finding that a plaintiff was a volunteer because the plaintiff “cannot be said to have displaced a bona fide applicant who desired to sell his services at prevailing rates.”
How later courts described this case
- finding that a plaintiff was a volunteer because the plaintiff “cannot be said to have displaced a bona fide applicant who desired to sell his services at prevailing rates.”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:17-cv-00150-MR-DLH
GREGORY ARMENTO, )
)
Plaintiff, )
)
vs. ) MEMORANDUM OF
) DECISION AND ORDER
ASHEVILLE BUNCOMBE )
COMMUNITY CHRISTIAN )
MINISTRY, INC., )
)
Defendant. )
___________________________ )
THIS MATTER is before the Court following a bench trial on November
13, 2019. Upon consideration of the testimony and evidence presented by
the parties, the Court hereby enters the following Findings of Fact and
Conclusions of Law.
PROCEDURAL BACKGROUND
On June 12, 2017, the Plaintiff Gregory Armento (“Armento” or the
“Plaintiff”) initiated this suit against the Defendant Asheville Buncombe
Community Christian Ministry, Inc., (“ABCCM” or the “Defendant”), alleging
failure to pay minimum wage and overtime in violation of the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. §§ 206 and 207, and the North Carolina
Wage and Hour Act (“NCWHA”), N.C. Gen. Stat. §§ 95-25.3 and 95-25.4;
record-keeping violations under 29 U.S.C. § 211(c) and N.C. Gen. Stat. §
95-25.13; misclassification of employees under 29 C.F.R. Part 541;
retaliation and wrongful termination in violation of 29 U.S.C. §§ 215 and 218c
and the North Carolina Retaliatory Employment Discrimination Act (“REDA”),
N.C. Gen. Stat. § 95-241; claims under 42 U.S.C. §§ 1983 and 1985; and
claims for “duress, undue influence, and illegal contracts” and intentional
infliction of emotional distress. [Doc. 1].
On July 7, 2018, the Defendant filed a motion to dismiss the Plaintiff’s
claims, except for the NCWHA claim, under Rule 12(b)(6) of the Federal
Rules of Civil Procedure, and a motion for partial summary judgment under
Rule 56 of the Federal Rules of Civil Procedure on the Plaintiff’s FLSA,
NCWHA, and REDA claims. [Docs. 46, 49].
On March 27, 2019, the Court issued an Order granting the
Defendant’s motion to dismiss with respect to the Plaintiff’s claims for record-
keeping violations under the FLSA and NCWHA; duress, undue influence,
and illegal contracts; intentional infliction of emotion distress; retaliation and
wrongful termination under the FLSA and REDA; and violations of 42 U.S.C.
§§ 1983 and 1985, but denied the Defendant’s motion with respect to the
Plaintiff’s claims for unpaid wages and overtime violations under the FLSA
and NCWHA. [Doc. 66]. In the same Order, the Court granted the
Defendant’s motion for summary judgment with respect to the Plaintiff’s
claims for minimum wage and overtime violations under the FLSA but denied
the Defendant’s motion with respect to the Plaintiff’s claims for minimum
wage and overtime violations under the NCWHA. [Id.]. As a result, the
Plaintiff’s only remaining claim is for unpaid wages and overtime violations
under the NCWHA. [Id.].
This matter thereafter proceeded to a bench trial. Upon conclusion of
the presentation of evidence, the Court allowed the parties to file
supplemental briefs. The parties filed those briefs on December 6, 2019.
[Docs. 110, 111]. Having been fully heard and briefed, this matter is ripe for
disposition.
FINDINGS OF FACT
A. The Parties
1. The Plaintiff Gregory Armento is a United States Army veteran who
was homeless in 2015.
2. The Defendant Asheville Buncombe Community Christian Ministry,
Inc., is a nonprofit corporation, organized in accord with Section
501(c)(3) of the Internal Revenue Code. [Second Revised Joint
Stipulations (“Joint Stip.”), Doc. 95 at ¶ 1].
3. The Defendant operates The Veteran’s Restoration Quarters (“VRQ”)
in Asheville, North Carolina. [Id. at ¶ 2].1 The VRQ offers rehabilitative
services to homeless veterans with the goal of making them self-
sufficient, drug-free and alcohol-free, and capable of establishing
permanent housing and permanent employment.
4. The VRQ provides homeless veterans with transitional housing, meals,
counseling, a gym, an onsite chaplain, educational assistance, a
computer room, a library, laundry facilities, Alcoholics Anonymous
meetings, nursing services, psychologist services, case management
services, claims assistance, and transportation to the local United
States Veteran’s Administration (the “VA”) medical center. [Id. at ¶ 2-
3].
