Lawsuit Prevention for Employers

The problem often remains dormant until the relationship sours, and a worker who has been classified as a “volunteer” files a claim for workers’ compensation or unemployment benefits.

Because these claims require the claimant to be an “employee,” the alleged employer’s defense will likely assert that the worker’s status as a “volunteer” presents an insurmountable obstacle to the claim.

The administrative agency hearing the claim must resolve this “jurisdictional issue” as the first item of business. Whether the claimant is properly characterized as a “volunteer,” or an “employee” will depend on a technical legal analysis, not how the parties described the relationship. This is true even if their understanding is in writing, and signed by the claimant.

Shortly into this exercise, the alleged employer will painfully discover how difficult it is to prove that a worker is a “volunteer” under California law.

First of all, the law includes a legal presumption that any person performing services for another is an “employee.” This makes the defense of such a claim an uphill battle from the beginning.

Moreover, California law requires a preliminary finding of whether the alleged volunteer was a current employee of the entity requesting the services in question.  This is because the law applies a different legal analysis, depending on whether the worker had an existing employment relationship with the alleged employer at the time the “volunteer” work was performed.

No Present Employment Relationship

To summarize, if the “volunteer” is not a present employee and performs work (without any expectation of payment) for humanitarian, religious or public service purposes, he/she will likely qualify as a bona fide “volunteer,” and not be subject to California employment regulations.

Caution: if the “volunteer” is provided with anything of value at reduced or no charge (free food, for example), this can support a claim that the asserted volunteer relationship was a sham, and that the worker was in reality an employee under the law.

Existing Employment Relationship

In situations where the “volunteer” is a present employee, and performing “volunteer” services in addition to his/her normal employment duties, he/she will be deemed to be performing hours worked as an employee unless the work performed as a “volunteer:”

1. Is done entirely during non-working hours; and
2. Is entirely unrelated to his/her normal duties as an employee.

In the event that the evidence fails to prove volunteer status, the relationship will be deemed to be one of employment, subjecting the employer to liability exposure for:

1. Unpaid taxes that should have been withheld, plus associated penalties;
2. Daily premiums for meal and rest periods that should have been provided to all employees but were not, plus penalties;
3. Overtime compensation for any hours worked beyond eight in a day or 40 in a week; and
4. The value of any fringe benefits that were available to employees, such as health insurance, workers’ compensation insurance, stock options, profit sharing plans and similar benefits, among others.

In addition, the claimant would be entitled to assert any legal rights that would have been available to him/her had he/she been properly classified as an employee, such as the right to sue the employer for wrongful termination, discrimination, retaliation and/or unlawful harassment, for example.

Conclusion

If employers understood the enormous risks of misclassifying as “volunteers” workers who are actually “employees” under California law, employers would be far more cautious about whether they can prove “volunteer” status.  The same can be said of misclassifying employees as “trainees” and “interns.”

Next Month: Who qualifies as an “intern” or “trainee?” 

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Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. www.jaygputnam.com/articles-by-jay-g-putnam/