As reported by the San Jose Mercury News, Westover Winery’s “use of volunteer workers has put [it] out of business after the state squeezed [it] like a late-summer grape for $115,000 in fines.” The winery owner claimed ignorance of the legal issues and said that the use of volunteers is “common practice.” But that’s no defense to the fines imposed by the California Department of Industrial Relations for not paying minimum wage, not providing wage statements, and not paying workers’ compensation insurance. It appears that those fines were too steep for this small winery to pay and remain in business.
A volunteer isn’t considered an employee and thus isn’t subject to the wage-hour laws. Tony & Susan Alamo Found. v Secretary of Labor (1985) 471 US 290, 295, 105 S Ct 1953. But just because someone is willing to work for free doesn’t make that person a volunteer under the law. California’s Labor Code §1720.4(a)(1) defines volunteers as
an individual who performs work for civic, charitable, or humanitarian reasons for a public agency or corporation qualified under Section 501(c)(3) of the Internal Revenue Code as a tax-exempt organization, without promise, expectation, or receipt of any compensation for work performed.
In the winery situation, the owner claims that they “didn’t really need any helpers; we were just educating people about wine.” But the winery is not a non-profit educational or otherwise charitable organization; it’s a for-profit business, so it’s claimed volunteers did not qualify under the law.
Even if the winery’s volunteers were thought of as interns learning the wine business, that likely wouldn’t have passed legal muster. In general, interns will be considered employees and must be paid at least the minimum wage for all hours worked unless all of the following can be established (see DOL Wage and Hour Division Opinion Letter FLSA2004–5NA (May 17, 2004)):
- The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
- The training is for the benefit of the trainees.
- The trainees do not displace regular employees, but work under close observation.
- The employer that provides the training derives no immediate advantage from the activities of the trainees; and on occasions his operations may actually be impeded.
- The trainees are not necessarily entitled to a job at the completion of the training period.
- The employer and the trainees understand that the trainees are not entitled to wages for the time spent training.
Let this vintner’s sad story be a lesson to your clients contemplating the tempting use of volunteer labor. If the Department of Industrial Relations representatives see violations of the wage and hour laws, they must issue citations and the fines may be tough to swallow.
For more on all of the laws and penalties related to the payment of wages, turn to CEB’s California Wage and Hour: Law and Litigation, chapter 5. And if you’re interested in the legal challenges facing the wine industry generally, you need to be in beautiful Yountville on November 6-7 for CEB’s 2014 Wine Law Forum™: Facing Change, Finding Alternatives.
Other CEBblog™ posts you may find useful:
- Avoid Apple’s Legal Headaches Over Final Paychecks
- Drafting a Healthy Sick Leave Policy
- Everybody in the (Tip) Pool!
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