When “Free Help” Isn’t Free: Volunteer Classification and Liability for Nonprofits
Nonprofits often rely on volunteers to keep programs running, but that reliance can create legal risk when a volunteer arrangement starts to look like an employment relationship. This article outlines common classification red flags, explains why stipends require care, and summarizes the volunteer-liability framework under federal law, Massachusetts law, and D.C. law.
WHY THIS MATTERS FOR NONPROFITS
Charity and volunteerism go hand in hand. For many nonprofits, volunteers make the difference between a program that runs and a program that does not. But volunteer arrangements can create legal risk when the facts start to look less like true volunteer service and more like an employment relationship. A community member who shows up on a fixed schedule, performs work the organization depends on, and receives a recurring stipend may not remain a volunteer in the eyes of the law. And even where a person is properly treated as a volunteer, the organization still needs to think carefully about liability, supervision, and insurance.
WHEN A VOLUNTEER STARTS TO LOOK LIKE AN EMPLOYEE
One of the most fundamental principles of the Fair Labor Standards Act is that an employer must compensate its employees for all work “suffered or permitted.” Employees cannot volunteer to perform their regular work for free. Whether a worker willingly performs uncompensated work does not determine whether the entity has a legal obligation to pay that person. At the same time, federal law recognizes that individuals may, in appropriate circumstances, volunteer services for civic, charitable, or humanitarian reasons without becoming employees. The harder question is when that arrangement remains a true volunteer relationship and when it starts to look like compensable work. See 29 U.S.C. § 203(e)(4); 29 C.F.R. § 553.101.
Courts and agencies have done much of the work of clarifying the difference between a volunteer and an employee. In Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985), the Supreme Court made clear that the analysis turns on the economic reality of the relationship, not just the label the parties use. In practice, relevant considerations often include the organization’s level of control, the structure and frequency of the work, the extent to which the individual expects compensation, the role of any stipend or other benefits, the permanence of the arrangement, and whether the person is performing work the organization would otherwise need to pay someone to do. See generally Alamo Foundation, 471 U.S. at 301–02. If a nonprofit relies on a “volunteer” to perform regular, operationally necessary work, the classification risk increases.
Stipends require particular care. Federal regulations recognize that volunteers may receive expense reimbursement, reasonable benefits, or a nominal fee without automatically losing volunteer status. 29 C.F.R. §§ 553.101, 553.106. A commonly cited rule of thumb is that a fee below 20% of what the entity would otherwise pay a full-time employee to perform the same services is more likely to be treated as nominal, but that figure is not a safe harbor and not the end of the analysis. The amount, frequency, and purpose of the payment all matter, as do the time commitment, the demands of the role, and whether the payment looks tied to productivity or to the burdens of service. See 29 C.F.R. § 553.106. Small per-call or per-shift payments may be permissible in some settings, but nonprofits should not assume that calling compensation a stipend resolves the issue.
FOUR COMMON RISK AREAS
To see how these rules play out, let’s consider a few scenarios:
The regular-hours volunteer doing staff work. A person who works on a fixed schedule, performs operationally necessary tasks, and fills a role the organization would otherwise assign to paid staff presents a higher classification risk. The more the arrangement looks like ordinary workforce planning, the harder it is to defend as true volunteer service.
Employees “volunteering” for the same organization. This is especially sensitive. As a practical matter, if an employee is performing the same or closely related services for the same organization, the organization should assume the time is compensable unless clear legal authority supports a different conclusion. The closer the volunteer activity is to the employee’s paid role, the greater the risk.
Fellows and interns receiving stipends. These arrangements deserve a separate analysis. A stipend, educational framing, or limited term does not by itself prevent employee status. If the organization is receiving the primary operational benefit from the arrangement, or if the individual is effectively filling a regular work role, the classification risk rises.
Board members who also perform operational work. A board member may have legal protection when acting in a governance capacity, but that does not automatically answer the classification question for separate operational work. If a director is also handling bookkeeping, HR, program operations, or event logistics on a sustained basis, the organization should evaluate that work on its own facts rather than assuming it is protected because of the person’s board role.
WHY MISCLASSIFICATION CARRIES REAL CONSEQUENCES
Employees have fundamentally different rights and protections under federal and state law, and nonprofits have different obligations depending on the classification. Wage-and-hour exposure is usually the most immediate concern, but it is not the only one. Reclassification can also affect payroll practices, tax withholding, insurance, benefits, and internal policies. In Massachusetts, for example, the Massachusetts Wage Act, M.G.L. c. 149, § 148, imposes strict liability for unpaid wages, with mandatory treble damages and attorneys’ fees. There is no good-faith defense. SeeM.G.L. c. 149, §§ 148, 150. For nonprofit leaders, the lesson is simple: a volunteer program is not legally low-risk just because no one intended to create an employment relationship.
VOLUNTEER LIABILITY IS A SEPARATE QUESTION
Misclassification is only one side of the volunteer-risk equation. Even where a worker is properly treated as a volunteer, a separate question remains: who bears the risk if that volunteer injures someone or is accused of causing harm while serving the organization? Federal and state law provide some protection to individual volunteers, but those rules do not eliminate the nonprofit’s own exposure.
