The Department of Labor recently released an opinion letter clarifying how employers (including nonprofits) may establish an optional employee volunteer program without having to pay overtime to participating employees under the Fair Labor Standards Act (FLSA). Nonprofits that incentivize or otherwise encourage their employees to participate in volunteer work run the risk that such activities might be considered "hours worked" under the FLSA, and therefore subject to its overtime and minimum wage requirements. The DOL's recent Opinion Letter FLSA2019-2 outlines some of the key guidelines to protect nonprofits against such employee wage and hour claims.

This guidance applies to programs set up to engage employees in community service, whether chosen by the employer or selected by the employees – for example, an "adopt a school" program where a nonprofit's employees may paint and landscape a school building on weekends over the course of the year. It applies only to volunteer work performed by employees outside of work hours for outside charitable or similar organizations. It does not apply to volunteer work performed during work hours, at the direction of the nonprofit (even if it is for an outside charity), or work for the nonprofit or nonprofit's benefit that is similar to work performed by regular, paid employees (which likely does not qualify as "volunteer" work). Thus, this guidance does not address the issue of overtime for a nonprofit's employees who wish to volunteer in the nonprofit's own programs (for example, an employee in the finance department who wants to tutor in his or her nonprofit employer's after-school programs).

In order to fall outside the purview of the FLSA, a nonprofit's volunteer program must be optional and designed to promote volunteering generally or incentivize employees to engage in community service and charity activities during the employees' non-work time, at their own discretion, and generally without the nonprofit's supervision or direction. Activities performed pursuant to such programs will not count as "hours worked" for FLSA purposes, if the employee's involvement is truly voluntary, meaning that the nonprofit does not unduly pressure employees to participate and there are no negative consequences for employees who do not participate.

Nonprofits that choose to offer financial incentives related to participation in such activities should not guarantee a financial bonus or benefit for volunteering. They may, however, offer a discretionary bonus or incentive based in part on an employee's participation in outside volunteer work. For example, a nonprofit may offer a monthly bonus to the employee or department that makes the biggest community contribution, measured in part by total hours of volunteer work.

Nonprofits may track the number of hours employees spend volunteering, for the purpose of measuring community impact, but should avoid paying employees a set dollar amount per hour spent volunteering. The flexibility to provide a monetary award at all is a bit surprising, as the potential for a monetary award could be considered as undue pressure to participate and thus make an activity less "voluntary." Nonprofits and other employers may wish to take advantage of the DOL guidance in this regard, in order to engage more employees in bonding and reap the other benefits of employee volunteer programs.

If, rather than operating an employee volunteer program, your organization seeks to become the beneficiary of one or more companies' employee volunteer programs, you may wish to provide this alert to the companies, as the DOL guidance provides very helpful requirements for running a program that is not subject to FLSA overtime and minimum wage requirements. We are always available to answer questions on this topic as needed.