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Unpaid Staff Are Not Employees Under the NLRA

Unionized employers with workers who receive neither pay nor benefits will be very interested in the unanimous August 26, 1999 decision by the National Labor Relations Board in WBAI Pacifica Foundation, 328 NLRB No. 179, 1999 NLRB LEXIS 586. The Board held that unpaid staff at a nonprofit radio station are not employees under the National Labor Relations Act. The definition of “employee” under Section 2(3) of the Act is very broad. It includes “any employee” and excludes all others who are not expressly excluded by the statutory definition itself, such as supervisors, independent contractors and agricultural workers, and others excluded by Board policy.

In this case, the employer, WBAI, filed a unit clarification petition seeking to exclude 200 unpaid staff from a 225-person bargaining unit that it voluntarily recognized in 1987. WBAI entered into successive contracts with the United Electrical, Radio and Machine Workers of America during those 12 years. Each contract expressly covered unpaid staff. During negotiations for a new agreement, WBAI for the first time sought to exclude unpaid staff from the bargaining unit on the ground that they were not employees. The Union resisted the request and WBAI filed a unit clarification petition.

Under the station’s collective bargaining agreement, a volunteer who works at least 10 hours per month for 4 months or 20 hours per month for 2 months is designated “unpaid staff” and included in the bargaining unit. Unpaid staff receive no wages, benefits, paid leave, or other compensation for their work for the radio station. WBAI does not pay workers’ compensation or unemployment insurance on their behalf. The number of hours unpaid staff members work is at their discretion.

Unpaid staff are not subject to the hiring procedures set forth in the contract for paid staff. The record showed some were brought in by management while others simply walked in off the street. Although unpaid staff could apply for paid positions, they did not receive any special preference or consideration for those positions. Unpaid staff could substitute for absent paid staff members, and they are paid when they do so, but they are not given any priority over anyone else when the station needs to find a substitute.

Unpaid staff are eligible under the contract for a child care allowance and reimbursement for travel expenses. However, there was no evidence any unpaid staff member ever received a child care allowance or that WBAI had a widespread practice of reimbursing them for travel expenses. By contrast, many volunteers paid out of their own pockets to produce their programs, raised money for the station, and many also contributed money to WBAI. Unpaid staff could file grievances under the contract. They were required under the contract to attend some, but not all, of the meetings that the paid staff must attend. The unpaid staff and the paid staff did similar work, both produced programs under the general direction of the station’s Program Director.

The Regional Director of Region 2 (Manhattan) determined the unpaid staff were employees within the meaning of Section 2(3) on the ground that they provide an essential service to WBAI and are subject to WBAI’s control. Since there were no prior Board precedents directly on point, the Regional Director relied on other cases such as Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941), which dealt with applicants for employment, and NLRB v. Town & Country Electric, 516 U.S. 85 (1995), which dealt with union “salts” (employees referred by a union for the express purpose of organizing an employer) to support his determination.

The Board unanimously reversed the Regional Director. It held that unpaid staff members are not employees because they “do not work for another for hire . . . [T]o work for another for hire is to receive compensation for labor or services.” The Board explained that in Phelps Dodge and Town & Country Electric, the cases cited by the Regional Director, “there was at least a rudimentary economic relationship, actual or anticipated, between employee and employer.” The Board also discussed the Supreme Court’s decision in Chemical Workers v. Pittsburgh Plate Glass, 404 U.S. 157 (1971), where the Supreme Court held that retirees were not employees for purposes of bargaining about changes in their retirement benefits. The Board concluded that “[t]he vision of a fundamentally economic relationship between employers and employees is inescapable.”

Looking at the facts before it, the Board held that the unpaid staff were not employees because they had no actual or anticipated economic relationship with WBAI. The Board noted unpaid staff work for WBAI to see the station survive and thrive, to contribute to programming and to serve the community. The Board was not persuaded that the unpaid staff is compensated for their services by the fact that the labor contract made them eligible for a child care allowance or travel costs reimbursement, or that they are paid when they substitute for paid staff. Finally, the Board noted unpaid staff positions are not stepping stones to paid positions since unpaid staff is not given any special consideration when they apply for paid positions, and thus, there was no evidence of anticipated compensation.

The Board did not look outside the Act or the three Supreme Court decisions set forth above, which interpret the Act, in reaching its holding. However, several courts have addressed the issue of whether a volunteer is an employee under other federal labor and employment laws, such as Title VII and the Fair Labor Standards Act. The Second Circuit has squarely held that Title VII does not cover volunteers. In O’Connor v. Davis, 126 F.3d 112 (2d Cir. 1997) (discussed in February 1998 Employment Law Alert., pp. 3-4), the court dismissed a hospital intern’s sexual harassment claims because she was not an employee within the meaning of Title VII. The intern received no salary or benefits and thus she could not establish the “‘essential condition’ of remuneration.” Similarly, in Tadros v. Coleman, 898 F.2d 10 (2d Cir.), cert. denied, 498 U.S. 869 (1990), the court upheld the dismissal of a visiting lecturer’s Title VII claims where the defendant, a medical college, did not pay the plaintiff or control the plaintiff’s work.

In Graves v. Women’s Professional Rodeo Ass’n, Inc., 907 F.2d 70 (1990), the Eighth Circuit held that the defendant was not an employer under Title VII because it did not compensate the putative employees and there was no duty of service owed by them. Several district courts have issued similar rulings. See Neff v. Civil Air Patrol, 916 F. Supp. 710 (S.D. Ohio 1996); Smith v. Berks Community Television, 657 F.Supp. 794 (E.D. Pa. 1987).

In Tony & Susan Alamo Foundation v. Sec’y of Labor, 471 U.S. 290 (1985), the Supreme Court applied an economic reality test to determine whether individuals were employees under the Fair Labor Standards Act. The individuals in this case were held to be employees because they expected to and did receive in-kind benefits for their services, but the Court explained that the FLSA excludes individuals who work “’without promise or expectation of compensation.’”

This NLRB decision is quite significant. It is the first time since the Act was passed in 1935 that the Board has decided this issue. The conclusion that unpaid staff are not employees under the Act was reached by a bipartisan panel consisting of Members Fox, Hurtgen and Liebman.

Under this decision, volunteers are not necessarily accorded the same protections as paid employees. Unionized employers who have unpaid staff in a current bargaining unit together with paid staff may wish to consider filing a unit clarification petition with the NLRB. An employer may file a unit clarification petition either shortly before or after the labor contract expires. No showing of interest is required. Unit clarification petitions filed during the early part or midway through the term of an existing contract that clearly defines the unit covered by that contract will be dismissed by the Board without prejudice to refiling at an appropriate time. However, the Board will entertain a unit clarification petition that is filed shortly after a contract is executed where the parties were unable to agree during their negotiations whether certain individuals (such as unpaid staff) should be included in the unit and did not want to delay executing the new contract on this issue.

The unionized employer is in control where unpaid staff receives neither pay nor benefits. As the WBAI case shows, the employer can even file a unit clarification petition to exclude that staff from existing contracts despite years of consistent prior recognition and contract coverage. The union in this case lost 200 dues-paying members when WBAI’s unit clarification petition was granted. Finally, since unpaid staff are not employees under the NLRA, they lose the considerable protections afforded employees under that statute and can also be excluded from proposed bargaining units during union organizing campaigns. Employers are truly in the driver’s seat.

*article courtesy of Nixon Peabody LLP.

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