All employers, including nonprofit organizations, need to know when their employees can and cannot provide unpaid volunteer services to the organization. If an employer mistakenly accepts or receives "volunteer" services under the wrong circumstances, it could risk liability for a variety of claims arising under wage, tax, unemployment compensation and workers' compensation laws.

Under the Fair Labor Standards Act (FLSA), individuals who provide services without any expectation of compensation are "volunteers." In enforcing the FLSA, the United States Department of Labor (DOL) considers several factors to determine whether an individual is an employee or a volunteer. Such factors include but are not limited to whether (1) the designation of "volunteer" status is done unilaterally by the employer to avoid minimum wage or overtime requirements; (2) the volunteer time is for a civic, charitable or humanitarian purpose without any promise, expectation or receipt of compensation by the employee; and (3) the act of volunteering is truly voluntary, without any direct or implied coercion from the employer.

The DOL has provided some guidance as to when an employee of a nonprofit organization may volunteer at the same organization where he or she is employed. Specifically, the DOL has taken the position that employees may not volunteer to provide services for the nonprofit organization that are "the same as, similar, or related to" their regular job duties. As a general example, a school custodian may not volunteer to empty the trash cans after a basketball game, but he or she may volunteer to coach the team. The DOL also has stated nonprofit organizations cannot request or direct employees to perform volunteer work during the employee's normal working hours, even if the requested volunteer duties are not the same as or similar to the employee's regular job duties.

In addition, nonprofit organizations must exercise caution with respect to the type of perks or rewards given to volunteers for their services. While volunteers may be provided with nominal and occasional perks and rewards for their services (such as snacks or certificates), actual payments in the form of stipends and/or products of meaningful monetary value may be interpreted by the DOL as compensation for services, which may cause a putative volunteer to be classified as an employee. Determining when an employee may provide volunteer services is a fact-specific inquiry, and if in doubt, employers should consult legal counsel.