Salvation Army
SAN FRANCISCO - A state appeals panel has ruled the Salvation Army may owe pay, including overtime, to certain people it classified as volunteers at its donation centers and thrift stores.
San Francisco Superior Court Judge Ethan Schulman ruled in favor of the charity in a lawsuit it faced from three people who said they kept full-time hours in various thrift store operational positions. The plaintiffs, seeking to certify a class, say they were unpaid for the entirety of their six-month stints in a residential substance abuse rehabilitation program.
The California First District Appellate Court agreed volunteers can be exempt from certain wage laws. But justices said Judge Schulman used the wrong standard to decide whether these rehab participants qualified as employees.
Justice Gordon Burns wrote the panel’s opinion, filed Jan. 6; Justices Mark Simons and Danny Chou concurred.
Justin Spilman, Teresea Chase and Jacob Tyler said they were in the Salvation Army’s adult rehab program at least once from 2015 through 2020. Spilman and Chase said they chose the program as a form of probation to avoid criminal incarceration. The Salvation Army said in addition to rehab — which includes church services, Bible study and 12-step meetings — participants are housed in dorms, fed three times a day and given clothing and gratuities, such as small amounts of cash and canteen cards redeemable at the rehab center.
Participants also must perform “work therapy” in the warehouse or thrift store. While the parties dispute whether that requirement frames 40 hours per week as the minimum or maximum, the plaintiffs all claim they worked more than that amount.
In granting summary judgment to Salvation Army, Burns wrote, Judge Schulman cited the general California law rule that “unpaid workers who voluntarily perform services without any express or implied agreement for remuneration are not employees,” adding “the employment relationship under California law is fundamentally contractual, and … an expectation of compensation is essential to such a relationship, such that voluntary unpaid workers are not employees.”
Burns further noted Schulman decided the workers were voluntarily in the program and therefore not employees and reached that conclusion without ruling “on most of the evidentiary objections” or factual disputes, finding them immaterial.
“Traditional volunteers do not have a common law master-servant relationship with the nonprofit organization to which they contribute their labor,” Burns wrote, meaning they aren’t “engaged” in formal work. But another aspect of California Wage Law prevents employers from permitting unlawful work “by acquiescence” or “failing to hinder,” he said, a clause specifically “intended to cover ‘irregular working arrangements’ that might otherwise circumvent the labor laws — for example, employers who sought to evade child labor laws by using such labor without formally hiring the children.”
While noting an overly broad reading could “make all nonprofit volunteers employees,” Burns wrote, the panel agreed “wage orders could not have been intended to categorically eliminate volunteer work in California, which would cripple the ability of many humanitarian, charitable, and other nonprofit organizations to carry out their important missions.”
The prevailing precedent for deciding the question of volunteer or independent contractor comes from a 2018 California Supreme Court opinion, Dynamex Operations West v. Superior Court. Taking a similar approach, Burns said, helps distinguish between volunteers and nonprofit agency employees while allowing a court to prevent a company from evading wage order provisions.
An agency, the panel said, “must establish that the worker freely agreed to work for the nonprofit to obtain a personal or charitable benefit, rather than for compensation, and overall, the nonprofit organization’s use of the volunteer labor is not a subterfuge to evade the wage laws.”
This analysis should include considering whether any benefits extended to a volunteer are contingent on performance and the duration of the volunteer relationship. The panel said nonprofit agencies aren’t being coercive by providing an opportunity to enroll in a court-approved program as part of criminal proceedings but would have to show “work therapy” has a rehabilitative purpose and isn’t just a means of sourcing labor outside of hiring staff.
Burns said Judge Schulman didn’t acknowledge how “the Labor Code’s protections for employees go well beyond those afforded by a traditional contractual relationship” and said he should have a chance, on remand, to apply the panel’s analysis framework to the plaintiffs’ allegations and determine if any of the factual disputes not considered on the first pass preclude summary judgment.
The plaintiffs are represented by the firms of Rose Bien Galvan & Grunfeld and Rukin Hyland & Riggin.
The Salvation Army is represented by the firm of Littler Mendelson.
