Volunteers

Legal definition

What is a volunteer? The law defines a volunteer as someone who performs service for charitable or humanitarian reasons for a nonprofit or public agency without expecting compensation.

Does your farm meet the six criteria for a volunteer?

Folks are sometimes willing to work on farms for “free.” Some want job training, others simply appreciate the opportunity to be out in nature and see where their food comes from. Is this okay? Yes, so long as the farm meets certain criteria. Both the US Department of Labor Wage and Hour Division (US DOL) and the Rhode Island Department of Labor and Training (RI DLT) consider the following six factors when determining whether someone is a true volunteer.

1. The farm must be operating as a nonprofit organization

Legally speaking, a for-profit business cannot have a volunteer. The law defines employing someone as permitting someone to work for the business. The fact that the worker isn’t paid is not relevant—the farm is being helped and the farm owner is permitting the work. That means the worker is an employee (unless they are an intern or independent contractor). The federal definition of a volunteer is someone who is motivated by charitable or humanitarian reasons for a public agency with no expectation of receiving compensation for her services. So, volunteering for a for-profit business just doesn’t work under the dominant legal paradigm.

The reasoning behind this is again about preventing exploitation and coercion of workers. If a business could “persuade” employees to volunteer without any legal repercussions, the resulting economic and power dynamic would easily create unjust situations. A notion of fairness is also at play; if the business is operating to make money, workers deserve compensation for their labors.

Read further in Section 2 “Managing Risks of Interns and Volunteers in Rhode Island” for more details on this criterion.

2. The volunteer must work less than full time

This factor protects the workers from coercion and exploitation. If a volunteer works full time for a nonprofit farm, they may become dependent on the farm for their livelihood. Let’s say the nonprofit farm has “volunteers” that work full time and the farm provides them room, board, and essentially all they need for their livelihood. This puts these workers in a potentially exploitative situation. The workers may feel pressured to do everything the farmer says to protect their living arrangement, even if unfair working conditions prevail. This is precisely the type of arrangement that employment laws protect. Nonprofit farms should be careful not to create such a dependency relationship. The best way to do this is to have the volunteers work only part time. This provides them opportunities to create a livelihood outside of the farm.

3. The volunteer must offer the services freely, without pressure or coercion

The volunteer needs to have some level of autonomy. As the name depicts, a volunteer must “voluntarily” agree to the tasks at hand. While the farmer can provide instruction and direction, the farmer cannot force a volunteer to do arduous or repulsive tasks such as shovel horse manure for hours on end— unless, of course, the volunteer freely volunteers to do it!

In addition, the non-profit farm cannot force a regular employee to perform volunteer services for free. Forcing an employee to volunteer is by no means volunteering! With that said, the farm can have a one-off event, such as a weekend fundraiser, and open up volunteer opportunities to regular employees. However, the farmer cannot require employees to participate or make it in any way a condition of continued employment.

4. The volunteer must not receive or expect to receive compensation from the nonprofit farm

This gets to the heart of the legal definition of a volunteer—someone who does not expect compensation for the services offered. If the worker expects compensation in return, they are not a volunteer. This brings up a couple key points.

First, farmers who provide some compensation to volunteers—whether in the form of cash or in-kind payments—should tread cautiously. By compensating volunteers, the farmer risks making it look more like an employee arrangement. The “volunteer” begins to expect this compensation. Farmers in Rhode Island should strongly consider ratcheting up any compensation provided to volunteers to at least the minimum wage amount. Otherwise, they may be better off not compensating volunteers, as it will look less like an employment arrangement.

In addition, as mentioned earlier, a non-profit farm cannot suddenly require a regular employee to do the work they regularly do for free. For example, let’s say the farm is running low on cash. The farmer can’t ask the employee to work for free for a couple weeks to get the farm through a tough time. The law sees this as unfair to the employee who expects compensation for their work. The farm will need to figure out another way to make payroll.