5. The VRQ receives funding by way of grants from the VA through the
Homeless Providers Grant/Per Diem Program (“GPD Program”)
pursuant to Title 38 of the United States Code and subject to the
requirements thereof. [Id. at ¶ 2]. The funding from the VA only
partially covers the cost of the services provided by the VRQ. The
VRQ pays the rest of its costs with funding from other sources,
including charitable donations and grants from entities like Land of Sky
1 The Defendant also operates a separate similar facility for female veterans that is not at
issue here.
Regional Council, a local non-profit organization. Neither the
Defendant nor the VRQ derives any funding from work performed by
VRQ residents. As a non-profit entity subject to the requirements of
the GPD Program, the Defendant would have to return the grant
money it receives from the VA if it earned a profit.
6. Roughly 2,500 individuals volunteer regularly at the VRQ by preparing
and cooking meals, helping at the front desk, teaching life skills
classes, performing maintenance, cleaning, assisting with
landscaping, providing housekeeping, and performing other similar
activities. The VRQ does not compensate volunteers for the hours
that they work.
B. Service Hours
7. As part of the overall housing and rehabilitative services program at
the VRQ, all residents are required complete a certain number of
“Service Hours” by performing various chores around the VRQ. [Id.
at ¶ 7]. The only exception to the Service Hours requirement is that
VRQ residents who are employed full-time or attend school full-time
do not have to perform Service Hours. [Id. at ¶ 10]. Residents are
not paid for completing Service Hours. Residents can perform
Service Hours at the VRQ by maintaining the living spaces, cleaning
the kitchen, cleaning common areas, staffing the front desk and
computer lab, or driving a van. Residents also can perform their
Service Hours at a different ABCCM location or a charitable
organization that has no affiliation with ABCCM.
8. Service Hours further the mission and purpose of the VRQ by
providing structure for residents’ lives and helping them build job skills
and gain experience to become self-sufficient and employable.
Residents also develop a sense of personal pride in the VRQ by
working Service Hours.
9. The number of Service Hours that a resident must perform is
determined by his employment and school enrollment status.
Residents employed full-time or enrolled in school full-time do not have
to perform any Service Hours. Unemployed residents must perform
twenty Service Hours per week, while residents who are employed
part-time or enrolled in school part-time must perform ten Service
Hours per week. The Defendant defines part-time employment as
working thirty hours or less per week.
10. While some residents perform more Service Hours than are required,
such extra service is on a volunteer basis and there are no
repercussions for refusing to work extra Service Hours if asked.
11. Residents performing Service Hours at the VRQ perform chores that
would otherwise be performed by community volunteers, resident
volunteers, or residents providing hours pursuant to other programs
(e.g. the Transitional Employment Program, infra). Community
volunteers typically complete the chores around the VRQ more
effectively and reliably than residents performing Service Hours,
primarily because VRQ residents generally have a history of
employment difficulties and other related problems. While the
Defendant has more issues with residents performing Service Hours
than volunteers, it is particularly forgiving towards residents when they
make mistakes performing Service Hours.
12. The VRQ has enough community volunteers to perform all the chores
that are performed by residents performing Service Hours. According
to Reverend Scott Rogers, the Executive Director of ABCCM, the
VRQ would only use volunteers and would not have residents perform
any Service Hours at all if its sole objective was to ensure that the
work was performed and performed in the most effective manner.
13. The VRQ enforces its rules through a “Three Strikes Accountability
Policy.” [Plaintiff’s Ex. 1-A at 11]. That policy provides that residents
can receive a strike for committing infractions or violating rules,
including by refusing to perform required Service Hours. [Id.].
Residents can be removed from the VRQ for committing their third
strike, although residents who commit particularly serious infractions
can be removed prior to their third strike. [Plaintiff’s Ex. 1-A at 11;
Plaintiff’s Ex. 20 at 1].
C. Transitional Employment Program
14. The VRQ also has a Transitional Employment Program, which allows
residents to work at the VRQ for pay. [Joint Stip. at ¶ 12]. Unlike the
Service Hours program, residents are not required to work in the
Transitional Employment Program. Residents wishing to participate in
the Transitional Employment Program must apply and be approved.
Residents can work up to 1,000 hours in the Transitional Employment
Program. [Id. at ¶ 13].
15. Participants in the Transitional Employment Program work in various
positions at the VRQ, including as front desk managers and as van
drivers. [Id.].
16. The Transitional Employment Program is designed to help “transition
homeless veterans into meaningful employment in the community.”
[Plaintiff’s Ex. 7 at 3]. The Transitional Employment Program provides
participants with “the experience, knowledge, and skills necessary to
attain competitive employment in the community.” [Id.].
