As we kick off the Conscious Legal Corner, here’s one of our first questions from the social venture community:
Q: We are a small conscious business. Many of our friends have offered to help us in the business. Some write copy. Some answer the phones. Are we at risk of getting sued for back wages? What is one of our volunteers falls off a ladder? Are these actually risks? What can I do to minimize the risks?
A: To answer this question, I went to Las Vegas lawyer, Glenn Meier. Glenn is a shareholder in the law firm of Holley, Driggs, Walch, Fine, Wray, Puzey & Thompson and a founder of the Las Vegas Conscious Capitalism chapter. This is what Glenn had to say:
There are different laws about volunteering for businesses than for nonprofits.
Glenn Meier: It’s important to start with the understanding that the default rule under federal employment law is that for-profit businesses cannot use volunteer workers to do any act that benefits the company’s business. (There are some limited exceptions that wouldn’t apply to the general situation you describe.)
If you think about this, it does make sense in the old paradigm. Can you imagine how some businesses would try to circumvent minimum wage rules, child labor regulations, etc. by using “volunteers” for various tasks?
By contrast, non-profit and public agency employers can use volunteer workers (under specified circumstances). The different treatment for non-profits and public employers stems from the idea that volunteer work supporting those employers can, under the right circumstances, serve the public good.
Could benefit corporations be treated like a nonprofit?
This idea raises a potential basis under which certain conscious businesses could take a position that would support them being subject to the same rules as non-profits and public employers: benefit corporations are entities that are chartered under their state law to serve a specified public good.
Arguably, benefit corporations could take the position that having volunteer workers (under the right circumstances) serve their public benefit and should be allowed under federal employment laws.
Of course, it is important to note that while this is a plausible argument, it hasn’t been tested by any court case or administrative hearing. The benefit corporation is a relatively new entity and there is not a long legal history, like there is for the single-bottom-line companies. Laws evolve by testing and questioning existing and accepted concepts. Someone has to care enough to invest the resources to change the law.
The bottom line: play it safe and work to change the laws.
If a benefit corporation (or a group of them) wants to be proactive about this situation, the best thing to do would be to contact legislators and rulemakers within the Labor Department to request action to provide specific rules applicable to benefit corporations. [Kim’s note: another idea that Glenn and I kicked around was whether it would make sense to create a non-profit auxiliary organization for the public good activities. The auxiliary organization could use volunteers.]
In the current legal climate, any for-profit business using volunteer workers to benefit their business is at risk for a potential back wage claims in the future.
As for the other concerns (personal injury, etc.), a good commercial general liability insurance policy should protect your company from liability claims for bodily injury and property damage.
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It wouldn’t be a good legal column without a disclaimer! Here it is: we get insights from experts that can help you understand the law, but the Conscious Legal Corner isn’t legal advice. For legal advice, talk to a lawyer about your unique situation.