5. The nonprofit farm cannot leverage its unpaid volunteers to unfairly compete with other farms

In addition to protecting the workers, the law is also interested in protecting overall fairness in the marketplace. Nonprofit farms gain a bit of an advantage over for-profit farms given they don’t have to pay their volunteers. They can, in turn, undercut their prices. This runs counter to how the free market system is supposed to work, so the law does not allow this! If a nonprofit farm is using its volunteer base to get an upper hand at the market, the law may step in and say that the volunteers must be treated and paid as employees. What can the nonprofit farm do to prevent this? First, the nonprofit farm should be sure that the tasks assigned to volunteers are typical of volunteer tasks. Basically, they should be more tangential than essential to the farm’s core operations. While the volunteer base can offer a significant help to the nonprofit farm, the volunteers should not be running or even playing a critical role in the operation. In addition, the farm should be sure to charge the going market rate for its products.

6. The volunteer’s work must be informal

This factor goes hand-in-hand with the previous factor. The volunteer’s work should be informal. This means that if the volunteer doesn’t show up, the farm’s regular operations won’t be significantly affected. In other words, the volunteers should not be fulfilling essential duties of the organization that would otherwise be done by paid employees. One way the law gauges this factor is to see if regular employees are being displaced by volunteers. If they are, it’s looking more like an employee. To be on the safe side, the nonprofit farm should continually ask itself whether volunteers are displacing their employees. In addition, if the volunteer is being told to come in at a specific time for a specific duration on a specific day, the law will most likely see this as an employee. Farmers should extend flexibility and forgiveness to volunteers and not become overly dependent on them.

Now What?

Farmers like Farmer Ralph who have a non-profit farm and feel they meet these criteria should review Section 2, Managing Risks of Interns and Volunteers in Rhode Island, for more information on the legal aspects of hosting volunteers.

Farms that don’t meet the volunteer criteria.

Farmers like Amanda will most likely need to treat their workers as employees. First, however, they can review the criteria in the next two sections for independent contractors and interns to see if they might qualify.

Independent Contractors

Legal Definition:

What is an independent contractor? The law defines an independent contractor as someone who performs a specific service for another while having control over precisely how the work is done.

Does your farm meet the three criteria for an independent contractor?

Farmers may be asking, what are the benefits of classifying workers as independent contractors? The main benefit in Rhode Island is that the farm is not required to pay minimum wage, carry workers’ compensation, or pay certain payroll taxes for independent contractors—whereas the farm may have to for employees (depending on available exemptions). When farm budgets are tight, the flexibility that independent contractors allow can seem attractive. However, if the farm misclassifies a worker as an independent contractor, it potentially faces penalties and fines at both the state and federal level.

In Rhode Island, a worker is considered an employee until proven otherwise. Rhode Island law requires all independent contractors to file a Notice of Designation as an Independent Contractor form with the RI Department of Labor and Training (“RI DLT”). This form can be downloaded from the RI DLT website. Rhode Island Farmers who want to retain a worker as an independent contractor can protect themselves by confirming that the worker has received independent contractor designation from the RI DLT. The RI DLT evaluates worker status for purposes of minimum wage, workers’ compensation and other state employment law obligations. The Rhode Island Division of Taxation evaluates worker status for purposes of tax obligations.

Rhode Island law uses the same test as the federal IRS to determine whether a worker is an independent contractor versus an employee. When determining the status of a worker, the IRS applies common-law rules that have evolved over decades through court cases. The common-law rules can be summed up as follows: The greater degree to which the farmer controls the worker, the more likely it is an employee relationship. The greater degree of independence the worker has, the more likely it is an independent contractor relationship.

Unfortunately, it’s not that simple! The IRS considers a multitude of factors when determining the status of a worker, which it narrows down to three general categories: behavioral control, financial control, and the type of relationship. What does this really mean?

Before getting into the details of the legal criteria, it’s helpful to start with a “perfect” example of an independent contractor—a plumber. The plumber comes to your house, brings her own tools, and her skills and expertise to determine what needs to be done to reach your goal of fixing your pipes. She doesn’t take orders from you. Also, she likely has other clients, and has business skills to build her plumbing business. You hire her for a specific project, and while you may call her back when things break, you don’t have a permanent or ongoing relationship. This is a true independent contractor. With this in mind, let’s turn to the legal criteria.