17. The Transitional Employment Program allows unemployed residents
to earn money, develop job skills, build responsible habits,
demonstrate accountability, acclimate to consistent employment,
generate an employment history, and otherwise transition towards self-
sufficiency. [Joint Stip. at ¶ 12]. The Transitional Employment
Program also empowers the Defendant to give residents who complete
the program an honest job recommendation for potential employers.
D. Plaintiff’s Enrollment at the VRQ
18. The Plaintiff enrolled at the VRQ on September 2, 2015. [Id. at ¶ 5].
19. As part of the enrollment process, the Plaintiff received forms detailing
VRQ policies. One of the forms said that “Service Hours are program
requirements for residents who are not actively employed or attending
school.” [Id. at ¶ 9]. Another form, which the Plaintiff signed, said “I
understand there is no cost for my residency in the VRQ transitional
housing program. I will be receiving free room and board.” [Id. at ¶ 6].
The Plaintiff also received a VRQ Resident Handbook, which stated
that “[a]ll unemployed residents must perform service hours to remain
motivated and engaged with campus life.” [Id. at ¶ 10]. The Plaintiff
signed a document that said “I agree to follow all of the policies, rules,
and guidelines included in the handbook. I understand that if I fail to
abide by the written contents of this handbook, I will be subject to
disciplinary procedures to include warnings, strikes, 90-day protocols
and/or immediate dismissal from the program.” [Id. at ¶ 11].
20. The Plaintiff’s intake documents made it sufficiently clear that the
Service Hours were part of the rehabilitation program of the VRQ and
were unpaid. The Plaintiff understood that Service Hours were a
required element of living at the VRQ unless the Plaintiff was employed
full-time or attending school full-time. The Plaintiff also understood that
residents who worked part-time or went to school part-time were
required to perform ten Service Hours per week.
E. Plaintiff’s Work as a Front Desk Manager
21. Front desk managers at the VRQ answer phone calls, sign residents
in and out of the building, provide security, administer breathalyzer
tests, and conduct bag checks. [Plaintiff’s Ex. 7 at 20].
22. Front desk manager shifts are performed by residents performing
Service Hours, residents enrolled in the Transitional Employment
Program, and volunteers. The VRQ has enough community volunteers
alone to staff the front desk manager positions without needing to staff
residents performing Service Hours.
23. The Defendant creates a weekly schedule for front desk managers.
[Defendant’s Ex. 9 at 1]. The schedule lists the residents working in
the Transitional Employment Program as well as the residents working
for Service Hours. [Id.]
24. The Plaintiff enrolled in the Transitional Employment Program and
worked part-time as a front desk manager at the VRQ from September
8, 2015 to June 1, 2016. [Joint Stip. 95 at ¶ 14]. The Plaintiff made
$9.00 per hour for his work in the Transitional Employment Program at
the front desk. [Id. at ¶ 17].
25. The Plaintiff worked only part-time in the Transitional Employment
Program, so he still was required to perform ten Service Hours per
week. [Doc. 12 at 22]. The Plaintiff performed a substantial portion of
those Service Hours as a front desk manager. [Joint Stip. at ¶ 18].
26. The Plaintiff performed the same tasks while working as a front desk
manager whether he was working in the Transitional Employment
Program or performing Service Hours. [Id. at ¶ 20].
F. Plaintiff’s Dispute Regarding Service Hours
27. The Plaintiff’s first full week as a front desk manager was the week of
September 13, 2015. [Defendant Ex. 10 at 1]. During that first week,
the Plaintiff worked forty hours, thirty-two of which were initially logged
as Service Hours and eight hours as part of the Transitional
Employment Program. [Id.]. During the next week, the Plaintiff again
worked forty hours, sixteen of which were initially logged as Service
Hours and twenty-four hours as part of the Transitional Employment
Program. [Id.]. In his third week as a front desk manager, the Plaintiff
worked forty-eight hours, twenty-four of which were initially logged as
Service Hours and twenty-four hours as part of the Transitional
Employment Program. [Id.]. Those three weeks were the only weeks
in which the Plaintiff worked forty or more hours between his Service
Hours and his hours in the Transitional Employment Program. [Id.].
Those three weeks also were the only weeks in which the Plaintiff
worked more than ten Service Hours while in the Transitional
Employment Program. [Id.].
28. On October 2, 2015, at the end of his third week as a front desk
manager, the Plaintiff met with Gene “Slim” Jones (“Jones”), his case
manager at the VRQ. [Defendant’s Ex. 12 at 23; Defendant’s Ex. 7 at
1]. During that meeting, the Plaintiff expressed concerns about the
hours he was working in the front desk manager position. [Defendant’s
Ex. 12 at 22]. The Plaintiff told Jones that he was working at the front
desk part-time and was doing his Service Hours at the front desk, but
his supervisor was requiring him to work more than the ten Service
Hours he was required to perform. [Id.].
