The line between volunteer and unpaid labor can be difficult to distinguish. When do people freely agree to donate their time and services, and when are they persuaded or even coerced to do so? An April 16 decision from the Sixth Circuit Court of Appeals gives certain businesses latitude to use volunteer labor without the need to pay minimum wages under the Fair Labor Standards Act.

In Acosta v. Cathedral Buffet, Inc., the U.S. Department of Labor sued a for-profit restaurant associated with an Ohio evangelical church. The church used the restaurant to proselytize local residents. While it had a paid staff, the church supplemented the restaurant’s workers with church members. Many of these members testified that they felt coerced to donate their time to the restaurant upon threat of “failing God.” DOL contended that under the economic realities test, these workers were actually employees entitled to compensation under the FLSA.

The Sixth Circuit disagreed, reversing a verdict in favor of DOL. The court concluded that the economic realities test does not apply because the workers were true volunteers. If there is no expectation of economic benefit, the analysis never reaches the test used to distinguish between contracting and employment work. The Sixth Circuit rejected DOL’s contention that the workers were spiritually coerced to work at the restaurant, stating that the FLSA only regulates economic coercion, not the relationship between the pastor and his congregation.

If followed by other federal courts, this decision could significantly change the way volunteer labor is regulated. Once the Sixth Circuit concluded that the workers were not expecting payment, it ended its legal analysis, concluding that they are not statutory employees under the FLSA. More importantly, the decision ignores DOL’s position that for-profit enterprises cannot use uncompensated volunteer labor. Although not directly addressed in the opinion, the affiliation between the restaurant and the church appears to create an exception to this general rule that permits uncompensated volunteer labor.