Courts continue to wrestle with claims brought by individuals treated by businesses as outside the scope of the FLSA’s minimum wage and overtime requirements. Many of these claims are asserted by individuals classified as volunteers and of course interns, all claiming to be employees entitled to the protections of the FLSA. In one such case, the Court of Appeals for the Tenth Circuit, reviewing a decision from a federal court in New Mexico, affirmed that under the “economic realities” of the arrangement, a public sector union president was a volunteer officer, not an employee of the union, and thus not entitled to overtime pay. Padilla v. Am. Fedn. of State, 2014 U.S. App. LEXIS 71 (10th Cir. 2014).
Padilla, a regular employee of a county water authority, cited the union’s policy of compensating officers and members at a fixed hourly rate for “lost time” spent on union activities, which policy, the union asserted, was designed to alleviate the burdens of volunteerism. Padilla alleged that these payments were akin to regular employee compensation. Reviewing the district court’s analysis of the economic realities of Padilla’s role as union president, including its findings that the union “did not exert control over Padilla’s services, including his schedule and the amount of time spent on his presidential duties and, further, that [the union] did not hire or fire [Plaintiff],” the Circuit ruled that Padilla’s presidential duties did not create an employment relationship under the FLSA, notwithstanding the “lost time” pay.
Organizations treating individual service providers as outside the protections of the FLSA must continue to monitor developments in this area, as well as DOL guidance and rulemaking.