29. In November 2015, the Plaintiff met with Mary Sczudlo (“Sczudlo”), the
director of homeless services at the VRQ, regarding his complaints.
As of November 2015, the Plaintiff’s main complaint was that his
employment status was not re-adjusted weekly based on the number
of combined Service Hours and Transitional Employment Program
hours that he worked in the prior week. For instance, the Plaintiff
claims that he should have been paid for all forty of the hours that he
worked during the week of September 20, 2015 because he worked
forty hours the week before and therefore should have been
considered a full-time employee. Sczudlo told the Plaintiff that he was
classified as part-time because he was only paid for a maximum of
thirty hours per week and therefore still needed to work ten Service
Hours per week. [Id.]. Nevertheless, Sczudlo told the Plaintiff that she
would investigate his complaints about the hours he was working. [Id].
30. OnDecember 2, 2015, Sczudlo met with Jones regarding the Plaintiff's
complaints and told him that her investigation found that the Plaintiff's
pay had been calculated incorrectly. [Id]. Sczudlo showed Jones a
document detailing the Plaintiff's hours and the corrections that needed
to be made to his pay. [Id]. With those corrections, the Plaintiff's first
ten hours of each week were considered Service Hours and any
additional hours after those first ten hours were Transitional
Employment Program hours for which he was to be paid. For example,
the Plaintiff received six more paid hours for the week of September
20, 2015 after the corrections were made:
Summary of Greg Armento's Service Hrs. And Paid Time
Training Required Hrs. due Amt. due
Date Shift Service Hrs Paid Svc. Hrs. | tobe Paid | at $9/Hr.
Sunday 9/13/2015
Monday 9/14/2015 8-4pm 8
Tuesday 9/15/2015 8-4pm 8
Wednesday 9/16/2015 8-4pm 8
Thursday 9/17/2015
Friday 9/18/2015 8-4pm 8
Saturday 9/19/2015 8-4pm
Sub-Total raz | 8 | tt
Sunday 9/20/2015 8-4pm
Monday 9/21/2015
Tuesday 9/22/2015
Wednesday 9/23/2015 Mid-8am
Thursday 9/24/2015 8-4pm 8
Friday 9/25/2015 8-4pm 8
Saturday 9/26/2015 8-4pm
Sub-Total Pie | a Cf to SOT
14
[Defendant’s Ex. 10 at 1].
31. On December 2, 2015, Jones met with the Plaintiff to explain the
corrections to his pay as well as how and when the Plaintiff would be
paid in recognition of the corrections. [Defendant’s Ex. 12 at 20]. The
Plaintiff said that the Defendant’s adjustments were still incorrect, that
he should be paid for more hours, and that “his battle was not over”
with the Defendant. [Id.]. The Plaintiff was paid in accordance with the
corrections despite his protests.
32. On May 13, 2016, Jones met with the Plaintiff again. [Id. at 15]. The
Plaintiff said he was “thinking about what he wants to do after his hours
run out” in the Transitional Employment Program. [Id.]. As such, the
Plaintiff clearly expressed his understanding that he was enrolled in
the Transitional Employment Program and that his participation in the
Transitional Employment Program was capped at 1,000 hours.
33. The Plaintiff was removed from the Transitional Employment Program
on June 1, 2016 after he completed 1,007 hours of work. [Plaintiff’s
Ex. 8 at 1]. The Plaintiff refused to sign the form documenting his
removal from the Transitional Employment Program, for the first time
claiming that he was never in the Transitional Employment Program
and was never subject to a 1,000-hour limit. [Id.]. The Plaintiff’s
testimony at trial that this was always his understanding, however, was
not credible.
34. Notwithstanding the Plaintiff’s protest, he was removed from the
Transitional Employment Program because he had exceeded the
1,000-hour maximum.
35. The Plaintiff performed a total of 349 Service Hours as a front desk
manager while enrolled in the Transitional Employment Program.
[Joint Stip. at ¶ 19].
36. After working in the Transitional Employment Program, the Plaintiff
obtained part-time employment for periods of time mowing lawns,
working at the Smokey Mountain Honey House, and as a computer
repairman. The Plaintiff was only required to work ten Service Hours
per week when he was employed part-time in those positions.
G. Plaintiff’s Work as a Van Driver
37. The Plaintiff also performed Service Hours as a van driver at the VRQ.
[Id. at ¶ 24].
38. As a van driver, the Plaintiff transported residents to appointments at
the VA hospital, to the gym and other establishments in Asheville,
responded to emergencies involving residents, and picked up
homeless individuals when it was below freezing outside. The Plaintiff
helped set the schedule for van drivers.
39. The Defendant considered the Plaintiff’s work as a van driver to be
entirely for Service Hours and informed him that as such, his work as
a van driver would not be compensated. [Joint Stip. at ¶ 25].
