the best that can be madefrom the original document.

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Legal Barriers toVolunteer Service

c

U.S. DEPARTMENT OF EDUCATIONOthce or Educaeohal Research and improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

)(This document has been reproduced asreceived from the person or organizationoriginating it.

0 Minor changes have been made toimprove reproduction quality.

Points of view or opinions stated in thisdocument do not necessarily representofficial OERI position or policy

"PERMISSION TO REPRODUCE THISMATERIAL HAS BEEN GRANTED BY

14-)eY\ox

remTO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)."

Q A Community Service Brief from thec-f) Nonprofit Risk Management Center

2 3EST COPY E,

Community Service BriefsThis publication is partof a series on legal liability, insurance,

and risk management for community-serving organizations.The series is designed to serve three major purposes: provideguidance on resolution of legal issues; suggest strategies thatprogram managers can implement to prevent legal problemsfrom hampering their operations; and offer suggestions formodifying laws that may inhibit national and communityservice.

All opinions expressed in this booklet are those of theauthors on behalf of the Nonprofit Risk Management Center.They do not necessarily reflect the official position of theCorporation for National and Community Service.

Nonprofit Risk Management CenterThe mission of the Nonprofit Risk Management Center is

to meet the risk management and insurance needs of communityserving organizations through research, education, andadvocacy. The Center is an independent nonprofit organizationthat does not sell insurance nor endorse specific insuranceproviders. General operating support has been received fromthe Ford Foundation, the Lilly Endowment, and the MottFoundation. Liaison to the insurance industry is provided byrepresentatives of the nation's leading insurance, riskmanagement, and health benefits associations serving on theCenter's Council of Technical Advisors.

Corporation for National and Community ServiceThe Corporation for National and Community Service

will engage Americans of all ages and backgrounds incommunity-based service. This service will address the nation'seducation, human, public safety, and environmental needs toachieve direct and demonstrable results. In doing so, theCorporation will foster civic responsibility, strengthen the cordsthat bind us together as a people, and provide educationalopportunity for those whc make a substantial commitment toservice.

3

Legal Barriers toVolunteer Service

a community service brief

N ()

Suzanne Tufts

Charles Tremper

Anna Seidman

effrey Kahn

MANAC,I\11`,I

4

Mb

COPYRICIIIT © 1994 BY fill NONPROtIT RISK MANAGFMCN1 CINTIR.

This publication is designed to provide accurate and authori-tative information in nard to the subject matter covered. Itis distributed with the understanding that the publisher isnot cute aged in rendering legal, accounting, or other profes-sional service. If legal advice or other expert assistance isrequired, the services of a competent professional should besought. From a Declaration of Principles jointly adopted bya Committee of the American Bar Association and a Commit-tee 14 Publishers.

e

Ackhowledgments

The authors thank the following individuals for their helpfulsuggestions on this Community Service Brief.

Winnifred Brown, New York City Mayor's VoluntaryAction Center

Brad Caftel, National Economic Development and LawCenter

Bernice Figueredo, Jackson, Lewis, Schnitz ler & KrupmanCarol Friedland, New York City Mayor's Voluntary Action

CenterJane KennyAndrew 0. Moore, National Association of Service and

Conservation CorpsJennifer Phillips, Milwaukee Community Service CorpsPamela Poff, Jackson, Lewis, Schnitz ler & KrupmanBradford W. Warbasse, Gordon, Feinblatt, Rothman,

Hoffberger and HollanderSteven INillborn, University of Nebraska College of Law

With special thanks to Harvey Dale and Sandra Agan of the New YorkUniversity Program on Philanthropy and the Law.

Community Service Brief Review PanelWilliam C. Basl, Washington Service CorpsMike Brown, City YearIrene Fisher, Lowell Bennion Community Service CenterMargaret O'Neill, Student Service Alliance

COMMUN.! T Y S ER v I c F BR I E F

Contents

IntroductionWage and Ho-r Laws

Volunteer Or Employee?"Pure" VolunteersOfficial GuidelinesBenefitTrainingCompetitionCompensationEconomic DependenceEmployee-VolunteersFl SA Applicability

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3

45

5

6

7

7

7

8

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Construction, Maintenance, Repair, Painting andDecorating 14Davis-3acon Applicability 15

Davis-Bacon Implications for Volunteer Programs 18Union Rules 20Non-citizens 21

Conclusion 22Footnotes 23

COMMUNI T Y S F R V ICE BR I E F

Introduction

Volunteers can do anything!

That slogan may be great for building volunteer spirit, butthe law says otherwise. Several federal and state statutes havethe effect of prohibiting the use of volunteers in a few situations.Although these laws have little to do with most volunteerservice, we examine them here to alert you to potential pitfallsand to assure you if your program is unaffectc d by any of theselaws.

Most of these laws make no reference to volunteers per se.Instead, they require that individuals performing certain tasksbe paid specific amounts for their labor. If these laws apply,individuals must be paid, even if they want to volunteer.

Many of these laws were passed during the Depression toprotect workers from exploitation. Their enforcement to restrictthe use of volunteers may now conflict with public policy.Nonetheless, these laws remain on the books and can be en-forced.

The purpose of this booklet is to explain these rules so youdo not violate them unintentionally. In addition, the informa-tion here may help you to work to change laws that inappropri-ately limit the use of volunteers.

