Spilman V. The Salvation Army: California Court of Appeal Announces a New Framework for Nonprofit “Volunteers” In Wage and Hour Cases

Why It Matters

The ruling raises litigation risk for charities by expanding the criteria for employee classification, potentially exposing them to wage‑hour claims and class actions. It forces nonprofits to reassess volunteer program designs, documentation, and benefit structures to avoid misclassification.

Key Takeaways

• Two‑part test defines volunteer vs employee
• No pay agreement not sole factor for classification
• Benefits tied to work may be deemed compensation
• Volunteers in revenue‑generating roles face heightened scrutiny
• Nonprofits must document program purpose and role distinctions

Pulse Analysis

The distinction between volunteers and employees has long been a gray area for California charities, where the state’s “suffer or permit to work” standard can sweep even unpaid labor into wage‑hour coverage. Prior decisions often hinged on whether a written agreement promised compensation, allowing many nonprofits to rely on consent forms to shield themselves from liability. Spilman v. The Salvation Army disrupts that approach by introducing a more nuanced, fact‑based inquiry that looks beyond paperwork to the actual economic reality of the relationship.

The appellate court’s two‑part test requires nonprofits to prove that a volunteer freely chooses the role for personal or charitable benefit and that the organization is not using the unpaid labor as a subterfuge to sidestep wage obligations. Factors such as conditional housing, mandatory full‑time schedules, and tasks identical to paid staff now carry heightened evidentiary weight. For programs that blend rehabilitation services with thrift‑store operations, the line between therapeutic work and commercial labor is especially thin, opening the door to class‑action exposure and potential PAGA penalties.

Practically, charities should audit every volunteer position, separating therapeutic activities from revenue‑driven duties and ensuring that any in‑kind benefits are not contingent on work output. Clear documentation of the program’s mission, volunteer expectations, and the non‑compensatory nature of benefits can provide a defensible record if challenged. As the decision filters through California courts, nonprofits nationwide are likely to tighten their volunteer policies, adopt stricter role definitions, and consider converting high‑impact, profit‑centered tasks to paid employment to mitigate risk. Early compliance not only reduces legal exposure but also preserves the public trust essential to charitable operations.