40. Van driver shifts are performed by residents performing Service Hours,
residents enrolled in the Transitional Employment Program, and
volunteers. The VRQ can staff the van driver shifts without using
residents performing Service Hours.
41. The Plaintiff performed a total of 766.6 Service Hours as a van driver
from November 9, 2015 to July 3, 2017. [Id. at ¶¶ 24, 26].
H. Plaintiff Leaves the VRQ
42. Under the terms of the GPD Program, an individual is typically limited
to a twenty-four-month stay at the VRQ. [Id. at ¶ 38].
43. The Plaintiff left the VRQ on September 2, 2017, after living there for
exactly twenty-four months. [Id. at ¶¶ 38, 5, 39].
44. The Plaintiff is currently enrolled full-time at Asheville-Buncombe
Technical Community College in Asheville, North Carolina.
CONCLUSIONS OF LAW
I. Was the Plaintiff an Employee when Performing Service Hours?
The Plaintiff presents claims for minimum wage and overtime violations
under the NCWHA. Specifically, the Plaintiff argues that he is owed wages
for the Service Hours he worked at the VRQ.
In pertinent part, the NCWHA defines “employee” as “any individual
employed by an employer,” and defines “employ” as “to suffer or permit to
work.” N.C. Gen. Stat § 95-25.2. Notwithstanding this broad definition, it is
obvious that a volunteer who is “permitted to work” for a non-profit chartiable
organization is not an employee. Because no cases under the NCWHA
articulate the distinction between an employee and a volunteer, this Court
may also “look to the FLSA for guidance.” Rehberg v. Flowers Baking Co.
of Jamestown, LLC, 162 F. Supp. 3d 490, 503 (W.D.N.C. 2016) (citations
omitted).
Whether the Plaintiff was “a volunteer is a matter of law to be
determined by the court.” Purdham v. Fairfax Cty. Sch. Bd., 637 F.3d 421,
428 (4th Cir. 2011) (citing Castillo v. Givens, 704 F.2d 181, 185 (5th Cir.
1983), cert. denied, 464 U.S. 850 (1983)). The Court must “review ‘the
objective facts surrounding the services performed to determine whether the
totality of the circumstances’ establish volunteer status, or whether, instead,
the facts and circumstances, objectively viewed, are rationally indicative of
employee status.” Id. (quoting in part Cleveland v. City of Elmendorf, 388
F.3d 522, 528 (5th Cir. 2004)). The Court must determine “whether the
principal purpose of the seemingly employment relationship was to benefit
the person in the employee status.” Isaacson v. Penn Cmty. Servs., Inc.,
450 F.2d 1306, 1309 (4th Cir. 1971) (citing Walling v. Portland Terminal Co.,
330 U.S. 148 (1947)); see also McLaughlin v. Ensley, 877 F.2d 1207, 1209
(4th Cir. 1989). To be deemed an employee, the Plaintiff must show that the
Defendant received most of the benefit from the relationship, not just some
benefit. Isaacson, 450 F.2d at 1309-10.
The Plaintiff argues that he was unaware that his Service Hours were
to be unpaid time, and his understanding was that he would be paid for those
hours. While an individual’s understanding as to whether he/she would be
compensated may be relevant in determining their employee or volunteer
status, Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 301
(1985), the Plaintiff’s testimony in this regard was manifestly not credible.
The Plaintiff was presented with several documents detailing the Service
Hours program during his intake at the VRQ. Those documents were
sufficiently clear regarding the unpaid nature of the Service Hours.
Moreover, the Plaintiff’s statements to his case manager showed his clear
understanding of the program and the unpaid nature of the Service Hours.
As such, the Court has found and does find that the Plaintiff fully understood
from the outset that he would not be paid for the Service Hours he was to
perform.
Moreover, the nature of the agreement that existed between the
Plaintiff and the Defendant indicates a lack of an employment relationship
regarding the Service Hours. As part of the overall VRQ agreement between
the Plaintiff and the Defendant, the Plaintiff could have avoided performing
any Service Hours by attending school full-time (as he currently does),
obtaining full-time employment, or leaving the VRQ. The Plaintiff also could
have performed his hours at another location that was not affiliated with the
Defendant. In addition, the Plaintiff exercised a degree of autonomy over
when he performed Service Hours because he had input into the work
schedule as a van driver. Further, the Plaintiff concedes that there was never
any discussion during his entire two years at the VRQ as to any rate of pay
for Service Hours. From the time of the receipt of his first paycheck for
Transitional Employment Program hours, the Plaintiff was fully aware that he
was not paid and would not be paid for Service Hours and was not
considered to be an employee regarding those hours.