At the outset, a brief word about terminology is necessary.As you will see, the applicability of many of the laws dependson whether an individual you consider to be a "volunteer" isclassified as an "employee" under a particular law. An indi-vidual you refer to as a "volunteer," "participant," "gratuitousemployee" or "intern" may be subject to employment laws andstandards.

To minimize con i'asion, we use "employee" throughoutthis booklet to refer to someone covered by the employment law

NONPROFIT RISK MANAGEMENT CENTER

at issue, whether or not you consider that person to be avolunteer. We use "volunteer" as loosely here as it is usedamong volunteer programs to mean anyone ordinarily thoughtof as a volunteer. We recognize that some volunteers functionmuch like employees and some receive stipends or other sup-ports that might be considered compensation. The task here isto help you determine whether specific employment laws applyto any of these volunteers.

The applicability of employment laws to volunteers can beespecially confusing because an individual may be consideredto be an employee for one law but not another. For example, theInternal Revenue Code uses different rules for distinguishingbetween employees and independent contractors than the FairLabor Standards Act uses for determining whether someonemust be paid the minimum wage. Similarly, a state child laborlaw may he interpreted to cover volunteers even if the federallaw does not.

While we have attempted to make our work as thoroughand accurate as possible, this bookletcannot provide exhaustiveor definitive answers for many of the questions it addresses. Thelaw simply does not permit such certainty. Our goal is to giveyou as much of the answer as possible under these conditions.You may still need to consult a lawyer for an opinion regardingyour specific circumstances. If so, this booklet should be a time-saving tool for your attorney. We have included footnotes forattorneys' use.

If you spot an error or omission in this booklet, or if youhave ideas for operating in ways that minimize the negativeeffects of any law on your program, please notify the authors.Our chief objective is to provide the best possible guidance to thefield, and that includes a commitment to update the material inthis booklet as needed. Please let us know how we can makethese materials more useful for you and share your knowledgewith us so other programs can learn from your experience.

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C O M ML,NIT S E R BRIEF

Wage and Hour Laws

Wage and hour laws are designed to protect workers fromexploitation by employers that would otherwise pay too little orforce employees to work too long. The federal law and similarstate laws set a minimum wage and require overtime pay athigher rates for long hours. These laws contain certain safe-guards designed to prevent employers from circumventing therules by requiring workers to "volunteer." Because the rules area bit overinclusive, they may require payment of the minimumwage (or overtime) in some circumstances that are intended tobe true volunteer activities.

Traditional wage and hour laws have no bearing ontraditional volunteer service. The United States Supreme Courthas cited approvingly the Department of Labor's position thataltruistic citizens who volunteer to "minister to the comfort ofthe sick, elderly, indigent, infirm, or handicapped, and those

ho work with retarded or disadvantaged youth" are exemptfrom minimum wage and maximum hours laws in almost allcircumstances.'

In several situations, though, the federal Fair Labor Stan-dards Act (FLSA) or other legislation may prohibit individualsfrom conducting certain activities unless they are paid. TheFLSA prescribes minimum wage and compensation rates formost employees and provides for enforcement proceedingsand sanctions against employers who violate its requirements.-It is administered by the United States Department of Labor. Inaddition to the FLSA, states have their own wage and hour laws.Some state laws, though, apply to broader categories of work-ers, impose additional requirements, or may otherwise impingeon volunteer programs. In these states, the more expansive lawwill apply.

Our review of the FLSA, its regulations, and explanatory3

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N ONPR OF IT R K MAN AGEMENT CENTER

4

----- -.7 - - ----------materials published by the U.S. Department of Labor hasidentified five criteria which can convert a volunteer into anemployee for the purposes of FLSA wage and hour protection.As explained in more detail below, individuals who have any ofthe characteristics listed below in aybe considered to be employ-ees under the FLSA.

Characteristics That May Trigger the Fair Labor Standards Ad1) Receives some compensation, whether mon-

etary or in-kind for performing service.2) Displaces paid workers, provides services in

competition with paid workers, or otherwiseimpairs the employment prospects of paidworkers.

3) Volunteers for his or her own employer anddoes the same type of work done for theregular job.

4) Is economically dependent on the organiza-tion for which the volunteer service is per-formed.

5) Performs tasks that benefit the organizationitself rather than the community the organi-zation serves.

If your volunteers have any of these characteristics, youshould read the remainder of this section.

11,;' Volunteer Or Employee?

Fair Labor Stand a rds Act (FLSA) requirements apply onlyto individuals considered to be "employees" of an "enterprise"engaged in interstate commerce.' Most organizations, includ-ing an governmental entities, are considered to be "enterprises"engaged in interstate commerce. To determine if your organiza-tion is an "enterprise," see the "FLSA Applicability" sectionbelow.

The Fair Labor Standards Act does not specify the charac-teristics we identified. Instead, it distinguishes generally be-

11

Niml. NIT1 S F R VICE BRIEF'7-- ----tween "employees" and "volunteers." The Act itself offers littleguidance for determining whether someone is an employee ora volunteer. It does not define "volunteer" and defines "em-ployee" as "any individual employed by the employer." "Em-ploy" is defined as "to suffer or permit to work."4 The factors weidentify here represent an attempt to systematize the results ofthe Department's rulings and judicial opinions.

"Pure" Volunteers

The Department of Labor acknowledges that some indi-viduals offer services as "pure" volunteers, and that thoseindividuals are indeed exempt from FLSA coverage. Depart-ment of Labor regulations most clearly exempt almost all publicsector volunteers from the Fair Labor Standards Act. Individu-als who perform services for a public agency (a unit of state orlocal government) for civic, charitable or humanitarian reasons,without promise, expectation or receipt of compensation forservices rendered, are not considered to be employees under theFLSA.' (But see "Employee-Volunteers," below.)

