“But we couldn’t make it without our volunteers!” — A very expensive trap for the unwary business owner (even if you don’t think of it as a “business”)

As you may gather from the very title of this blog, I focus on California employment law (!). This past week, a colleague whose practice has a focus on helping wineries and breweries with legal issues gave me a heads up on a confluence of our practice areas: the use of volunteers at wineries. While you, dear reader, may not operate a winery, you may use volunteers – read on!

For most people, getting to work for a small winery is that rare chance to do something you love. Some even perform the work for free because it is fun, or because volunteering is a great opportunity to get a foot in the door, or because it is a chance to help a friend. Many wineries rely upon volunteers to work in the tasting room, pour at festivals, and help with the bottling line. And while months, or years may go by where this creates a seemingly symbiotic system, with rewards for both the volunteer and the winery, the employment concerns are a ticking time bomb of penalties and unpaid wages.

In general, both California and federal laws that govern how people are to be paid prohibit most private sector, for-profit employers from using volunteers. For the most part, only public sector and non-profit organizations can use volunteers and only when the volunteer is performing civic, charitable, or humanitarian work.

An important thing to remember about California’s employment laws is that, for the most part, they apply to every employer — from every “new economy” tech company with the latest killer app to every small business started 40 years ago. Needless to say, there is no exception for small, medium or large wineries.

In California, an individual is an employee if he or she works in the service of another person (the employer) and that employer has the right to control the details of the employee’s work performance. There are a few, very limited exceptions to the rule that California expects workers to be paid as employees. These exceptions include bona fide independent contractors (bona fide being a key phrase!), educational internship programs and immediate family members of the employer (spouse, parent, child). There are also limited exceptions for certain types of jobs. Except for those limited exemptions to the general rule, California requires that an employee be paid at least minimum wage for all hours worked, be paid overtime for all hours worked over eight in a day (and 40 in a workweek), and to be provided the opportunity to take meal and rest periods of a minimum length. This means that, at a minimum, a winery or any other employer must make the appropriate arrangements to properly hire, pay and employ workers.

Before someone can begin working, the employer must require the individual to show that he or she is legally authorized to work in the United States. The employee must complete a Form W4 to determine withholdings for income tax purposes. The employer must track the hours worked by the employee on a daily basis to ensure overtime is paid. The employer must issue paychecks at least every two weeks, and the paystubs must include specific information such as the hours worked, the overtime earned, and the rate of pay, among many other pieces of information. A written offer letter and/or a letter setting forth certain terms and conditions of employment can be invaluable – and sometimes required. This is just a short summary of the requirements for being an employer, but it is a good starting point.

After my colleague told me about this issue for local wineries, I did the heavy research of looking up the matter on the internet. I found some commentators suggesting that wineries simply pay the (former) volunteers as “1099 workers” or as contractors. This decision could get the winery into different, and expensive trouble with the workers and government agencies. It is the rare winery worker who is properly classified as an independent contractor because a critical factor in assessing that status is the degree of control over the worker. For example, the individuals who work in the tasting room pouring your wine the way you want it poured, talking about your wines, and selling them, is an employee. The workers who come every two weeks to maintain the landscaping are contractors.

In the end, many wineries—and other types of companies! – have used volunteers to supplement their paid work force. They have done this without any evil intent. The law, however, is set up to protect workers from, well, “other” companies – the ones that force workers to volunteer for a period before they may consider being hired, the ones that don’t pay at least minimum wage, etc. In any event, no matter how generous you are with your volunteers in ways other than wages, it could be a very detrimental decision to continue using them in this manner. Volunteers can seek back wages for four years’ time, along with substantial penalties, interest and attorneys fees. It is not uncommon for the penalties and fees to exceed the underlying wages owed. And these situations are ripe for the dreaded, financially crippling class action.

If you think you may need to take a close look at how you pay (or don’t pay) people who work at your company, give any of the attorneys at McPharlin Sprinkles & Thomas LLP a call!

(And for a link to my colleague who can help with your winery, brewery and distillery legal issues, click here.)
Whew. I need a drink!