The Plaintiff points to the facts that (1) the Defendant supervised and
exercised control over residents performing Service Hours; (2) the
Defendant created work schedules for residents performing Service Hours
and expected them to stick to that schedule or face repercussions; and (3)
the Plaintiff performed the same tasks as a front desk manager when he
worked Service Hours and when he worked in the Transitional Employment
Program. While control can be an important factor in distinguishing between
an employee and an independent contractor, it provides little information to
address the distinction between employees and volunteers.2 The efforts of
volunteers must be coordinated by some supervising authority to be
effective. Therefore, the fact that a supervisor directed the activities and set
the schedules of Transitional Employment Program workers, Service Hours
workers, and community volunteers, all working side-by-side, provides no
indications that the Plaintiff was an employee.
2 The Plaintiff urges the Court to examine the relationship between the Plaintiff and the
Defendant under the “economic reality test.” [Doc. 91 at 3; Doc. 111 at 2]. The Fourth
Circuit, however, has determined that the economic reality test “‘is best suited to
determine whether, as a matter of economic reality, an individual is in business for himself
or herself as an independent contractor, or is an employee of another’” and is “of limited
utility in determining whether an individual is an ‘employee,’ as opposed to a ‘volunteer.’”
Purdham, 637 F.3d at 433 (citing Krause v. Cherry Hill Fire Dist. 13, 969 F.Supp. 270,
272 (D.N.J.1997)). The question presented here is not whether the Plaintiff was an
independent contractor as opposed to an employee. As such, the Court’s analysis will
examine the objective facts of the relationship between the Plaintiff and the Defendant
and focus on whether the principal purpose of that relationship was to benefit the Plaintiff
or the Defendant.
Of much greater importance to the determination of the Plaintiff’s
status are the facts surrounding the principal purpose of the entire Service
Hours arrangement, and for whose benefit that arrangement was designed.
The Court has found and does find that the Service Hours were primarily for
the residents’ benefit. The Service Hours provide structure for VRQ
residents’ lives, which limits idleness that can lead to problems like drug and
alcohol abuse. That is particularly true for residents who are unemployed or
only employed part-time, like the Plaintiff, who would otherwise have large
amounts of idle time each day.
Service Hours also give residents a chance to build job skills and gain
experience that will help them become self-sufficient and employable after
their stay at the VRQ. Residents working Service Hours get experience
working under supervisors, interacting with co-workers, and handling
customers and the public. Service Hours help residents learn to be
accountable, timely, and responsible. Service Hours also allow residents to
build resumé material so they can find a job after their stay at the VRQ.
Service Hours also provide an opportunity for residents to build those
job skills and gain that work experience in a more forgiving environment than
one provided by an ordinary employer. Residents working Service Hours
are given significantly more leeway to make mistakes and errors than typical
employees. For example, the Defendant is more likely to correct significant
errors committed by residents working Service Hours by requiring that
resident to perform training, rather than terminating that resident as would
be the case in a typical employment relationship. That forgiving environment
is especially important for residents like the Plaintiff, who was previously
unable to maintain consistent employment and benefitted from the
opportunity to make mistakes without facing termination.
While the Defendant receives some benefit from the residents
performing Service Hours, that benefit is substantially less than the benefit
the residents receive. Residents performing Service Hours help the
Defendant staff its front desk, computer lab, and kitchen, maintain the living
spaces at the VRQ, keep the common areas at the VRQ clean, and offer
transportation to residents. The Defendant, however, has enough volunteers
to complete those tasks without requiring residents to perform any Service
Hours at all. Those tasks, therefore, would have been performed at no cost
to the Defendant whether performed by residents working Service Hours or
by volunteers working for free. As such, the Defendant did not profit from
residents such as the Plaintiff working Service Hours. See Isaacson, 450
F.2d at 1310 (finding that a plaintiff was a volunteer because the plaintiff
“cannot be said to have displaced a bona fide applicant who desired to sell
his services at prevailing rates.”).
Moreover, any benefit the Defendant receives from the performance of
Service Hours is offset by the fact that the Defendant would have a more
efficient operation if it staffed chores entirely with volunteers, rather than with
residents performing Service Hours. Residents working Service Hours
provide lower quality work and generally create more issues than volunteers.
The Defendant, however, utilizes residents in order to provide benefits to the
residents. Like in Isaacson, the Defendant created this program “to
accommodate [the Plaintiff] and others similarly classified.” 450 F.2d at
1310.
The benefit received by the Defendant is further offset by the fact that
the residents can perform their Service Hours by working at charities and
non-profits other than the VRQ, including places having no affiliation with the
Defendant. That further reduces the benefit that the Defendant receives from
the Service Hours and indicates that the Service Hours program is primarily
for the benefit of the residents.
