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On January 6, 2026, the First District Court of Appeal in <a href="https://www4.courts.ca.gov/opinions/documents/A169279.PDF" target="_blank" rel="noreferrer noopener"><em>Spilman v. The Salvation Army</em>, 117 Cal. App. 5th 913 (2026)</a>, held that volunteers are neither owed wages nor entitled to rights under the California Labor Code and created a two-part test for determining whether a worker is a volunteer rather than an employee.

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In <em>Spilman</em>, the plaintiffs were volunteer participants in the Salvation Army’s adult rehabilitation program for substance abuse. As program participants, they received housing, meals, clothing, other gratuities, and rehabilitation services such as counseling. Participants also took part in mandatory “work therapy,” performing unpaid work supporting the Salvation Army’s warehouse and thrift store such as loading and unloading trucks, cleaning, and inventorying items. Individuals who were unwilling to engage in work therapy or other program requirements were ineligible for the program. The plaintiffs filed a class and representative complaint alleging that rehabilitation program participants were employees under the applicable wage order (Wage Order no. 7 – Mercantile Industries) who were owed minimum and overtime wages under California law.

The trial court granted summary judgment against one of the plaintiffs, concluding that the plaintiff (who participated in the Salvation Army’s alcohol and drug rehabilitation program) was not an employee because there was no express or implied agreement for compensation.

The appellate court reversed and remanded, holding that the lack of an agreement for compensation was not dispositive of whether the volunteer was an employee. The court first held that as a matter of law, volunteers for nonprofit organizations are outside the scope of the wage order’s definition of “employ,” i.e., to “engage, suffer, or permit to work.” The court noted, “[i]f applied literally, the suffer or permit to work standard would make all nonprofit volunteers employees,” and “would cripple the ability of many . . . nonprofit organizations to carry out their important missions.” Notably, the court departed from the Department of Labor Standards Enforcement’s opinion that categorically excluded all volunteers from commercial functions of a nonprofit’s operations, finding that “[n]othing supports a blanket rule” barring volunteers from helping support a nonprofit by working in “commercial” functions.

The court then held that after a worker provides prima facie evidence of employment, the defendant bears the burden to show that the individual should be deemed a volunteer by satisfying both elements of the following two-part test: “(i) the worker freely agreed to work for the nonprofit to obtain a personal or charitable benefit, rather than for compensation, and (ii) overall, the nonprofit organization’s use of the volunteer labor is not a subterfuge to evade the wage laws.”

Regarding the first prong of the test, the court held that the essential distinction between a volunteer and an employee is that a volunteer agrees to work for a personal or charitable reason or benefit, such as a “desire to advance a cause championed by the nonprofit” or receive a benefit like drug rehabilitation, rather than to earn money. The court held that, accordingly, courts should examine “whether there is evidence of an express or implied promise of compensation,” which may involve ordinary wages or nonmonetary benefits “that, in the context of the entire relationship, constitute ‘wages in another form.’” In assessing whether nonmonetary benefits constitute compensation, courts examine whether they are contingent on the worker’s labor and satisfactory performance of it.

With respect to the second element of the test, organizations that require the performance of labor as part of a rehabilitation program must show that the work is reasonably calculated to serve a rehabilitative purpose rather than being a ploy for sidestepping wage protections at the expense of workers and competing businesses. The court noted that in most cases, it should suffice for the nonprofit to show that it has an actual and reasonable belief that (in this case) the work therapy, along with other elements of the program, contributes to recovery, including leaving enough time for meaningful rehabilitation. In addition, the court noted that if the work performed is the same as work performed by paid employees, this may be indicative of a scheme to avoid compliance with wage laws, especially if the volunteer works in a commercial venture within the nonprofit.

While recognizing that there is inherent tension between volunteer work and wage law policy (as any organization could pay someone to perform work and because using volunteers ultimately lowers costs), the court noted that under the second part of the inquiry, courts must distinguish between circumstances that merely reflect the tension inherent in any nonprofit volunteer arrangement and circumstances that indicate evasion, subterfuge, and exploitation.

The above case provides needed guidance for nonprofit organizations and their volunteer workforces and allows volunteers to work in a nonprofit’s commercial functions, such as stores or warehouses. However, nonprofit organizations should ensure that they have properly classified their volunteers according to the above test to avoid liability for wage and hour violations.

California Court of Appeal Creates Test for Distinguishing Volunteers from Employees

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