How-to Guide

How to Determine if an Individual Is a Volunteer or an Employee

HR professionals are aware of minimum wage requirements for employees, so how can an employer implement an unpaid volunteer program? This guide will describe the instances in which volunteer programs are legal and explain how to determine if an employer's volunteer program is compliant with federal law.

To determine whether an individual is a volunteer or an employee, an employer will need to understand:

The definition of an employee.
The definition of a volunteer.
State and federal laws.
How trainees, internships and apprenticeship programs work.

Step 1: Understand the Definition of an Employee

An employee is a worker who performs services for the employer, and the employer controls how and what the employee will do. The Fair Labor Standards Act (FLSA) defines the term "employ" to include "to suffer or permit to work" for an employer. Employees must be paid at least minimum wage and receive overtime for any hours over 40 in the workweek unless otherwise exempt under federal law.

Step 2: Understand the Definition of a Volunteer

A volunteer donates his or her time and energy without receiving financial or material gain. According to the Bureau of Labor Statistics (BLS), the most common volunteer activities are fundraising, tutoring and teaching. Guidelines exist for volunteers in the public and nonprofit sectors in which payment of minimum wage or overtime would not be necessary. The individual would need to a) work toward public service, religious or humanitarian objectives; b) not expect or receive compensation for services; and c) not displace any genuine employees. Under FLSA regulations, an individual cannot volunteer services to a private, for-profit company.

Step 3: Comply with State and Federal Laws

There are no general regulations that permit volunteering of services to an employer in the private sector. All hours worked must be paid. According to the FLSA, an employer must pay all employees not less than the minimum wage for all hours worked. The FLSA regulation 29 C.F.R. §785.44 states that time spent in work for public or charitable purposes at the employer's request, or under the employer's direction or control, or while the employee is required to be on premises, is working time. The Wage and Hour Division of the U.S. Department of Labor (DOL) states that employees cannot volunteer to do the same type of work that they perform as a part of their normal work duties and that the hours must be included in calculating hours worked. Time spent voluntarily engaged in civic, charitable or humanitarian activities that are completely different from the employee's normal work duties and outside of the employee's normal working hours would not be considered work time. In addition, an individual would need to volunteer without any coercion or undue pressure. The DOL has provided this direction regarding volunteers in several opinion letters.

Step 4: Determine FLSA Status of Trainees, Internships and Apprenticeship Program Participants

Whether trainees or students are employees of an employer under the FLSA depends on the circumstances surrounding their activities with the employer. The School-to-Work Program is an excellent example of trainees that are not considered employees. State programs exist that allow students from local schools to gain experience in their chosen vocations. Students obtain valuable knowledge from employers willing to provide these worthwhile opportunities that prepare the trainees for the reality of the work environment.

Many companies develop and implement intern programs that allow students the opportunity to obtain real-world experience in their selected fields of study. For someone to be considered an unpaid "intern" or a "trainee" under FLSA regulations, specific criteria must be met as well. According to 2018 guidance from the DOL, the following seven factors are evaluated in determining whether an employment relationship with an intern or student exists:

Both parties understand that the intern is not entitled to compensation.
The internship provides training that would be given in an educational environment.
The intern's completion of the program entitles him or her to academic credit.
The internship corresponds with the academic calendar.
The internship's duration is limited to the period when the internship educates the intern.
The intern's work complements rather than displaces the work of paid employees while providing significant educational benefits.
The intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship's end.

Employers must develop and outline their trainee, internship and apprenticeship programs to ensure compliance with FLSA regulations.