The facts of this case are most similar to the facts of Harker v. State
Use Industries, where the Fourth Circuit held that prisoners participating in a
prison work program were not employees under the FLSA because they
performed work “as a means of rehabilitation and job training” and the prison
had “a rehabilitative, rather than pecuniary, interest in” the prisoners’ labor.
990 F.2d 131, 133 (4th Cir. 1993). In that case, the Fourth Circuit
emphasized that the prison work program gave prisoners a chance to work
“in an atmosphere that mirrors the conditions of a true private employer,”
which “helps prepare [them] for gainful employment upon release.” Id.
Likewise, the Fourth Circuit noted that
the FLSA does not cover these inmates because the
statute itself states that Congress passed minimum
wage standards in order to maintain a ‘standard of
living necessary for health, efficiency, and general
well-being of workers.’ 29 U.S.C. § 202(a). While
incarcerated, inmates have no such needs because
the DOC provides them with the food, shelter, and
clothing that employees would have to purchase in a
true employment situation.
Id.
Even though the residents are free to leave the VRQ, their situation is
like that of the prisoners in Harker in that the residents perform Service Hours
as a means of “rehabilitation and job training.” Id. Moreover, as a non-profit
charitable entity, the Defendant has “a rehabilitative, rather than pecuniary,
interest in” the residents’ labor. Id. Like the program in Harker, the Service
Hours program allows residents to work “in an atmosphere that mirrors the
conditions of a true private employer,” which “helps prepare [them] for gainful
employment upon release.” Id. Finally, like the workers in Harker, the
residents performing Service Hours are provided “with the food, shelter, and
clothing that employees would have to purchase in a true employment
situation.” Id.
If the Court were to adopt the Plaintiff’s position on this issue, it would
have consequences reaching far beyond this case and the provision of
federal service to homeless veterans. See 38 C.F.R. § 61 et seq. For
instance, the Court takes judicial notice that one who seeks to receive
housing from Habitat for Humanity is required to provide a certain number of
hours in constructing Habitat for Humanity houses at the direction of
supervisors from Habitat for Humanity. If such beneficiaries were to be
considered employees, rather than volunteers, simply because they are
required to work hours under the direction of Habitat staff, the entire program
would be in jeopardy. Habitat for Humanity and the provision of service to
homeless veterans are not the only examples of a non-profit requiring some
unpaid effort on the part of a recipient of such assistance, and as such, the
Plaintiff’s construction of the NCWHA would jeopardize a broad range of
charitable activity across this state. The Court declines to interpret the scope
of the employee provision in the NCWHA in a manner that would have such
far-reaching and unintended consequences.
The Plaintiff urges the Court to take a very simplistic approach and
conclude that he was an employee merely because the Defendant “suffer[ed]
or permitted [him] to work,” citing N.C. Gen. Stat. § 95-25.2. This argument,
however, ignores the fact that every charity and non-profit “suffers or permits”
every volunteer to work. This begs the question of whether the arrangement
is one of employment or volunteerism.
For all these reasons, the Court finds and concludes that the Service
Hours were primarily for the Plaintiff’s benefit. The Plaintiff was a volunteer
in that he voluntarily came to the VRQ seeking the benefits of the
Defendant’s program, knowing that there was an unpaid Service Hour
component to that program. The Plaintiff voluntarily remained in that
program and continued to perform Service Hours despite being able to opt-
out of the Service Hours requirement by obtaining full-time employment,
enrolling full-time in school, or leaving the program. Looking at the totality of
the circumstances, the Court finds and concludes that the structure and
purpose of the Service Hours program were such that the Plaintiff was a
volunteer rather than an employee when working those hours, and thus was
outside the scope of the NCWHA. See Purdham, 637 F.3d at 428 (citation
omitted).
II. Was the Plaintiff an Employee when working in the Transitional
Employment Program?
The Plaintiff next argues that even if he is deemed to be a volunteer,
he still must be paid for the Service Hours that he worked during the time he
was also enrolled in the Transitional Employment Program. In support of
that argument, the Plaintiff cites N.C. Gen. Stat § 95-25.14(a)(5), which
provides an exemption to the NCWHA requirement to pay minimum wage
for “[b]ona fide volunteers in medical, educational, religious, or nonprofit
organizations” when “an employer-employee relationship does not exist.”
The Plaintiff’s reliance on N.C. Gen. Stat § 95-25.14(a)(5), however, is
misplaced for two reasons. First, Section 95-25.14 pertains to the situation
where there is an existing employment relationship, and the employee is then
required to provide “off the clock” work as a “volunteer” as a condition
(express or implied) of continued employment under that agreement. That
is not the case here. The Plaintiff’s Service Hours were not a condition of
his participation in the Transitional Employment Program, but rather an
integral part of the VRQ program whereby he was receiving the housing,
meals, training, and other benefits provided by the VRQ. In other words, the
Plaintiff had one agreement with the Defendant regarding his receipt of VRQ
services, which included the provision of Service Hours, and a separate
agreement with the Defendant regarding his participation in the Transitional
Employment Program. Those two agreements were funded from entirely
separate sources and are distinct. This is far from a situation where
someone applies for and is hired for a job and then is ordered to provide “off-
the-clock” hours. Section 95-25.14(a)(5) is simply inapplicable to “convert”
the Plaintiff’s Service Hours to paid hours.