In general, according to the Department of Labor, theFLSA does not apply to volunteers who:

1) are working toward "public service, religious,or humanitarian objectives,"

2) are not displacing employees when perform-ing these services, and

3) are donating services not generally consid-ered to be compensable "work."

As examples, Labor li:,ts the following: student volunteersat hospitals and nursing homes, parents helping in their children'sschools, and camp counselors."

Official Guidelines

The Department of Labor does not consider all volunteersto be "pure" volunteers. The Wage and Hour Administrator ofthe Department of Labor will look beyond the "volunteer" label

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to determine whether an employment relationship exists forpurposes of FLSA protection. Labor will scrutinize the follow-ing four elements of the relationship.

1) Benefit,2) Training,3) Competition, and4) Compensation.'

Benefit

. In any volunteer situation, the question, "Who benefits?,"provides a sensible, but difficult to apply, basis for decidingwhether wage and hour laws apply. The less benefit to theorganization (employer) and greater the nonmonetary benefitsto the individual and the community, the higher the likelihoodof an exemption. At one end of the spectrum are volunteers likehot line counselors who directly help needy individuals. At theother end of the spectrum are assembly line workers who helpan automobile manufacturer to make a profit. Business sectorworkers are considered employees (unless a specific training orapprentice exception applies) because their employer is thebeneficiary of their labor. This remains true even if the workersthemselves derive psychological gratification from the job.Similarly, volunteers who conduct unrelated commercial ac-tivities on behalf of a nonprofit organization are likely to becovered because the organization and not the communitydirectly benefits from the service.8

In between are volunteers whose services help an organi-zation but do not directly benefit the public. Who derives thebenefit of services provided by someone who maintains thebooks for a soup kitchen or by an individual who files medicalforms at a free clinic? If the relationship between the volunteer'sservices and a benefit to the community is unclear, the Depart-ment of Labor may conclude that the organization is the benefi-ciary. If so, aggressive application of the rules might requirepayment of the minimum wage.

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COMMUNITI S F R VICE B R I F F

Training

If volunteers receive substantial training and education aspart of their volunteer assignment, the position is less likely it isto be viewed as employment. (Department of Labor guidelinesuse vocational school training as an exemption example.9) Onecritical factor is whether the training is specific to the needs of theemployer or would be useful for other jobs. Discussions oftraining tend to be lumped together with the question of "whobenefits?" Substantial training that can be used to perform otherjobs tends to indicate that the position is for the benefit of thevolunteer.

Competition

If a volunteer's activities compete with, substitute for, orreplace in any way the employment of paid workers, the FLSAis more likely to apply. A business or organization may notreduce its paid labor force by taking on volunteers. In suchsituations, the Department of Labor may step in to protect jobs.

Compensation

Compensation in any form tends to indicate an employ-ment relationship, but FLSA provisions allow "reasonable ben-efits" for volunteers. For example, regulations regarding volun-teers for public agencies provide that "benefits would beconsidered reasonable, for example, when they involve inclu-sion of individual volunteers in group insurance plans (such asliability, health, life, disability, workers' compensation) or pen-sion plans or 'length of service' awards, commonly or tradition-ally provided to volunteers of State and local governmentagencies."' Although these rules appear in regulations forpublic sector employees, nothing suggests that they do notapply to volunteers for charitable organizations as well. TheDepartment of Labor reserves the right to analyze the compen-sation offered in exchange for volunteer services and states thatwhether such payments would cause the recipient: to lose theirvolunteer status "must be determined by examining the total

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amount of payments in the context of the economic realities ofthe particular situation."Il With respect to trainees, the Depart-ment of Labor Field Operations Handbook provides that "merepayment of a scholarship, stipend, or allowance (as long as itdoes not exceed a reasonable approximation of the expensesincurred by the trainee taking the course or where it serves as anallowance for subsistence) will not be considered to establish anemployment relationship."12

Providing cash in the form of a stipend rather than a wage,though, does not automatically exempt it from the minimumwage law. To the contrary, paying some compensation createsan inference that the FLSA applies. An exception, if one can befound, must rest on the other factors discussed. here or, forfederally funded programs, on an exception in the law authoriz-ing the program.

Economic Dependence

In 1985, the United States Supreme Court addressed thevolunteer/employee issue in the case of Tony and Susan AlamoFoundation v. Secretary of Labor." That case holds that if anindividual who performs service for an organization is depen-dent on that organization for sustenance, the Fair Labor Stan-dards Act wage and hour rules apply.

To the extent your program resembles the circumstancesin Alamo, the Court's analysis will govern. Because Alamo is ajudicial decision rather than a set of regulations, though, it doesnot offer a simple test for every situation. The facts of the caselimit the generalizabili tv of its conclusion.

The Alamo Foundation was incorporated as a nonprofitreligious organization for the purpose of rendering assistance tothe needy and the sick. As part of its mission, the Foundationoperated various commercial businesses including service sta-tions, clothing and grocery stores, and a motel. Members whovolunteered to work for the Foundation were called "associ-ates." Many were former drug addicts or had criminal recordsand were being rehabilitated by the Foundation while staffi.ngits commercial businesses. Associates received no cash pay-

8

C OM M U N I T Y S F R VICE BR IF F

merits for the work they performed. However, they did receivefood, clothing, lodging, transportation and medical benefits.

