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socrateaser
socrateaser, Lawyer
Category: California Employment Law
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Experience:  Retired (mostly)
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I want to create a service that does vetting and matching of

Resolved Question:

I want to create a service that does vetting and matching of (unpaid) volunteers/interns for charities in California. I need to understand what legal issues I might face, for example if I take a small fee from charities for that service.
Submitted: 1 year ago.
Category: California Employment Law
Expert:  socrateaser replied 1 year ago.
Hello,

There are three areas of concern with regards XXXXX XXXXX contemplated activities:

1. Under California law, there is no prohibition against the creation of an agency that attempts to place volunteers, whether at nonprofit or for-profit organizations. However, if you were to construct an agency and it was determined that your volunteers were actually engaged in employment, then you could be found to be involved in a conspiracy to violate the minimum wage laws, and that could create huge problems for you.

Concerning the definition of a "volunteer," the following text from California Division of Labor Standards Enforcement (DLSE) Opinion Letter 1988.10.27, is important:

  • In determining whether one is a volunteer or an employee, the California Division of Labor Standards Enforcement takes the position that the intent of the parties is the controlling factor. If the person intends to volunteer his or her services for public service, religious, or humanitarian objectives, not as an employee and without contemplation of pay, the individual is not an employee of the religious, charitable, or similar nonprofit corporation which receives the services.

  • In certain circumstances, a regular employee of a religious, charitable, or nonprofit organization may donate services as a volunteer. However, these may not be the usual services of that employee's job. However, when religious, charitable or nonprofit organizations operate commercial enterprises which serve the general public, such as restaurants or thrift stores, or when they contract to provide personal services to businesses, such enterprises are subject to the Industrial Welfare Commission Orders and volunteers may not be utilized.

  • If the person performing the service is an employee, that person must be paid pursuant to the IWC Orders. If the person is truly a volunteer, with no expectation of any pay, and is not performing services of a a commercial nature, the person is not covered by the IWC Orders.

 

The key to maintaining volunteer status is that your placements must not be such that individuals are being utilized to permit a nonprofit organization to avoid hiring employees, where the volunteer work is something that is almost always carried on by an employee. Examples: Providing directions to persons entering a hospital lobby, is traditionally a volunteer activity. Working as a cashier in a hospital gift shop is traditionally paid employment. Handing out a free cup of coffee or some free cookies is volunteer work. Mixing specially ordered coffee drinks and providing pasteries in exchange for payment is paid employment.

 

BotXXXXX XXXXXne, you must be careful about crossing the line, or you can be held liable for the employee's pay and payroll taxes.

 

2. California law does not regulate private employment agencies, except where the form of employment is a talent agency. (Labor Code 1700 et seq.) A talent agency is an organization that attempts to place "artists," and an artist "a person who is or seeks to become an actor, actress, model, extra, radio artist, musical artist, musical organization, director, musical director, writer, cinematographer, composer, lyricist, arranger, or other person rendering professional services in motion picture, theatrical, radio, television, Internet, print media, or other entertainment enterprises or technologies."

Even if you are placing volunteers in a theatrical performance for a nonprofit where the volunteers intend to to perform without compensation, the history of the talent industry is one rife for worker exploitation -- consequently, the DLSE will make every possible effort to try to turn volunteer performers into paid artists -- and if that happens, then you will be found to be operating an illegal talent agency, which can expose you to criminal liability.

3. There is a special type of volunteer, termed an "intern." Interns are regulated by both California and U.S. law, differently from mere volunteers. But, it is frequently very difficult to distinguish between a volunteer and an intern.

The U.S. Department of Labor (DOL) has articulated six criteria, derived from the U.S. Supreme Court's Portland Terminal case (Walling v. Portland Terminal Co" 330 U.S. 148 (1947)) to be applied to determine whether a "trainee" is exempt from FLSA's minimum wage coverage.2 (DOL OL 5/I 7/04 [criteria derived from Portland Terminal].) The six criteria used by DOL are as follows:

(I) The training, even though it includes actual operation of the employer's facilities, is similar to that which would be given in a vocational school;

(2) The training is for the benefit ofthe trainees or students;

(3) The trainees or students do not displace regular employees, but work under their close observation;

(4) The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer's operations may be actually impeded;

(5) The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and

(6) The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

Great care must be taken to avoid violating the above-described factors, whether the person is characterized as a volunteer or an intern, because if your volunteer fails the internship tests, then it's quite possible that the volunteer is actually an employee, and this would, once again, place you at risk of violating the minimum wage and payroll tax laws of both California and the USA.

In sum, I think you propose an interesting idea. To make it work, you must be careful about the services that your volunteers perform -- because if they operate to replace traditional employment, or are artistic engagements that should be compensated, then you could find yourself imputed to be the employer and subjected to pay the employee's wages and taxes.

Please let me know if I can clarify my answer or provide further assistance.

Hope this helps.
Customer: replied 1 year ago.

Good afternoon,


 


thank you very much for your answer. From what you are describing, there doesn't seem to be a direct problem for the types of volunteering activities we are talking about, but maybe I can clarify a little further.


 


We are talking about small tasks those volunteers would perform in their area of training/expertise (for example a website, writing a grant application, a PR text, or something like that), typically between 10 and 100 hours of work.


 


The service we plan on providing helps to find the right quality volunteers, to provide a collaboration (online) platform and a rating system that helps good volunteers find good charities. For this, we would charge charities a small fee for each project of probably 10-20$.


 


Does this raise any concerns with you?


 


Kind regards


 


John

Expert:  socrateaser replied 1 year ago.

In my opinion, the sort of work you are describing is employment. However, if the volunteers, you and the nonprofit are willing to sign an acknowledgment in advance stating that the volunteer intends their services to be entirely without compensation, and that they will not be subject to the supervision and control of your organization or the nonprofit, in any manner, except as to the end result of the agreed-upon project, then you're probably on pretty safe ground.

You may want to consider trying a test case, and sending it to the Division of Labor Standards Enforcement for an opinion letter on whether or not your test case would be considered volunteerism or employment.

A request for a legal opinion must be submitted by letter to the Chief Counsel of the Labor Commissioner and must contain a statement that there is no California decision or prior DLSE opinion on point and that you have actively researched the subject matter on the DLSE website, including the DLSE Enforcement Policies and Interpretations Manual found on the website. The request must also contain a statement that the opinion is not sought in connection with anticipated or pending private litigation concerning the issue addressed in the request nor is the opinion sought in connection with an investigation or litigation between a client or firm and the Division of Labor Standards Enforcement.

 

All such requests for a legal opinion which comply with the above requirements should be submitted to:

 

 

Chief Counsel
Division of Labor Standards Enforcement
P.O. Box 420603
San Francisco, CA 94142


Hope this helps.

socrateaser, Lawyer
Satisfied Customers: 34634
Experience: Retired (mostly)
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