Second, the Plaintiff was not an employee of the Defendant by virtue
of his participation in the Transitional Employment Program for the same
reasons that working Service Hours did not make the Plaintiff an employee
of the Defendant. The Defendant’s Transitional Employment Program
shares many characteristics with the Defendant’s Service Hours program.
Both programs aim to “transition homeless veterans into meaningful
employment in the community.” [Plaintiff’s Ex. 7 at 3]. Both programs help
residents gain “the experience, knowledge, and skills necessary to attain
competitive employment in the community.” [Id.]. Both programs exclusively
draw from the VRQ’s residents, regardless of whether those residents are
the best candidates for the work or their abilities qualify them for the position.
Both programs allow residents like the Plaintiff to learn critical job skills, gain
important experience, and develop a work history. Both programs also give
those opportunities to individuals who often lacked the skills and work
experience to otherwise obtain those opportunities. The programs are so
similar that the Plaintiff performed the same tasks regardless of whether he
was working Service Hours or in the Transitional Employment Program.3
[Joint Stip. at ¶ 20].
Like the Service Hours program, the Transitional Employment Program
is similar to the situation addressed by the Fourth Circuit in Harker, where
less-than-minimum-wage programs were deemed not to create an employer-
employee relationship. Like those programs, the Transitional Employment
program was created specifically “to accommodate [the worker] and others
similarly classified[,]” Isaacson, 450 F.2d at 1310, by providing “rehabilitation
and job training.” Harker, 990 F.2d at 133. The Transitional Employment
Program further mirrors those programs by helping prepare participants “for
gainful employment upon release” by allowing them to “work in an
atmosphere that mirrors the conditions of a true private employer.” Id. The
Transitional Employment Program also replicates those programs’
“rehabilitative, rather than pecuniary, interest” in the residents’ labor. Id.
Finally, like those programs, a resident in the Transitional Employment
3 The Defendant refers to the Plaintiff as an employee with regard to his Transitional
Employment Program hours in that he was paid for those hours. That, however, is an
entirely difference question from whether the Plaintiff’s efforts fall within the scope of the
NCWHA.
Program resides where he works and receives meals, housing, and shelter
from the entity he works for. Id.
The differences between the Service Hours program and the
Transitional Employment Program are not enough to establish that the
Plaintiff was an employee. While the Transitional Employment Program
pays residents for the hours they work, that fact in and of itself is not
dispositive of the question of whether a person is an employee rather than a
volunteer. Isaacson, 450 F.2d at 1308; see also Harker, 990 F.2d at 133.
That payment is offset by the fact that the Transitional Employment Program
limits participants to working 1,000 hours. Under such a program, the
Defendant must train a new worker, terminate that workers’ participation
once he reaches 1,000 hours, and then repeat the cycle. Because of that
cycle, the Defendant faces constant turnover in its positions regardless of
how capably a Transitional Employment Program participant performs in his
role. That is completely unlike a traditional employment relationship, where
employers retain capable employees for as long as possible, further
indicating that the Transitional Employment Program is primarily for the
workers’ benefit.
The Court finds and concludes that based on the “totality of the
circumstances” related to the Transitional Employment Program, the
“seemingly employment relationship was to benefit the person in the
employee status.” Isaacson, 450 F.2d at 1309 (citation omitted). As such,
the Plaintiff's work in the Transitional Employment Program did not create an
employer-employee relationship and the Plaintiff's argument based on § 95-
25.14(a)(5) fails.4
ORDER
IT IS, THEREFORE, ORDERED that this action is hereby DISMISSED
WITH PREJUDICE in its entirety, and the Defendant shall recover their costs
of the action from the Plaintiff.
A Judgment consistent with this Memorandum of Decision and Order
shall be entered contemporaneously herewith.
IT IS SO ORDERED.
Signed: December 31, 2019
a Reidinger er
United States District Judge aes
4 Even if the Plaintiff were an employee, any wages he would be entitled to receive for his
Service Hours would be offset by “the reasonable cost . . . of furnishing [him] with board,
lodging, or other facilities.” N.C. Gen Stat. § 95-25.2(16). Just as the Defendant did not
profit when paying Plaintiff nothing for his Service Hours, the Defendant likewise would
not profit if incurring an additional cost of paying a minimum wage for those hours. The
Plaintiff's argument to the contrary is without merit.
32