Misclassification of Workers - Proskauer Rose LLP

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© 2010 Proskauer Rose LLP court’s ruling that the individuals were employees. iii. No Volunteer Exemption for Services Provided to Private, For-Profit Employers (A) Under no circumstance will an individual be deemed a volunteer when providing services to private, for-profit employers under the FLSA. The FLSA has no statutory provision permitting employees of private, not-for-profit employers, such as private universities, to volunteer their services. However, for enforcement purposes, the Wage- Hour Division of the U.S. DOL applies the same policy and factors enumerated in the public sector context to employees of religious, charitable, or nonprofit organizations who donate their services as volunteers to their employing organization. See Field Operations Handbook § 10b03(d). However, that U.S. DOL’s enforcement position does not waive, or have any effect on, an individual employee’s right under section 16(b) of the FLSA bring a cause of action seeking compensation for “volunteer” hours. See Wage and Hour Opinion Letter, FLSA 2004-6 (Q.2 at p. 2). iv. Exemption of Volunteers from the Requirements of the FLSA Applies Only to Public Sector Employees (A) Following the Supreme Court’s decision in Tony and Susan Alamo Foundation, Congress amended the FLSA in 1985 to create an exemption for volunteers who perform services for a public agency and who satisfy enumerated criteria. In so doing, Congress intended to ensure that true volunteer activities will not be impeded or discouraged while minimizing the risk that the FLSA’s minimum wage and overtime requirements will be subject to abuse by employers. (B) The FLSA and its regulations permit public sector employees to volunteer their services to their employing public agency, without defeating “volunteer” status, assuming all of the following criteria are met: (1) they provide their services for civic, charitable or humanitarian reasons; (2) they provide their services free from coercion or pressure; (3) they do not volunteer to provide the same type of services for which they are employed by that very public agency; (4) their hours of service are provided with no promise, expectation,
© 2010 Proskauer Rose LLP or receipt of compensation for the services rendered except for reimbursement for expenses, reasonable benefits, and nominal fees, or a combination of the above; (5) the volunteer services do not occur during the employee’s regular working hours; (6) the time spent devoted to volunteering is insubstantial compared to the employee’s regular work hours; and (7) the volunteers do not impair job opportunities of other employees. See 29 U.S.C. § 203(e)(4)(A); 29 C.F.R. § 553.101, 553.103, 553.104; and 553.106. 16 4. Hallissey v. America Online, Inc., 2006 U.S. Dist. LEXIS 12964 (S.D.N.Y. Mar. 10, 2006) a. On May 24, 1999, two former AOL Community Leader volunteers filed a collective action under the FLSA and a class action under New York state law against America Online and AOL Community, Inc. (collectively, “AOL”), in the United States District Court for the Southern District of New York. 17 The plaintiffs alleged that, in serving as Community Leader volunteers, they were acting as employees rather than volunteers for purposes of the FLSA and New York state law and were thus entitled to minimum wages. b. From the 1990s through June 2005, AOL utilized “volunteers” (i.e., Community Leaders) to perform a number of functions, including chat room monitoring. Volunteers had to apply for a position and, if accepted, sign an agreement to commit three to four hours of work per week. In exchange for their services, AOL provided free internet service to the volunteers. Community Leaders also received special accounts that allowed them to restrict disruptive chat, hide inappropriate message board postings, and access private areas on the AOL service, such as the Community Leader Headquarters (CLHQ). Thousands of individuals performed unpaid “volunteer” work for AOL through its 16 See also Wage and Hour Opinion Letter, No. 1422 (WH-369) (December 3, 1975). 17 In June 2001, a related case, Williams, et al. v. Am. Online Inc., et al., 01-Civ-04927 (KTD), was filed by several of the Hallissey plaintiffs in the United States District Court for the Southern District of New York alleging violations of the retaliation provisions of the FLSA. That case was stayed pending the outcome of the Hallissey motion to dismiss. No acitivity has occurred in that case since its filing. From July through October 2001, three related class actions were filed in state courts in New Jersey, California and Ohio, alleging violations of the FLSA and respective state laws. The New Jersey and Ohio cases have been removed and transferred to the United States District Court for the Southern District of New York for coordinated or consolidated pretrial proceedings. The California case, which consisted only of state law claims, was remanded to statecourt based on the plaintiffs’ assertion that their claims did not exceed $75,000. That case was settled in 2006 after class certification was denied. On January 17, 2002, Community Leader volunteers filed a class action lawsuit in the United States District Court for the Southern District of New York against AOL Time Warner, America Online and AOL Community, Inc. under ERISA. Plaintiffs alleged that, in serving as Community Leader volunteers, they were acting as employees rather than volunteers and are entitled to pension and/or welfare benefits and/or other employee benefits subject to ERISA.
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