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socrateaser, Lawyer
Category: California Employment Law
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Experience:  Retired (mostly)
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I volunteer to work bingo for a 501 3 (c) high school band

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I volunteer to work bingo for a 501 3 (c) high school band booster corporation. As volunteers, workers receive a $10 “credit” per hour. This credit is placed into a student account for active booster members and into a member account if the member is considered to be an associate member; a member with no student currently enrolled in the band program. These earned credits can be applied to a student’s annual expenses or can be donated to another student or program expense. Additionally, volunteers can work for other booster approved non-profits.

This past year one of the other non-profits was removed from the approved list and credit that was earmarked for that non-profit were not paid out. Those credits were also not placed into the workers’ account. By all appearances the dollar equivalent was placed into the band boosters’ general account. The volunteers that worked for this other non-profit were told only that the money could not be paid out to the revoked non-profit but the board of directors imply that all money was paid out and that we need to get the money back from the non-profit that we worked for even though they never received a payout.

My question is this; even though the compensation is paid as a credit is this credit considered to be earned income which would be covered by California labor laws? If it was wages earned are the boosters required to pay out the compensation as a cash payment to the volunteer with the understanding that the payout would be considered taxable income or can the boosters simply keep the money as they have done?

Another issue with the bingo program is that the Booster’s Treasurer states that even though there are no annual dues there is an annual donation due from each student of $300 to cover program expenses. If a parent works bingo and their “donation” has not been paid then the booster treasure automatically deducts the credit from the first 30 hours worked to cover the “donation” which in effect makes the donation a mandatory fee. My understanding is that as this is a public school no student may be forced to pay any fees to participate in band, sports or any other extracurricular activity.

Parents are allowed to work bingo and use the credit earned to pay for band trips for the students or for the parent(s) provided the parent is going on the trip as an approved chaperone. The treasurer states that if the parent is not a chaperone then they cannot use the earned credit to pay because it would be personal gain. It would seem to me that any credit earned and used to pay any expenses would amount to personal gain.

If the credits are part of an express or implied agreement with the volunteers, to compensate them for their time, then the credits are wages, and the entire regime is illegal under California law. Federal law provides that a person can volunteer for free or be paid as a worker. There is no middle ground.

The workers are employees, they are entitled to at least minimum wage, to receipt of the credits in cash, at least once before the 15th of the month and then again before the 1st of the following month. The nonprofit is liable for payroll taxes, Social Security, Medicare, unemployment, workers compensation, SDI, etc.

Big trouble. Any worker can file a wage claim with the Division of Labor Standards Enforcement. And, each worker can file a form SS-4 with the IRS.

Hope this helps.

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Customer: replied 6 years ago.

If I understand correctly, the confiscation of funds for the "donation" equals an unauthorized and illigal wage garnishment.

We have been told that since no cash changes hands if the credit goes directly into a student or member account then direct to the boosters to pay band expenses that the income is tax free and it is not considered income.

Sounds like this whole thing could blow apart.

It's not a wage garnshment, because that contemplates the wages being taken to satisfy a third-party debt. Your facts show that the credits are held to be used for student or parent, depending upon circumstances. Regardless, it's illegal:

“It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.” Lab.C. § 221.

Hope this helps.

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