THE FEDERAL BASELINE: THE VOLUNTEER PROTECTION ACT
The federal Volunteer Protection Act of 1997 establishes a nationwide baseline of immunity for individual volunteers serving nonprofits and governmental entities. It covers individuals who provide services without compensation other than reasonable expense reimbursement or other items of value not exceeding $500 per year, and it expressly includes directors, officers, trustees, and direct-service volunteers. But the protection is conditional. A volunteer is protected only when acting within the scope of assigned responsibilities, properly licensed or authorized where required, and not engaging in willful misconduct, criminal misconduct, gross negligence, reckless misconduct, or conscious, flagrant indifference to safety. The Act also does not protect claims arising from the operation of a motor vehicle or other licensed vehicle. See 42 U.S.C. §§ 14503(a), 14505(6).
Two structural points matter for nonprofit leaders. First, the VPA does not protect the nonprofit organization itself. The statute expressly leaves organizational liability intact, which means claims based on respondeat superior, negligent supervision, negligent hiring, or the organization’s own policies and practices remain in play. Second, the VPA sets a floor, not a ceiling. It preempts inconsistent state laws that impose greater liability on volunteers, but it preserves state laws that provide additional protection and allows states to condition immunity on organizational risk-management measures, including training requirements or maintenance of insurance. The Act also limits punitive damages against volunteers unless the claimant proves by clear and convincing evidence that the harm was caused by willful or criminal misconduct or conscious, flagrant indifference to safety. See 42 U.S.C. §§ 14502, 14503(c), 14503(e).
HOW MASSACHUSETTS AND D.C. MODIFY THE RULES
Massachusetts supplements the federal baseline in several targeted ways. Under Mass. Gen. Laws ch. 231, § 85W, an uncompensated officer, director, or trustee of a nonprofit charitable organization generally is not liable for civil damages arising from acts or omissions relating solely to performance of those duties, unless the conduct was intentionally designed to cause harm or amounted to gross negligence. That protection does not apply to primarily commercial activities, even if they generate revenue for charitable purposes, and it does not cover automobile-related claims. See M.G.L. c. 231, § 85W. Massachusetts also provides specialized protection under § 85V for certain uncompensated volunteers in nonprofit sports and sailing programs, including coaches, referees, and assistants. In that setting, both the volunteer and the nonprofit association may receive tort protection, except in cases of intentional harm, gross negligence, and certain premises-related claims involving real estate used in the program. See M.G.L. c. 231, § 85V.
D.C. takes a different approach. Under D.C. Code § 29-406.90, a volunteer of a nonprofit corporation — including an officer, director, trustee, or other uncompensated service provider — is immune from civil liability unless the claim involves willful misconduct, a crime, an improper personal benefit, or conduct that is both outside the corporation’s lawful authority and not in good faith. But D.C. makes that protection contingent on the nonprofit maintaining liability insurance of at least $200,000 per individual claim and $500,000 per occurrence, unless the organization qualifies for the statutory small-charity exception. Even where the statute applies, the nonprofit itself is not immune; its liability remains, effectively up to the amount of insurance it maintains. See D.C. Code § 29-406.90.
The practical takeaway is straightforward: nonprofits should not treat volunteer-immunity statutes as a substitute for internal controls. Written volunteer policies, role descriptions, screening protocols, training, and supervision all help reduce direct organizational liability and strengthen the argument that volunteers were acting within an authorized scope. Signed releases and liability waivers may also help, to the extent enforceable, especially for higher-risk activities. Insurance remains central. General liability, D&O, and other relevant coverage should be reviewed with volunteers specifically in mind — particularly in D.C., where minimum coverage is a statutory condition of volunteer immunity. See 42 U.S.C. § 14503; D.C. Code § 29-406.90.
WHAT NONPROFIT LEADERS SHOULD DO NOW
Nonprofits should analyze volunteer programs on two separate tracks. First, is this person truly a volunteer, or has the organization crossed into an employment relationship with wage-and-hour, tax, payroll, and benefits consequences? Second, if the person is properly classified as a volunteer, what protections exist for that individual, and what liability still remains with the organization? In both Massachusetts and D.C., the answer is similar at a high level: individual volunteers may have meaningful statutory protections, but the nonprofit still needs disciplined governance, clear role definitions, training, supervision, waivers where appropriate, and the right insurance program. Volunteer programs are mission-critical. They deserve the same legal and operational discipline as any other core part of the organization.
This article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For advice specific to your organization's situation, contact Commonlight Legal LLP.
Alex Booker is the Managing Partner of Commonlight Legal LLP, a boutique law firm serving nonprofits in Massachusetts, DC, New York, and Connecticut. He advises executive directors and boards on employment law, governance, and general nonprofit counsel.
Before founding Commonlight, Alex adjudicated federal employment cases at the U.S. Merit Systems Protection Board, where he researched and advised on novel issues in federal personnel law, and he litigated whistleblower, wage and hour, and civil rights cases on behalf of employees at a DC employment firm. He is admitted to practice in Massachusetts and Washington, DC.