The Supreme Court noted that the Alamo Foundationassociates were entirely dependent on the Foundation for foodand shelter for long periods of time, in some cases several years.Thus, as a matter of "economic reality" they were employeesand not volunteers. Therefore, the Foundation was required topay them minimum wage and overtime.'4

Significantly, the Court clearly viewed as irrelevant thestrong protestations by the associates that they were not em-ployees and that they did not expect compensation. A workercannot waive any of the FLSA's provisions.'' It also did notmatter that the associates never received "cash wages." Accord-ing to the Court, food and shelter are "wages in another form"and nothing in the FLSA limits its coverage to monetary com-pensation.

Despite its holding in Alamo, the Court was careful to notethat its ruling was not intended to extend the FLSA to "ordinaryvolunteerism." According to the Court,\ "ordinary volunteer-ism" is service that does not "contemplate compensation" inany form (cash or benefits) and would include such activities as"driving the elderly to work" or "serving at soup kitchens".16

In the wake of Alamo, the Department of Labor assertedthat Salvation Army participants in a "down and out worktherapy program" were employees subject to the FLSA. TheSalvation Army workers were therapy participants; many home-less, alcoholic or addicted to drugs. They helped sort donateditems and in turn received food, shelter, counseling and a smallweekly cash stipend.

The Salvation Army filed suit to enjoin the Department ofLabor's proposed action which would have resulted in thepayment of standard wages to an estimated 70,000 participantsenrolled in the work therapy program. At that point the Depart-ment of Labor abandoned its enforcement action and the Salva-tion Army dismissed its suit.

Dismissal of the suit leaves the breadth of the Alamoholding in question. The rule of thumb continues to be that themore a volunteer's circumstances resemble those of a paid

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worker, the stronger the grounds for applying the FLSA. Thevarious rules described above, the Alamo case, and the nearabsence of Department of Labor enforcement actions since thatcase all suggest that volunteer programs have considerablelatitude to engage volunteers in productive labor that benefitsthe community unless the program violates a specific prohibi-tion or the relationship is functionally equivalent to a paid job.

EmployeeVolunteers

In contrast to the muddy rules for determining whethertilt. types of volunteer service discussed above are subject to theFLSA, the rules are very clear for individuals who volunteer fortheir employer. Multi-part tests elaborate the general rule,which is designed to prevent employers from pressuring theiremployees to volunteer for overtime duty and thereby getaround minimum wage and maximum hour laws.

For private sector employees, the Department of Labor hasissued a six part test.

1) The services are entirely voluntary, with nocoercion by the employer, no promise of ad-vancement, and no penalty for not volunteer-ing.

2) The activities are predominantly for theemployee's own benefit.

3) The employee does not replace another em-ployee or impair the employment opportuni-ties of others by performing work whichwould otherwise be performed by regularemployees.

4) The employee serves without contemplationof pay.

5) The activity does not take place during theemployee's regular working hours or sched-uled overtime hours.

6) The volunteer time is insubstantial in relationto the employee's rerlar hours*.

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For public sector employees, the rules are a bit morecomplicated. A public sector employee can volunteer if:

1) the individual receives no compensation forthe volunteer assignment, and

2) the assignment does not involve the "sametype of service" that the individual is em-ployed to perform. IS

"SAME TYPE OF SERVICES"?

Whether an employee performs the "same type of ser-vices" on a volunteer assignment is determined on a case by casebasis. According to the Department of Labor, the determinationshould involve an examination of "whether the volunteerservice is closely related to the actual duties,performed by orresponsibilities assigned to the employee." Labor uses itSpith0-1117111 of Occupational Titles for making that determination. Youcan check the definitions contained in this dictionary to deter-mine whether employeevolunteers are performing the "sametype of service" as that for which they are employed.

According to the Department of Labor the followingsituations would not be considered the "same type of service"and would thus be permissible volunteer activity.

1) A city police officer who volunteers as a parttime referee in a basketball ieague sponsoredby the city,

2) An employee of the city parks departmentwho serves as a volunteer city fire fighter; and

3) An office employee of a city hospital or otherhealth care institution who volunteers tospend time with a disabled or elderly personin the same institution during off duty hours.

"SAME AGENCY"?

For government employees, a volunteer assignment in-volving the same type of service for another public entity mayor may not he permissible. The key here is to determine whetherthe other public entity is considered to be the "same agency" as

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NONPROFIT Rttik MANAGENICNT CENT'ER

12

the volunteer's employer. If the two entities are in differentlevels of government, there is no problem (for example, amunicipal employee wants to volunteer at a state facility).Where both are part of the same governmental structure, theanswer is not always clear (for example, what about an em-ployee of the state department of social services who wants tovolunteer in a state run health facility).

Volunteering Not Allowed

A nurse in a state-run hospital wishes to pro-vide patient therapy at a neighborhood healthclinic that is administered by the state. Underthe state's public health system, the clinic wouldnot be considered a "separate public agency."If the nurse conducts patient therapy as part ofher regular job, she would be considered to beperforming the "same type of services" andthus would be covered by the FLSA.

The starting place for such a determination will be theorganizational make-up of your state's executive branch. Thefederal Department of Labor regulations treat agencies sepa-rately if they are treated separately for statistical purposes in acensus of government issued by the United States Bureau of theCensus.

