Atlanta Employment Attorneys Blog
Whether you are an employer or a worker, employee-versus-nonemployee classification for purposes of employment law is a vital step, and the extreme importance of this classification process is something where you definitely should consult a knowledgeable Atlanta wage and hour lawyer. As a worker, misclassification may improperly deny you access to many statutory rights, including those guaranteed by the Fair Labor Status Act. As an employer, misclassification can inflict its own potential harm, including legal liability and an obligation to pay substantial court-ordered compensation to the worker(s) who sued your business.
Often, misclassification disputes involve deciding whether a worker is an employee or an independent (1099) contractor. As an FLSA case that recently came before the 11th Circuit Court of Appeals illustrates, that’s not the only way that misclassification can occur, and any classification that improperly fails to designate a worker as an employee can have serious negative consequences.
The plaintiffs performed services at a public golf club in South Florida. These roles included course rangers, cart attendants, driving range attendants, and bag drop attendants. The county specifically listed the positions as “volunteer” roles. They received no wages but were allowed to accept tips. As a perk, volunteers performing these tasks were entitled to “reduced fees to play and practice golf.” Specifically, volunteers who worked at least one seven-hour shift each week were entitled to “unlimited” rounds of golf at a steep discount ($5 per round instead of the standard $96 per round.)
After the county removed tip jars during the COVID-19 pandemic, three attendants sued for unpaid wages. They alleged that they were non-exempt employees and that the county’s practices violated the minimum wage requirements of the FLSA.
The courts, however, rejected that position. The FLSA has a specific exemption that says individuals who volunteer their time working for public agencies do not qualify as employees for purposes of the law’s minimum wage and overtime requirements. The U.S. Department of Labor’s regulations define a volunteer as an “individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered.” Even if civic or charitable motivations weren’t the sole reason the individual volunteered, the volunteer exemption still applies to them if they served a public agency and, in exchange, they got “either no compensation or only expenses, reasonable benefits, or a nominal fee.”
The Many Civic Benefits of Golf
In the golf course case, the hiring entity (Palm Beach County Parks & Recreation) undisputedly was a public agency. The attendants’ work was fueled, at least in part, by the provision of civic benefits. Public golf courses, the court extolled, provide an array of civic benefits. “For example, municipalities traditionally maintain public parks and outdoor recreational facilities to enhance ‘health and quality of life’ in the community; public courses are a more affordable ‘gateway’ option for golf newcomers; and the County maintained a teaching facility that introduced newcomers to golf.” The attendants knew that “that their services were crucial to the County’s ability to maintain golfing courses for the public.” By their own admission, the attendants served roles “that they knew were crucial to providing civic benefits to County citizens.”
Just as important, the courts concluded that discounted golf — even when that discount was massive — wasn’t enough to automatically make the attendants employees. As “a matter of economic reality,” getting to play a world-class golf course nearly for free was a major benefit, but still just a “perk” under the law. While in-kind benefits can replace cash wages and make a worker an employee for purposes of the FLSA, the courts typically have ruled that, under the economic reality test, these “wages in another form” must be necessities like food, shelter, clothing, transportation, and medical benefits. Discounted fees on recreational activities like golf do not similarly qualify under the economic reality test.
Furthermore, the value the attendants received was small. The savings worked out to be $74 per month, $206 per month, and $559 per month, respectively, for each of the attendants. Those numbers weren’t big enough to, by themselves, strip the attendants of volunteer status.
Employee-versus-nonemployee classification is one the most important pieces to the FLSA compliance puzzle. Classification errors can have disastrous consequences, whether you’re an employer or a worker. The experienced team of Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert has an in-depth and fully up-to-date understanding of the FLSA and other laws and regulations surrounding classification. Contact us today at 404-873-8048 or through this website to schedule a consultation.