The following highlights key factors the IRS—and the RI DLT and RI Division of Taxation—consider when determining whether a worker is an independent contractor or employee:

Does the farmer control the “behavior” of the worker?

Independent contractors are skilled workers who use their own methods. They are the experts and they don’t need to be told what to do. If the farmer provides a worker specific instructions on how to perform a task, controls how the worker achieves the desired outcomes of a project and/or provides the worker training on how to perform tasks specific to the farm, it’s more likely an employee relationship.

Controlling instructions the farmer might provide include: When and where to do the work, what tools or equipment to use, what workers to hire or to assist with the task, where to purchase supplies and services, what tasks to perform, and what order or sequence of tasks to follow.

Basically, if the farmer manages how the worker gets the job done, then the worker is an employee. Even if the farmer provides no instructions to a worker, it may still be determined that the worker is an employee if the farmer is supervising or managing the outcome of a project. In addition, if the farmer provides training to the worker on how to perform tasks specific to the farm, it’s more likely an employee relationship.

Does the farmer retain “financial” control over the worker?

Independent contractors have a right to control the business aspects of their work. They have their own independent, entrepreneurial operations with a potential to gain a profit and also suffer a financial loss. While none are determinative, the following financial factors sway towards independent contractor status:

□ The worker has unreimbursed business expenses – Independent contractors typically incur fixed ongoing costs regardless of whether work is currently being performed.

□ The worker invests in the facilities or tools used to perform the services for the farm – While significant investment Is not necessary, workers who have their own tools and facilities are much more likely to be considered to have independent contractor status.

□ The worker makes her services available to other farms or business— Independent contractors are in business for themselves and generally advertise or otherwise make themselves available to work for a broader client base than a single farm.

□ The worker is paid on a flat fee or on a time and material basis for the job— Unlike employees, independent contractors are generally not guaranteed a wage amount for an hourly, weekly, or other period of time.

□ The worker realizes a profit or loss—Unlike an employee, independent contractors are vested in a project. They can make a profit or loss, which depends on their specialized work and skilled project management.

What “type of relationship” do the farmer and worker have?

Various factors surrounding the relationship are also considered, including written contracts, benefits provided, duration of the relationship, and types of services that are performed.

• There’s an independent contractor agreement: While not determinative, it can help if there’s a written contract specifying that the worker is an independent contractor. If there’s no contract or services agreement, it can appear more like an employment relationship.
• The worker doesn’t receive benefits: Independent contractors usually don’t receive benefits such as insurance, a pension plan, vacation pay, or sick pay. If these benefits are provided it looks more like an employee relationship.
• The relationship is temporary or on a project basis: Independent contractors typically perform services on a project by project basis or short-term. If the worker is working on the farm indefinitely or for multiple seasons, they’re more likely an employee.
• The worker completes one-off projects or tasks that aren’t core to the farm operation: Independent contractors typically perform one-off or short term projects such as installing or fixing the irrigation system or building an equipment shed. They also perform tangential tasks such as accounting or payroll. If the worker provides services that are key aspects of the farm operation, it’s more likely an employee. Core tasks like harvesting crops on a daily basis would not be appropriate for an independent contractor. These tasks are typically completed by employees.

Now What?

Farmers who are still unsure of whether a worker is an independent contractor or employee can seek further guidance from the RI Division of Taxation or the US Internal Revenue Service (IRS). Farmers can obtain a formal determination of worker status by the IRS by submitting form #SS-8, which is available for download on the IRS website (search “IRS form #SS-8”).

Farms that do meet the independent contractor criteria:

Independent contractors are not covered by employment laws such as workers’ compensation, minimum wage, and others. As with any contract relationship, farmers should write down the terms of the agreement as a best practice.

Farms that do not meet the independent contractor criteria:

So you don’t meet these criteria? This means you don’t have an independent contractor. You likely need to go back to the default classification of employee. First, there’s one more option: interns. Read the following section to confirm your status there. Or, assume you have an employee and skip to the last section.

