Charity is Great, but Employee Volunteers Could Cost You

“I’ve signed our dental practice up to participate in a community event. It’s for charity, so you wouldn’t be paid, and you’re certainly not required to attend, but I think it’d be a great thing for all of us to do together…”

Does that sound familiar? Many practices enjoy donating their time, as a team, to a worthy local cause. There is no doubt that volunteering can be satisfying on a personal level, and it can also be a positive and enriching team-building experience for a group of your employees. So what’s the big deal if you get them to buy into the idea of doing charity work for free?

Well, I hate to break it to you, but no matter how enthusiastic your employees are, this seemingly innocuous suggestion could cause big problems. When it comes to whether or not your team can agree to work for free, my typical response is: you say “tomato,” the DOL says “hours worked.”

The easiest way to demonstrate the problem is with a couple of short examples. One is an orthodontist’s office and the other is a dental practice. Each has about 22 employees.

In the case of the orthodontist’s office, the doctor and team like to participate in an annual Race for the Cure, with proceeds going toward cancer research. This event takes place at a local park on a Saturday. The entire team shows up, with the front desk employees helping to sign up runners, the doctors and clinical technicians handing out water, and so on. The event is organized and managed by third parties, so the practice does not exert any control over its employees during the event.

Now, keep that picture in your mind, but contrast it with this one: a dentist’s office participating in an annual charitable event called “Dentistry from the Heart.” In this volunteer effort, local offices perform free services for those without the means to pay for dentistry. During this event, hygienists clean teeth, dental assistants assist the dentists, and dentists treat patients.

OK, so where’s the problem?

Prior to both of these hypothetical situations, management personnel make it clear that team participation is entirely optional. Employees who don’t sign up won’t be punished or stigmatized, and no one who volunteers will be given preferential treatment. Both practices even have employee handbooks that reiterate that no one is ever required to participate in any volunteer event.

Here’s the issue: In one of the above scenarios, the doctors are legally required to pay their employees. Do you know which one?

If you said the dentist’s office, you’re right! According to the Federal Labor Standards Act (FLSA), “volunteer” services rendered by an employee cannot be in the same capacity as the duties performed for work. By having employees perform the same types of services as their normal duties, you’re required to pay them as if they were at work, even though it’s all for charity. Therefore, the dentist’s office in this situation must pay as usual, while the orthodontist’s practice may be off the hook.

For an employee to be considered a bona fide volunteer, all of the following must apply: the employee must be performing charitable, civic, or humanitarian service; they must be free to participate in the event or not, at their own discretion; and the services they perform must be different from the employee’s normal work duties. The event must also take place outside of their normal working hours.

Let me volunteer a few tips and precautions, though…

To make life as an employer more interesting, there’s another catch that could apply even to charity events like the “Race for the Cure” described above. If your business is getting positive publicity or media coverage out of employees’ participation (for instance, by running a booth, having your logo on T-shirts, or acting as a co-sponsor), this can offset the claim that the event is purely voluntary and for the sole benefit of a nonprofit. In a case like that, all participating employees would also have to be paid.

And don’t forget about overtime! Assuming that your team’s time does need to be compensated, if any non-exempt employees exceed 40 hours that week by working at this “volunteer” event (or 8 hours per day in California), they are also entitled to overtime pay. Employees cannot legally waive this right—not even if they want to, and not even for a worthy cause.

There is one option open to you if you want to participate in a charitable event but cannot countenance paying each employee at their usual rate: a differential rate of pay. You are allowed to set a separate, lower rate of pay for volunteer events as long as you establish it in writing ahead of time. Include the fact that the event is voluntary, and have your employees sign an acknowledgment. Remember, no employee’s hourly rate may ever fall below your state or city’s minimum wage.

Here’s one last thought you might enjoy: If one or more of your employees decides to volunteer for a charitable event that you have absolutely nothing to do with—even if it’s dental-related—you are not automatically on the hook for paying them. You’re welcome!

Paul Edwards

Paul Edwards is the CEO and Co-Founder of CEDR HR Solutions and author of the blog HR Base Camp. Since 2006, CEDR has been the nation’s leading provider of customized dental employee handbooks and on-demand HR solutions, helping dentists and their office managers successfully handle employee issues, prevent and resolve disputes before they lead to lawsuits, and safely navigate the complex employment law landscape. Our Solution Center is staffed by HR experts and attorneys. Call 866-414-6056 or visit www.cedrsolutions.com.