When Can Employees Provide Unpaid Volunteer Services?
By Daniel L. Schwartz and Jaclyn K. Leung
All employers, including nonprofit organizations, need to know when their employees can and cannot provide unpaid volunteer services to the organization. If an employer mistakenly accepts or receives "volunteer" services under the wrong circumstances, it could risk liability for a variety of claims arising under wage, tax, unemployment compensation and workers' compensation laws.
Under the Fair Labor Standards Act (FLSA), individuals who provide services without any expectation of compensation are "volunteers." In enforcing the FLSA, the United States Department of Labor (DOL) considers several factors to determine whether an individual is an employee or a volunteer. Such factors include but are not limited to whether (1) the designation of "volunteer" status is done unilaterally by the employer to avoid minimum wage or overtime requirements; (2) the volunteer time is for a civic, charitable or humanitarian purpose without any promise, expectation or receipt of compensation by the employee; and (3) the act of volunteering is truly voluntary, without any direct or implied coercion from the employer.
The DOL has provided some guidance as to when an employee of a nonprofit organization may volunteer at the same organization where he or she is employed. Specifically, the DOL has taken the position that employees may not volunteer to provide services for the nonprofit organization that are "the same as, similar, or related to" their regular job duties. As a general example, a school custodian may not volunteer to empty the trash cans after a basketball game, but he or she may volunteer to coach the team. The DOL also has stated nonprofit organizations cannot request or direct employees to perform volunteer work during the employee's normal working hours, even if the requested volunteer duties are not the same as or similar to the employee's regular job duties.
In addition, nonprofit organizations must exercise caution with respect to the type of perks or rewards given to volunteers for their services. While volunteers may be provided with nominal and occasional perks and rewards for their services (such as snacks or certificates), actual payments in the form of stipends and/or products of meaningful monetary value may be interpreted by the DOL as compensation for services, which may cause a putative volunteer to be classified as an employee. Determining when an employee may provide volunteer services is a fact-specific inquiry, and if in doubt, employers should consult legal counsel.
Issuance of Form 8940 -- Request for Miscellaneous Determination
By Jennifer M. Pagnillo
The IRS recently issued Form 8940, Request for Miscellaneous Determination, in response to the concern expressed by practitioners that there was no published or uniform way in which a tax-exempt organization could make certain requests of the IRS or take various actions.
Now, tax-exempt organizations have a mechanism to obtain advance IRS approval of particular activities, request determinations (other than the organization's initial determination of tax-exempt status) and request exemption from the Form 990 annual filing requirements. Out of the nine uses for Form 8940, six relate specifically to private foundations. Accordingly, this form will be of particular interest to private foundation managers as well as to public charities that experience difficulty in meeting the public support test.
Form 8940 may specifically be used for the advance approval of:
By Jill A. Collins
December 31 is the deadline to apply for transitional relief for those small organizations that lost their tax-exempt status in the first round of automatic revocations. Small organizations (organizations with annual gross receipts of not more than $50,000) are eligible for transitional relief if their tax-exempt status was revoked automatically for failing to file an annual electronic notice (Form 990-N e-Postcard). Beginning in 2007, organizations with gross receipts in excess of $25,000 (increased to $50,000 in 2010) are required to file an annual Form 990-N e-Postcard, a new requirement that many organizations failed to recognize.
Transitional relief allows these small organizations to have their tax-exempt status reinstated retroactively to the date of automatic revocation. In order to qualify, an organization must meet the following criteria:
For more information, see the Automatic Revocation of Exemption List and Notice 2011-43, both available at www.irs.gov. Organizations subject to automatic revocation that do not qualify for transitional relief should review Notice 2011-44 for information on applying for reinstatement.
NJ Extends and Expands Permit Extension Act
By Thomas J. Malman and Christopher James Quinn
On September 19, Gov. Chris Christie signed Bill A1338 to amend the Permit Extension Act of 2008 (the PEA).
The process of obtaining land development approvals and permits can be difficult, time-consuming and expensive. Because of this, these approvals typically afford a protection period to allow a developer time to secure financing and complete a project without the fear of changes to governmental regulations or repeated application processes. Unfortunately, as a result of the national recession, in recent years projects have taken longer to complete, because of financing and marketability issues.
Thus, the New Jersey Legislature initially enacted the PEA in 2008 "to prevent the wholesale abandonment of approved projects and activities due to the present unfavorable economic conditions, by tolling the term of these approvals for a period of time, thereby preventing a waste of public and private resources." N.J.S.A. 40:55D-136.2(m). The PEA extended the life span of certain governmental approvals to December 31, 2014, to provide additional time to build a project. However, given the duration of the current economic downturn, the Legislature identified in A1338 the need to further extend and expand the PEA, as follows.
First, the expiration of the PEA's tolling period is extended from December 31, 2012, to December 31, 2014. This means that a qualifying permit or approval covered under the PEA may now be valid up to June 30, 2015.
Second, the scope of the PEA is retroactively expanded to include properties that were previously excluded from PEA protection. The PEA does not extend the life of all government permits and approvals. To qualify for an extension, a permit must meet the act's definition of an approval and fall outside its list of exceptions. The broadest exception excludes any permit or approval involving land located in an Environmentally Sensitive Area. This term initially included any land within the Highlands and Pinelands that was not designated as a growth center.
A1338 redefines and narrows the Environmentally Sensitive Area exception to afford PEA protection to more properties, including the following lands:
On February 24, Partner Carl A. Merino spoke on "Reporting by U.S. Person of Foreign Income, Assets and Transactions" at a webinar hosted by STEP Colorado Formation and STEP Chicago.
Liza Hecht authored a chapter for the eleventh edition of Wolters Kluwer's 403(b) Answer Book.
Barbara Freedman Wand spoke at a program, "The Philanthropy Talk: How Do I Do It...and Why Do I Have To?," presented by The Boston Foundation in partnership with The Philanthropic Initiative, Massachusetts Society of CPAs, and the Boston Estate Planning Council.
Day Pitney LLP, along with Caritas Partners (the Philanthropic Trading Division of Celadon Financial Group, LLC), Essential Fund Services International, LLC (ESFI) and WithumSmith+Brown, recently co-hosted "An Evening of Hope: Maximizing Philanthropic Outreach," an invitation-only event at the American Cancer Society's Hope Lodge Jerome L. Greene Family Center in New York City.
On October 17, Day Pitney LLP's Individual Clients Department and Family Office Practice hosted "Investing in Art," a private, invitation-only program in the firm's ongoing Family Office Investing Series, held at the Downtown Harvard Club of Boston.
Day Pitney has pledged $5,000 to the University of Miami School of Law's Ray H. Pearson Memorial Scholarship Fund.
Day Pitney Press Release
On March 11, Day Pitney Counsel Jordana G. Schreiber spoke on the "Basics of Estate Planning" for physicians at Massachusetts General Hospital.
Day Pitney Press Release
Day Pitney Press Release