FLSA Applicability

As mentioned in the introduction to this section, the FLSAdoes not apply to all organizations. Rather, it applies only toorganizations which are considered, to be "enterprises" en-gaged in interstate commerce. For an organiz- ion to be consid-ered an enterprise or to be engaged in commerce, the Actprovides that the organization must consist of at least twoemployees engaged in commerce, or in the production of goodsfor commerce or must have two employees handling, movingor selling goods which had previously moved in interstatecommerce. '"

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C OMMUNI T Y S E R VICE BRIE!'Under the FLSA, every public agency is considered to

engage in interstate commerce and to be subject to FLSA wageand hour laws. For nonpublic organizations, the test is whetherthe organization's activities are sufficiently closely related tocommercial activities that cross state lines, even if the organiza-tion does not consider its activities to be commercial. 4) Non-profit organizations that are subject to the Fair Labor StandardsAct specifically include certain schools and religious organiza-tions, hospitals, nursing homes, halfway houses, residentialcenters for drug addicts and alcoholics, homes for the blind andnursing homes.'' If your organization is involved in some formof commercial activity it is highly likely that it is an "enterprise"subject to the FLSA.

The FLSA does contain an exception for employees en-gaged in wholly charitable activities of nonprofit organizations.However, this is a very narrow exception. If volunteers performservices that represent production of goods for interstate com-merce, including any that are closely related to a process oroccupation directly essential to such production, they will beconsidered to be acting as employees and thus be subject toFLSA standards. An office worker who handles the mail-orderdivision which sells the organization's T-shirts and mugs couldbe covered by the FLSA. Similarly, if the services performedserve the general public in competition with ordinary commer-cial enterprises, then the workers will likewise be consideredemployees.'`

Another set of exemptions known as the "white collarexemptions" apply to persons who serve in an executive,administrative or professional capacity. Individuals who fitinto this category, including teachers, outside sales people andothers, are exempt from FLSA minimum wage and overtimerequirements if they spend sixty percent or more of their worktime each week in executive or administrative activities.23 Theseemployees can serve their employers as volunteers even if theydo the same type of work.

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14

Construction, Maintenance,Repair, Painting andDecorating

The federal Davis-Bacon Act24 requires that workers do-ing any form of construction, maintenance, repair, painting anddecorating on certain federally funded projects be paid the local"prevailing wage. "This rule applies regardless of whether theworkers consider themselvesor want to be volunteers.`'The Davis-Bacon Act was passed during the Depression toprevent migrant workers from undercutting local labor in theconstruction and building trades industries. As applied today ithas the effect of barring the use of volunteers in some situations.

At least4l states have their own version of the Davis-BaconAct covering state-funded projects.'" Although the various statestatutes closely parallel the federal Act, each has differences. Ifyour volunteer program is involved in the types of activitydiscussed in this section and you receive state funding, youshould determine whether your state law applies even if you arenot subject to the federal Davis-Bacon Act. A project receivingboth federal and state funds may be subject to two statutes.

The Davis-Bacon Act applies only to programs that haveworkers involved in the following types of activities.

Davis-Bacon ActivitiesConstructionMaintenanceRepair

Painting/ Decorating

If none of your voln, deers are involved in any qf these activities,Davis-Bacon does not apply. When you try to determine whetheryour work involves any of these activities, he aware that theDepartment of Labor interprets each item very broadly. If staff

COMMI: ITT S ER VICE B RIEFengage in these activities you could be subject to the Davis-Bacon Act in any of the following situations.

1. Work is performed on the site of a "publicbuilding or public works project" under afederal contract worth over $2,000.Work is performed on the site of a "publicbuilding or public works project" and you area subcontractor of a contractor that is subjectto Davis-Bacon.

3. Funds for the work are provided by a federalprogram that imposes the Davis-Bacon Actrequirements.

The analysis below can help you determine whether anyof these conditions applies to your program. Became there is nocase law on the applicability of Davis-Bacon to volunteerprograms per se, the answer may not be clear. To be certain youor your attorney may seek guidance from the Department ofLabor, which has a history of interpreting the Act as applyingvery broadly. The Department f Labor Wage and Hour Divisionissues Opinion Letters to give guidance to groups withDavis-Bacon questions. The Department's interpretation takesprecedence. over all other government agencies on issues ofDavis-Bacon interpretation and coverage.2'

2.

/I Davis-Bacon Applicability

Scenario 1 Work is performed on the site of a "publicbuilding or public works project" under afederal contract worth over $2,000.

The Davis-Bacon Act applies to contracts (or grants) inexcess of $2,000 to which the United States or the District ofColumbia is a party for the construction, alteration, or repair "ofpublic buildings or public works of the United States or theDistrict of Col umbia."28 If you receive such funding for a project,you cannot use volunteers for construction, etc., if they will beperforming the work on the site of a public building or publicworks project as defined for purposes of the Act.

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NONPROFIT RISK M,\NAGFMENT CENTER

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Public Building or Public Works ProjectThe phrases"public building" and "public works" refer to "any building orwork, the construction, prosecution, completion or repair ofwhich, is carried on directly by authority or with funds of afederal agency to serve the interests of the general public,regardless of whether title to the building or work is in a federalagency."29

A "public building" can be a federal building (such as acourthouse or federal office building) or it can be any other typeof building the construction etc., of which is being financed inwhole or in part by the federal government. The phrase "publicworks" usually refers to some form of public construction otherthan a building (such as a highway or a park) where the UnitedStates is a party or is financing, in whole or in part, the construc-tion, repair, etc.

