Primer for Nonprofits on Paid Employees, Volunteers, and Interns

July 30, 2020 | Podcasts

Nonprofits are some of the best providers of necessary services in the United States. However, many run on shoestring budgets and require a mix of paid staff, volunteers, and internships to fulfill their missions, and there are still labor and employment laws, rules, and regulations they must follow. We discuss some of the issues around staff classification and benefits with Jackson Walker Labor & Employment attorney Brooke Leondar and Kenesha Starling, a third-year South Texas College of Law student and 2020 summer associate at Jackson Walker.

Greg Lambert: Hi, everyone. I’m Greg Lambert, it’s July 24th, and this is Jackson Walker Fast Takes.
Today’s episode centers around the needs of nonprofit organizations and their employees, interns, and volunteers. Nonprofits are one of the best providers of necessary services in the country, but many are running on tight budgets and small staff and may need help in ensuring that they are compliant with labor and employment laws. And for that I brought in Brooke Leondar, who is a Jackson Walker Labor & Employment attorney.
Hey, Brooke.

Brooke Leondar: Hi, Greg. Thanks for having me.

Greg Lambert: As well as Kenesha Starling, who’s a third-year law student at South Texas College of Law and is completing her summer associate stint here at Jackson Walker.
Hi, Kenesha. It’s good to have you here.

Kenesha Starling: Hi, Greg. Thanks for having me.

Greg Lambert: Kenesha, let’s start with you. How do nonprofits need to classify their staff? Talk to me a little bit about the difference between a paid staff and unpaid staff there at the nonprofits.

Kenesha Starling: A nonprofit can utilize both unpaid volunteers, as well as paid employees. To use volunteers, they need to ensure that it’s very clear between both parties that the individual is not going to be compensated for any of the work that they perform, and that the work that they perform is for public-served, religious, or humanitarian objectives. And so, generally, volunteers will serve on a part-time basis, and they do not displace the regular employee workers or perform the work that would otherwise be done by those regular employees. So, a nonprofit should just think twice before asking someone to do things like handle the books for them or run their HR programs as an unpaid volunteer.

Greg Lambert: What about interns? We hear a lot about interns working at nonprofits. Are they paid employees, unpaid employees, or a mix of both?

Kenesha Starling: It can be a mix of both. You want to determine if your intern is going to qualify as a paid employee, and that requires you to use the primary beneficiary test. So, what that test does is examine the economic reality of the intern-employer relationship to determine which party is the primary beneficiary of the relationship—either the employer or the intern—and it should be used also to determine whether the intern is an employee versus a volunteer under the FLSA. So, there, the test considers things such as the extent to which the intern and the employer have a clear understanding that there’s no expectation of compensation. The internship should provide training that’s similar to that of an educational environment. The internship should also be tied to the intern’s formal education program by integrating some type of coursework or receipt of academic credit. Their internship should accommodate the intern’s academic commitment by corresponding with the academic calendar. It should be limited in duration to a period that would provide the intern with a beneficial learning experience. It also considers the extent to which the intern’s work complements rather than displaces the work of a paid employee or volunteer. And it also needs to be sure that there is an understanding of the extent to which the intern and employer will conduct the internship as far as entitlements of pay at the conclusion of the internship. So, there are just some distinctions that need to be understood between the employer and the intern.

Greg Lambert: So, it’s very important that both the intern and employer understand those restrictions, right?

Kenesha Starling: Absolutely. Communication will be key.

Greg Lambert: Brooke, let’s jump over to you and talk about the benefits side of a nonprofit. So first of all, are nonprofits required to provide any sick leave or vacation time?

Brooke Leondar: For vacation leave and holiday leave, no. They won’t be paid. The Fair Labor Standards Act does not require payment for this time that was not worked by the employee. And really these benefits are matters of agreement between the employer and the employee. Now for sick leave, there are multiple aspects to this. First, I do want to note that various localities impose paid sick leave requirements that may apply to nonprofits. And second, there actually is now a federal paid sick leave provision that could apply to nonprofits, as well. It’s called the Families First Coronavirus Response Act. It passed earlier this year, and it mandates that paid sick leave for employees under certain qualifying reasons due to COVID-19, such as contracting the virus or having to take care of your kids because of schools closed due to COVID and related reasons. Under this Act, any private sector employer who has fewer than 500 employees will be subject to the Families First Coronavirus Response Act. The good news here is that the employer will be entitled to tax credits that actually offset the payroll for these employees on this particular type of sick leave. And third, for organizations subject to the Family Medical Leave Act, unpaid protected sick leave is required.

Greg Lambert: What about the Family Medical Leave Act—Can you talk a little bit first about what the FMLA is and whether or not it applies to nonprofit organizations?

Brooke Leondar: The Family and Medical Leave Act, or FMLA, what it does, it provides certain employees with up to 12 weeks of unpaid job-protected leave per year, and it also requires that their group health benefits be maintained during the leave. So, we can think of situations like the birth of a child, or taking care of a family member with a serious health condition, or the employee himself or herself has a serious health condition that they need to take time off for. Once again, the policy behind FMLA helps employees balance their work and family responsibilities by allowing them the time to take that leave that they need. The question of does FMLA apply to nonprofits, typical lawyer answer coming at you: it depends.

Greg Lambert: I’ve heard that one before.

Brooke Leondar: Yeah, yeah. Law school answer, as well.
The main question is this: Does the nonprofit employ 50 or more employees? The FMLA applies to all public agencies, all public and private elementary and secondary schools, and private sector employers with 50 or more employees. So that is the operative question that we need to ask, whether or not the FMLA is covered for nonprofits.

Greg Lambert: Alright. Kenesha and Brooke, thanks for taking the time to talk with me about the labor and employment law issues surrounding nonprofit organizations and the staff that have run these vital organizations. It’s great talking to you both.

Kenesha Starling: Thanks for having us.

Brooke Leondar: Thank you.

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The music is by Eve Searls.

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