DOL Fact Sheet Clarifies When Nonprofit Workers Are Employees or Volunteers

The Department of Labor’s Wage and Hour Division clarified how the Fair Labor Standards Act applies to nonprofit organizations, drawing a firmer line between volunteers and employees for wage-and-hour purposes. The fact sheet spells out when individuals can legitimately serve as volunteers and when nonprofits must treat workers as employees eligible for minimum wage and overtime protections.

Under the guidance, volunteers are people who provide services freely for public, charitable, religious, or humanitarian objectives with no expectation of compensation. The fact sheet emphasizes that volunteers should not perform work that would otherwise be done by paid staff, and that current paid employees generally should not "volunteer" to carry out the same duties they are paid to perform. That distinction matters for local chapters, volunteer-run programs, and national nonprofits that rely heavily on unpaid labor.

The Wage and Hour Division also addressed commercial activity operated by nonprofits. Work performed in a commercial enterprise, such as a gift shop open to the public, typically falls outside volunteer status and creates employee relationships covered by the Fair Labor Standards Act. Nonprofit leaders running enterprises that serve the public should review operational roles and staffing to determine who must be paid under federal law.

Nonprofit employees are subject to FLSA minimum wage and overtime rules unless a statutory exemption applies. The fact sheet restates employers’ obligations to pay required wages and to keep accurate records of hours worked and pay for covered employees. The guidance points organizations to additional WHD resources on coverage, exemptions, and recordkeeping and explains how to contact Wage and Hour Division staff for assistance.

The practical impact on workplace dynamics can be significant. Boards, executive directors, and volunteer coordinators must balance mission-driven volunteer engagement with compliance risks. Misclassifying a worker as a volunteer when duties mirror those of paid staff can trigger back pay, penalties, and corrective audits. Conversely, clear role descriptions and careful separation between volunteer tasks and compensated positions help protect budgets and preserve volunteer goodwill.

For nonprofits that operate both mission programs and revenue-generating activities, the fact sheet provides a baseline for auditing job descriptions, updating volunteer policies, and training managers on wage-and-hour rules. Organizations should consult counsel for case-specific guidance, maintain accurate time and pay records for covered employees, and document the charitable nature of bona fide volunteer roles.

This guidance gives boards and program leaders a practical framework to prevent misclassification, protect workers’ pay rights, and sustain volunteer capacity without running afoul of federal labor law.