"On-Site"The Davis-Bacon Act's prevailing wage re-quirement applies only to workers conducting covered activi-ties directly at the physical construction site or at certain specifi-cally defined "off-site" locations described in Department ofLabor regulations. The term "site" is given a very expansivecommon sense definition. .

Scenario 2 Work is performed on the site of a "publicbuilding or public works project" and youare a subcontractor of a contractor that issubject to Davis-Bacon.

The Davis-Bacon Act requires contractorsand subanztrac-tars to comply with its provisions.30 Thus, you may be subject toDavis -Bacon even though you receive no federal funding. Ifyou are performing services under a contract with anotherparty that is subject to Davis-Bacon, then you, too, are requiredto pay the prevailing wage to anyone doing construction, etc.,on the site of a "public building or public works project"according to the same rules explained above for direct recipientsof federal funding.

C O M M U N I T Y S ER V I C F BR IF F

Scenario 3 Funds for the work are provided by a fed-eral program that imposes the DavisBa-con Act requirements.

Over 50 federal statutes expressly require grantees tocomply with the DavisBacon Act and related laws.31 Statuteswhich "reference" the DavisBacon Act are not limited to thefederal "site" limitation on the applicability of the Act. Forexample, the Domestic Volunteer Service Act contains thefollowing rule:

All laborers and mechanics employed by contractorsor subcontractors in the construction, alteration orrepair, including painting and decorating of projects,buildings and works which are federally assistedunder this chapter shall be paid wages at rates notless than those prevailing on similar construction inthe locality...."

Because of this rule, Foster Grandparent Programs, Re-tired Senior Volunteer Programs, and other programs fundedunder the Domestic Volunteer Service Act have been subject toDavisBacon Act rules regardless of where a contractor performsservices. Recipients of funds through the Community Develop-ment Block Grant program or other programs under the juris-diction of HUD or HHS are similarly subject to DavisBacon.33

Thus, if you receive federal funds, you should check thespecific rules in your award letter regarding DavisBaconapplicability. Some programs modify the type of compliancethat is required. For example, certain environmental statutesdealing with emergency clean-ups, reference DavisBacon butmake exceptions for certain circumstances and certain grant-ees? Others, require only that you comply with DavisBacon tothe extent it applies. This "assurance" rule merely requires thatyou follow DavisBacon if it applies under either scenario 1 or2, above.

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NONPR OF IT RISK MANAGEMENT CENTER

18

--Davis-Bacon Implications for Volunteer Programs

If your program is subject to DavisBacon Act require-ments, you must pay affected workers the prevailing wage inyour community, as determined by the Department of Labor,for the work they are doing. If you violate the DavisBacon Act,you can be subject to a variety of fines and penalties specifiedunder the Act and the regulations. These penalties can applywhether or not you, or the workers doing the construction, etc.,are working on behalf of a "prime contractor" or a "secondarycontractor." Moreover, if your funding agreement requirescompliance, you can also lose your funding.

Programs that are potentially subject to DavisBacon havedeveloped several strategies to give their participants meaning-ful opportunities closely related to construction, maintenance,etc., once they have obtained assurances of the local contract-ing/granting ager / and representatives of organized laborthat specific projects do not require payment of prevailingwage. For example, service corps have accomplished a range oflow income neighborhood projects such as installing playstructures, landscaping, renovating recreational facilities, spruc-ing up urban parks and community gardens, planting trees, andremoving graffiti. In each of these cases, the service programsought local determinations from federal authorities to insurethat the work contemplated was exempt from DavisBacon. Inaddition, projects involving less than $2,000 are exempt.

A few organizations have been able to tap into Commu-nity Development Block Grant "Social Service" funding ratherthan funding for capital improvements. The "Social Service"rules do not impose DavisBacon Act requirements. Someprograms use federal funds only for project materials and toolsand not for personnel working in connection with low incomehousing renovations. Another strategy is to seek to have aprogram judged to be a pre-apprenticeship program, as in thecase of the HUD Step-Up program, so as clearly to permit thepayment of wages below prevailing wage.

In all cases, a project that plans to use volunteers forconstruction, etc., needs to attend to DavisBacon applicabilityin advance. The project funders can be consulted about their

2J

Co mmUNI T V SE R VICE B RIEEspecific requirements and the federal and state labor depart-ments can be asked for an advance determination. Experiencehas shown that local unions' approval of the project can im-prove the prospects of a favorable ruling.

?619

N 0 NPROIIT RISK MANAGEMINT CENTFR

Union Rules

Volunteers should not be used to displace union workers.Not only should an organization with a unionized workforce becareful about using volunteers in day-to-day activities, it shouldalso be very careful about whether and in what circumstancesit plans to use volunteers in connection with union activity, suchas organizing a workforce. If you plan to use volunteers inconnection with union activity (whether on behalf of labor ormanagement), you should carefully coordinate your plans withlabor counsel since this area is fraught with regulation.'

Union rules and regulations depend not only on varioussituations but on the type of industry, employers and locations.In addition, each collective bargaining agreement may containrestrictions on the use or management of volunteers.

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COMMI.:NIT Y S I R V ICE BR IEF

Non-citizens

Laws prohibiting employment of aliens who are not law-fully present in the United States do not apply to unpaidvolunteers per se. That is, you need not verify citizenship statusof any individual engaged in traditional volunteer activities.Even if you are aware that someone in your volunteer programis in this country illegally, you are not required to inform theauthorities.