Interns

Legal definition:

What is an intern? Unfortunately, the law does not provide a precise definition of an intern. The legal criteria for an intern emphasizes the educational dimension of the arrangement. Fundamentally, the intern, not the farmer, must be the “primary beneficiary” of the internship program.

Does your farm meet the legal test for a non-employee intern?

These are tough questions, as the law surrounding non-employee interns is rather complex. Like Amanda and Ralph, farmers are attracted to offering “intern” positions because they want to offer a lot of education. However, farmers are often under the impression that because education is such a strong component, the intern is different than a regular employee. This is a misimpression. Simply providing education to a worker does not mean the worker is not an employee. Even if the farmer calls the worker an “intern,” the law will treat the worker as an employee unless they meet the legal test for interns.

In January 2018, the US Department of Labor (US DOL) updated its “legal test” for whether a worker qualifies as non-employee intern. The US DOL now applies the “primary beneficiary test” which matches the more flexible approach that several federal appellate courts have recently developed. The “primary beneficiary test” reflects the principle that to be a non-employee intern, the primary beneficiary of the internship program must be the intern, not the farmer. Under this test, the US DOL evaluates the following seven criteria to determine whether a worker is the “primary beneficiary” of the relationship and thus a non-employee intern:

1. The farmer and the intern both understand that the intern is not entitled to compensation.
2. The internship program provides training that would be given in an educational environment.
3. The intern receives academic credit upon completion of the internship program.
4. The internship program corresponds with the academic calendar.
5. The duration of the internship program is limited to the time when the intern receives the education or training provided.
6. The tasks the intern performs provide significant educational benefit and they complement rather than displace the tasks of paid employees.
7. The intern and the farmer both understand that the intern is not entitled to a paid job when the internship program ends.

How does the farmer know if its internship program sufficiently meets these seven criteria of the US DOL’s “primary beneficiary test”? The reality is, there’s no absolute certainty. The primary beneficiary test is a flexible test. Not all seven criteria need to be met and no single criteria is determinative. Whether an intern is an employee depends on the unique circumstances of each situation.

What does this mean for farmers in Rhode Island? It means there’s a level of uncertainty, which carries risks. What are the risks here? If the farmer treats their workers as non-employee interns and the law determines otherwise, the farmer risks having to pay back wages, back taxes, penalties, and risks lawsuits.

With this in mind, farmers basically have two options. Farmers who are risk averse and want to play it safe should treat their interns like employees and follow all applicable employment laws. Farmers who are less risk averse can choose to follow the seven criteria in the US DOL’s “primary beneficiary test” the best they can. Farms that accommodate a worker’s formal academic commitments, such as offering the intern position in the summer when school’s not in session, providing structured training with set curricula and learning objectives, tying the internship to an academic institution, and offering a limited term position will have an easier time arguing that the intern is not an employee.

For more details on these criteria on interns, see Section 2, Managing Risks of Interns and Volunteers in Rhode Island.

Now what?

Farms that do meet the legal criteria for interns:

Read Section 2, Managing Risks of Interns and Volunteers in Rhode Island, for more information on working with interns.

Farms that do not meet the legal criteria for interns:

Farmers uncertain if they meet the non-employee intern criteria should read Section 2, Managing Risks of Interns and Volunteers in Rhode Island, for more information. If these criteria are not met, the farm’s interns are legally classified as employees.

Employees

Legal Definition

Who is an employee? Rhode Island law defines an employee as someone who an employer directs or permits to work for her for profit business.

Employee is the default category

The bottom line: If someone performs work for a for-profit business the assumption is that he or she is an employee. That is, unless that person can be classified as an independent contractor or a non-employee intern. Again, for- profit businesses generally cannot have volunteers, so that is not an option.

Now what?

What must farmers do when they have employees? They must follow all applicable state and federal employment laws. For an overview of these requirements, see Section 3: Basic Checklist for Hiring a Farm Employee in Rhode Island.