Nonprofit organizations across California often rely on volunteers, but misclassifying workers as “volunteers” instead of “employees” can lead to significant liability under California wage-and-hour laws. The California Court of Appeal’s decision in the recent case of Spilman v. Salvation Army provides critical guidance on how courts will determine whether a worker is a true volunteer or a legally protected employee.
Why Classification Matters in California
California has some of the strictest employment laws in the country. If a worker is classified as an employee, they may be entitled to:
- Minimum wage
- Overtime pay
- Meal and rest breaks
- Reimbursement of business expenses
Misclassification can expose organizations to back wages, penalties and attorneys’ fees. For nonprofits, understanding the legal test for volunteers is essential to compliance.
The Spilman v. Salvation Army Decision
In Spilman v. Salvation Army (2026) 117 Cal.App.5th 913, the court examined a six-month, residential, substance-abuse-rehabilitation program provided by the Salvation Army, a nonprofit religious organization, where participants worked full time in the Salvation Army’s warehouse and thrift store operations in exchange for housing, food, clothing, small stipends and rehabilitation services. The organization classified these individuals as volunteers.
The Court of Appeal rejected the trial court’s narrow focus on whether there was an agreement for compensation and instead adopted a broader, worker-protective analysis aligned with California’s wage laws.
The Two-Part Legal Test for Volunteers in California
The Spilman court established a two-part test to determine whether a worker of a nonprofit organization is a volunteer or an employee:
1. True Volunteer Intent
The organization must show that the worker freely agreed to work for the nonprofit to obtain a personal or charitable benefit, rather than for compensation. Courts will look beyond written agreements and evaluate the worker’s actual motivation and the nature of the arrangement.
2. No Evasion of Wage-and-Hour Laws
Secondly, the organization must establish that, overall, the nonprofit’s use of the volunteer labor is not a subterfuge to evade the wage laws.
Courts examine the economic reality of the relationship, including whether the nonprofit is using unpaid labor to displace paid employees, reduce labor costs or operate revenue-generating activities.
If either prong is not satisfied, the worker may be deemed an employee under California law.
Compliance Tips for California Nonprofits
To reduce risk of misclassification claims, nonprofits should:
- Ensure volunteer programs are truly voluntary and mission-driven
- Avoid using volunteers for core commercial or revenue-generating functions
- Limit stipends or benefits that could be viewed as “wages in another form”
- Don’t make benefits contingent on the worker’s labor and satisfactory performance
- Avoid long-term, in-kind benefits
- Regularly review programs for compliance with California labor laws
Bottom Line
Spilman v. Salvation Army reinforces that calling someone a “volunteer” does not make it so under California law. Organizations must ensure that volunteer relationships are genuine and not a substitute for paid employment.
If your organization relies on volunteers, a proactive legal review can help avoid costly wage-and-hour claims and ensure compliance with evolving California standards. Contact us to learn how we can help.