Federal Guidance Clarifies Volunteer vs Employee Rules for A Simple Gesture Chapters

“DOL-WHD investigators and federal and state courts will likely determine that workers fall outside the definition of volunteer if they work a full-time schedule and perform substantially the same activities as paid employees,” Venable’s summary of Department of Labor practice states, a line that carries immediate implications for A Simple Gesture chapters that rely on regular unpaid help.

Tax and withholding exposure follows quickly from that enforcement posture. BDO cautions that “the Internal Revenue Code (IRC) does not specifically address whether volunteers are unpaid employees. Therefore, organizations must look at other sources for guidance,” and it points chapters to IRS Office of Chief Counsel memoranda, specifically CCA Memorandum 200025050, for precedent on when so-called volunteers are treated as employees. TrackItForward and Nonprofit Risk emphasize that “in general, a nonprofit employer must treat payments to volunteers the same as payments to employees, which means that income tax and FICA contributions must be withheld. (See 26 U.S.C. § 3402). Living allowances, stipends and in-kind benefits should generally be treated like wages.”

The practical line between volunteer and employee is illustrated in examples Venable uses: “individuals who help distribute food at a homeless shelter on the weekends, participate in a big-brother/sister program, or drive a vehicle to help provide transportation for a nonprofit organization’s field trip.” By contrast, performing regular weekday shifts that mirror staff duties will weigh against volunteer status. Nonprofit Risk’s guidance captures the dilemma many chapters face: “At first glance the simple difference between these two types of workers is that employees get paid and volunteers don’t. Yet many nonprofit leaders have discovered that there is more to distinguishing between employees and volunteers than whether an individual receives a regular paycheck.”

For chapters juggling staff who want to volunteer and unpaid helpers, Nonprofit Risk emphasizes an operational safeguard: “volunteer is also an employee, because it requires both the nonprofit and the volunteer to agree and acknowledge that volunteer service is separate from employment and that the willingness to volunteer will have no impact on the terms of a volunteer’s employment with the agency.” Nonprofit Risk also urges leaders to “Remember the Volunteer Service Rule of Three, ‘True’ volunteers are those who: (1) work toward public service, religious, or humanitarian objectives; (2) do not expect or receive compensation for services; and (3) do not displace any genuine employees.”

TrackItForward offers concrete tools chapters can deploy immediately: “A great starting point to distinguish volunteers vs employees more in your organization is to start tracking volunteer time independently of employee activities and tasks.” Its product guidance notes that a volunteer time tracking system can pull reports on “the number of volunteers, the number of hours volunteered per week, and so on,” and it recommends a separate volunteer handbook because “one of the number one rules of the Fair Labor Standards Act is that a volunteer does not do the exact work of employees.” VolunteerMatters provides complementary role definitions and flags that nominal tokens “under $75 value” are considered acceptable recognition, while larger stipends risk wage characterization.

The enforcement and liability stakes are concrete: BDO warns that misclassification can trigger assessments of unpaid employment taxes, interest, and penalties and that reporting inconsistent forms can “trigger IRS investigations.” Venable adds that courts give weight to DOL-WHD interpretations and that “only nonprofit organizations may take advantage of this ‘volunteer’ exception.”

For A Simple Gesture chapters, the immediate steps are specific: audit recurring unpaid roles for schedule and task overlap with paid staff, document a prior mutual understanding that service is unpaid, track volunteer hours separately with a system such as Track It Forward, maintain a volunteer handbook distinct from the employee handbook, treat stipends with withholding caution under 26 U.S.C. § 3402, and confirm state workers’ compensation rules. Those steps align with federal guidance summarized by Venable, BDO, TrackItForward, Nonprofit Risk, and VolunteerMatters and will reduce the risk that routine chapter help is reclassified as paid employment.