Congress enacted the Immigration Reform Land ControlAct of 19861' in response to concerns that illegal aliens werereplacing United States citizens in paid jobs. Its requirementthat employers obtain proof of citizenship or work authoriza-tion ordinarily has no relevance to volunteer positions.

Paying a volunteer in any form, however, or using avolunteer to perform a task that displaces a paid worker, maytrigger the Immigration Reform Act's rules. In the absence ofguidance on this issue from the Immigration and Naturaliza-tion Service, you can refer to the rules described above fordetermining whether someone is an employee for purposes ofthe Fair Labor Standards Act. If so, the Immigration and ReformAct requirements undoubtedly apply. Considering the pur-poses of immigration control law, a good rule of thumb wouldbe to follow its requirements if the volunteer's service woulddeprive any U.S. citizen of an economic opportunity. Moreover,because non citizens without work permits are especially vul-nerable to exploitation, any element of coercion in their volun-teer service may trigger government intervention.

Programs receiving federal funds under a few programsmay be required to check the citizenship status of volunteers orservice recipients. If you are subject to such a requirement, yourgrant award notice should set forth that limitation.

8

----

21

No\PROF.I R S MNAuf \% F \ Cf ',TER

Conclusion

Reading this booklet may leave you somewhat uncertainabout the permissibility of using volunteers in some situations.Most of the laws examined in this booklet were designed toprotect workers' wages and certainly were not passed to inhibitvolunteering, an effect that was probably never considered atthe time of enactment.

Consequently, the applicability of these laws in somecircumstances may be unclear. Good arguments support theside of application as well as the side of exemption. Until thecourts rule on these issueswhich will happen only if someonesuesthe uncertainty will continue. This booklet should at leastprovide some assistance for deciding how to proceed M theabsence of such clarification.

C M SE R V ICE BR I F F

Footnotes

These footnotes are intended for lawyers who need legalcitations for the discussions in the text.

' Tony and Susan Alamo Foundation v. Secretary of Labor, 471U.S. 270 at 303(1985) n.25. Citing Wage and Hour Division, United StatesDepartment of Labor, Employment Relationship under the Fair LaborStandards Act (W.H. Pub. 1297)(1985) p.6 (hereinafter cited asEmploy-molt Relations Supplement).

= Failure to comply with FLSA wage, hour and child labor stan-dards can result in civil and criminal liability, 29 U.S.0 § 216.

29 U.S.C. § 20(e) and (r).29 U.S.C. §§ 203(e)(1) and 203(g). Dunn, Leda E., "Protection of

Volunteers Under Federal Employment Law: DiscouragingVoluntarism?," 61 Fordham Law Review. 451, 455 (1992).

29 C.F.R. §§ 553.100 et seq.'' Employment Relations Supplement at 6-7.

Employment Relations Supplement at 7.Tony and Susan Alamo Foundation v. Secretary of Labor, 471

U.S. 290 (1985); Souder v. Brennar, 367 F. Supp. 808 (D.C. Cir. 1973);Mitchell v. Pilgrim Holiness Church Corp., 210 F.2d 879 (7th Cir.1954); cert denied, 347 U.S. 1013 (1954).

" Employment Relations Supplement at 4-5, 29 C.F.R. § 520.2(1)."' 29 C.F.R. §.553.106(d) ." 29 C.F.R.§ 553.106(f).

Department of Labor, Field Operations Handbook, FOH Insert#1626, pp. 10h12 10114, 3/31/82.

471 U.S. 290 (1985)." See also, Walling v. Portland Terminal Co., 330 U.S. 148, 152

(1947); Bartels v. Birmingham, 332 US 126, 130 (1947); United Statesv. Silk, 331 US 704, 713 (1947); Brock v. Superior Child Care Inc., 840F.2d 1054, 1058-59 (2d cir. 1988) (citing United States v. Silk, 331 U.S.704, 713 (1947)).

'; 471 U.S. at 301-02. Indeed, the Court held that the Act's verypurpose is to protect employees who may be forced to testify that theywere working voluntarily.

'' 471 U.S. 302-03. See also, McClure v. Salvation Army, 460 F.2d553, 557 (5th Cir.), cert. denied, 409 U.S. 896 (1972).

23

U 9

NONPROFIT RISK MANAGEMENT CENTER- -WH-369, Dec. 3,1975. See also, WH-282, Aug. 12,1974; WH-188,

Dec. 27, 1972IS 29 U.S.C. § 204(5)(a \ (A); 29 C.F.R. § 553.10(d).

29 U.S.C. § 203(s); 471 U.S. at 295-96. Furthermore, an enter-prise, to fall within the Act, must satisfy a dollar volume of sales madeor business done annually. This amount is determined on a quarterlybasis by the Department of Labor.

2" The legislative history of the FLSA and subsequent amend-ments make it clear that Congress intended to include nonprofitorganizations in the definition of "employer" or "enterprise." Indeed,on two occasions, Congress explicitly rejected proposals to exemptnonprofit organizations from FLSA coverage. See Milani, Lisa M,"The Applicability of the Fair Labor Standards Act to VolunteerWorkers at Nonprofit Organizations," 43 Washington & Lee LawReview 223,235-36 (1986); Jordan, Kelley, "FLSA Restrictions on Vol-unteerism: The Institutional and Individual Costs in a ChangingEconomy," 78 Cornell Law Review. 302 (1993).

