Do you need to compensate your employees for time spent volunteering on employer-sponsored activities?


Issue:

Your company has a pay plan that includes “results pay awards” or bonuses that are based on a work group’s performance. The work group’s performance bonus is calculated using a rewards matrix. This matrix awards varying amounts of points based on several categories of activities and performance standards. One of these categories, “Community Participation via Volunteer Efforts,” accounts for approximately 10 percent of the total points the group can achieve under the plan. The rewards matrices are designed so that an employee group can reach the highest award level without performing any volunteer activities.

The manager of one of your work groups e-mails members of the group encouraging them to participate in a Habitat for Humanity project sponsored by your company. He advises the group members as to how many volunteers are needed to complete the house on schedule. Later, the manager sends a second e-mail to the group informing them that, without a full crew, the work day may be longer or put the project behind schedule. A full crew for the event is assembled.

No employees are compensated for the time spent working, which was not on a normal work day. The project was added, however, to the work group’s performance under the reward matrix. Do you need to treat the hours the employees spent working on the project as compensable working time?

Answer:    

No. Time spent in work for public or charitable purposes at the employer’s request, or under the employer’s direction or control, or while the employee is required to be on the premises, is working time. However, time spent voluntarily in such activities outside of the employee’s normal working hours is not considered hours worked under the Fair Labor Standards Act.

Employers may encourage their employees to volunteer their services for public or charitable purposes outside of normal working hours without incurring an obligation to treat that time as hours worked, so long as participation is optional and non-participation will not adversely affect working conditions or employment prospects.

In the scenario described above, when the employees volunteer for Habitat for Humanity outside their normal working hours, the employer neither controls nor requires the volunteer work nor receives any benefit from it. The employer is merely trying to encourage employees to donate their time to others and is not obligated to treat the volunteer hours as compensable time worked under the FLSA.

Consideration of volunteer service in the determination of a group bonus does not change this result, as long as employees are not denied any part of the bonus because they did not participate in the volunteer activity. Nor can they be led to believe that their work conditions or employment prospects would be affected by nonparticipation, such as would occur if the group could not qualify for the full bonus without performing volunteer work.

In the employer’s performance pay plan, volunteer work accounts for only 10 percent of the total points available. The employees in this situation would have no expectation of compensation for their volunteer work because, among other things, they would have no way to know whether the group ultimately will meet its rewards goal for the year or whether the group will achieve the maximum award even without any employee’s volunteer service.


Source: Wage Hour Opinion Letter No 2482 (FLSA 2006-4), January 27, 2006.
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