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A Federal Court in Georgia Denies the Salvation Army’s Dismissal Motion in a Minimum Wage Dispute Involving ‘Rehabilitation Program’ Participants Who Worked in Its Thrift Stores

When it comes to determining compliance with the Fair Labor Standards Act’s minimum wage and overtime compensation requirements, it’s essential to understand that not all workers receive pay 100% in the form of cash. Some may receive compensation through housing, meals, or other non-cash forms. Even if you’re receiving in-kind or non-monetary compensation, it’s still possible for your employer to violate minimum wage laws, as a group of thrift store workers alleged in a recent federal action here in Georgia. If you believe you’ve encountered that kind of illegal treatment, don’t wait to take action. Get in touch with a knowledgeable Atlanta minimum wage lawyer to find out what next steps you should take.

Those thrift store workers worked at the Salvation Army’s stores in several southern states. According to all of the workers, the Salvation Army ran “residential adult rehabilitation centers and adult rehabilitation programs,” and used those rehab participants to staff its thrift stores.

Salvation Army thrift stores are big business, bringing in close to $600 million in revenue in 2019 alone. Here in the United States, the Salvation Army is separately incorporated in each of four regions. The federal case here in Atlanta is one of three. Thrift store workers recently achieved similar successes in overcoming the Salvation Army’s dismissal efforts in federal lawsuits in Chicago and New York City.

In the lawsuit proceeding here in Atlanta, the workers alleged that they got cash payments of somewhere between $7-$25 per week and periodically received “canteen cards” that could only be used at the rehab facility. The Salvation Army also provided workers with room and board, clothing pulled from donations, and “rehabilitation services.”

The workers also received food through the program, but some of it was paid for using the workers’ Supplemental Nutrition Assistance Program (SNAP) benefits provided by the government, not the Salvation Army.

Workers like this face a two-part challenge in making out a minimum wage case under the FLSA. Before they could proceed to argue regarding their compensation and its insufficiency for purposes of satisfying the FLSA’s minimum wage standard, they first had to demonstrate that they met the FLSA’s statutory definition of an “employee.”

The ‘Economic Reality’ Test

The U.S. Supreme Court has in the past ruled that the fundamental standard is something the law calls the “economic reality” test. This means that, even if your employer doesn’t label you as an employee and you don’t think of yourself as an employee, you may still be an employee under the FLSA if “the work done, in its essence, follows the usual path of an employee.”

When a worker is working “in an at least ostensibly rehabilitative context,” there are several key factors the courts will focus upon. One, did you have an “expectation of compensation?” Two, who “greatly benefits” from your work? Three, does finding a worker to be an employee advance the purposes of the FLSA?

When workers — like these thrift store associates — receive compensation in the form of basic necessities (shelter, food, clothing. etc.) necessary to survive, that compensation format creates a strong inference that there was an expectation of compensation.

The workers in the Atlanta case also had adequate arguments pointing toward the Salvation Army as the primary beneficiary of their work, and that deeming them to be employees would advance the goals of the FLSA, resulting in the court denying the Salvation Army’s request to dismiss the workers’ lawsuit.

Whether you’re working for a Fortune 500 company or a nonprofit entity, it’s possible that the compensation you’re receiving for the work you’re doing doesn’t comport with what the FLSA demands. When that happens, the skilled Atlanta minimum wage attorneys at the law firm of Parks, Chesin & Walbert are here to help. Contact us through this website or at 404-873-8048 to schedule a consultation today. The sooner you call, the sooner we can begin investigating your situation and, if you’ve been illegally underpaid, the sooner we can pursue getting you what the law says you’re owed.

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