21 29 U.S.C. § 213(a) (2) (iii) (1982); 29 U.S.C. §§ 203 (r) (s) (1982);[6 Wages-Hours] Labor Relations Reporter (BNA) 91:1177 (1977); seealso, [6 ,Wages-Hours] Labor Relations Reporter (BNA) 91:1198-1200(1976).

22 Although no specific statutory exception exists, several casesan i Advisory Opinions issued by the Wage and Hour Administratorof the U.S. Deparrment of Labor acknowledge this exception to thegeneral rule. See, Tony and Susan Alamo Foundation, 471 U.S. at 299,Wagner v. Salvation Army, 660 F. Stipp. 466 (E.D. Tenn. 1986);Opinion letters No. 1040 (November 18,1969) and 927 (May 29,1968),WH-377 (March 10, 1976).

2 29 U.S.C. § 213(a)(1); see also Minimum Wages and OvertimePay_ , 235 Lab. L. Rep. 11 (CCH) (April 5, 1991).

24 40 U.S.C. § 276(a) et seq, as amended.The "preva iling wage" for any given locality in the United States

is determined by the United States Department of Labor and varies bygeographic region. Note that here, as with the federal Fair LaborStandards Act, it is not the intent or title of the worker but the natureof the work being performed that is the operative factor. The Act andrelated statutes also contain extensive recordkeeping, overtime andmethod of payment,provisions.

25 The only States witlimit a parallel DavisBacon Act coveringvarious types of state projects are Georgia, Mississippi, North Carolina, South Carolina, Virginia, iowa, North Dakota, South Dakota andVermont. See also, Warner, Senator John W., "Congressional andAdministrative Efforts to Modify or Eliminate the DavisBacon Act,"10 Western State Law Review 1 (Fall 1982).

" The DavisBacon Act is enforced by the United States Depart-ment of Labor, Employment Standards Administration (ESA), Wageand Hour Division, Office of Government Contract Wage Standards

24 3 1

C a M M U NI T Y S E R VICE BR I F F

(Wage and Hour Division). The contracting agency responsible for aparticular project has the primary responsibility for enforcement ofthe Davis-Bacon Act. However, the Department of Labor has thecoordinating and oversight responsibility and the authority to ensureuniform enforcement of the Act by all relevant agencies. Reorganiza-tion Plan No. 14 of 1950, 5 U.S.C. Appendix, 64 Stat. 1267.

" 40 U.S.C. § 276a." C.F.R. § 5.2(k).

See, Re: Labor Services, Inc., (1991 WAB) CCH Wage and HourAdmin. Rulings ¶3221;18 Comp. Gen. 341, as cited in Opinior Le:terof the Secretary of Labor No. DB-26, P. 102-E, CCH Wage and 1-knirAdministrative Rulings ¶30647 (1962).

Over fifty federal statutes reference the Davis-Bacon Act. See,for example, Housing and Community Development Act of 1974, §§110, 802(g) and various housing and community development actsincluding the Community Development Block Grants. Some statutesalso expressly state that the Davis-Bacon Act does not apply, e.g., theJob 1 raining Partnership Act.

" Domestic Volunteer Service Act, 42 U.S.C. § 5046." Housing and Community Development Act of 1974, §§ 110,

802(g)..4 See, Re MotcoHazmat Site 1991, WAB, CCH Wage-Hour Ad-

ministrative Rulings, ¶ 31246; Comprehensive Environmental Re-sponse, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C.§ 9604(g)(1).

Federal labor law includes statutes such as the Wagner Act, TheLabor Management Relations Act, and The Norris LaGuardia Act.Both the Department of Labor and the National Labor Relations Boardhave jurisdiction over various matters involving organized labor andlabor:management relations.

8 U.S.C. § 274 et seq.

25

AkRisk Management Publications forVolunteer Organizations

Am I Covered for ...?: A Guide to Insurance for Non-Profits (2d ed.), by Terry S. Chapman, Mary L. Lai & Elmer L.Steinbock, 285 pages, $15.00. The most complete and up-to-datehandbook on insurance purchasing for nonprofits.

D & 0Yes or No?, 20 pages, $6.00. This booklet examinesthe major considerations for deciding whether to purchasedirectors and officers insurance and, if so, which policy to select.

Guidebook for Directors of Nonprofit Corporations,1992, 118 pages, $19.95. A layperson's guide from the AmericanBar Association for every board that wants to protect itself fromlawsuits.

No Surprises: Controlling Risks in Volunteer Programs,by Charles Tremper & Gwynne Kostin, 1993, 60 pages, $9.95.This practical handbook offers strategies for protecting theorganization, its staff, and the community it serves from injuries,lawsuits, and other unpleasant surprises.

State Liability Laws for Charitable Organizations andVolunteers,1993,48 pages, $12.50. A state-by-state compilationof volunteer protection laws and limitations on the liability ofcharitable organizations.

To order, please include $3.00 shipping and handling forthe first item plus $.50 for each additional item, $5.00 maximum.Send order and payment or purchase order to:

NRMC Publications1001 Connecticut Ave., NW, Suite 900Washington, DC 20036(202) 785-3891fax: (202) 833-5747

To receive a current publications list or for information aboutquantity discounts write, phone, or fax the Center.

33

Nonprofit JjjRisk ManagementCenter rrr1001 Connecticut Ave., N.W., Suite 900Washington, D.C. 20036(202) 785-3891