A small Christian school educates students in Western Kentucky. In order to make the school work, several of the mothers volunteer at the school, generously offering their services for free. The principal of the school, being grateful for their work and knowing the school could not operate without these volunteers, thought it would be appropriate to pay them a token sum of money each month and to reduce their children’s tuition by 50%. His primary goal was not to compensate the volunteers, but to do something that would express his gratitude for their work.
Unfortunately, when volunteers are paid—even if the pay is only free or reduced tuition—their classification changes. Instead of being volunteers, they must be reclassified as paid staff.
Suppose Sally volunteered at the Christian school 20 hours per week, and the principal gave her a token payment of $100 per month.
In the eyes of the law, she was working 80 hours per month and being paid at the rate of $1.25 per hour. This fact would mean that the school is now in violation of the minimum wage law.
In addition, the “volunteer” who was receiving $100 per month would need to be signed up as a regular employee, and withholding tax would need to be deducted from the “salary.”
Complex legal issues arise when paying staff and providing expressions of gratitude to volunteers. Understanding this information is extremely important for the legal protection of your ministry.