Spilman: A Nonprofit Volunteer Label Did Not End the Wage-Law Inquiry

Spilman v. The Salvation Army, No. A169279 (Cal. Ct. App. Jan. 6, 2026), rejected a rule making an agreement for compensation the decisive prerequisite for employee status under California wage law. The court did not hold that all nonprofit volunteers must receive wages. It required a more complete inquiry into freely chosen volunteer service and whether the arrangement evaded wage protections.

The January 6 published decision falls within the week preceding this January 7 editorial date. This analysis was prepared and updated later. The official appellate docket records issuance of the remittitur and completion of the appeal on March 10, 2026; that later procedural entry is not presented as information available January 7. The opinion itself left factual and evidentiary issues for the trial court.

The work and the rehabilitation benefits had to be considered together

Participants in a six-month residential rehabilitation program performed work supporting Salvation Army warehouses and thrift stores. They received housing, meals, clothing, small gratuities, and rehabilitation services, but no formal wages. The organization controlled schedules and tasks and prohibited outside employment during the program. Slip op. at 1–4.

The parties disputed important details, including the hours required, the relationship between benefits and work performance, whether participants performed the same tasks as paid employees, and the purpose served by the labor. The organization described the work as therapy; the plaintiffs disputed its claimed rehabilitative purpose. Those disputed positions were not appellate findings of exploitation.

The trial court treated the absence of an agreement for compensation as dispositive and did not resolve many evidentiary objections it regarded as immaterial. It entered judgment for the nonprofit. Id. at 4–5. That narrow starting point drove the appellate error.

The wage-order definition was broader than a contractual promise to pay

The court examined Wage Order No. 7 and the meaning of employing someone through the suffer-or-permit standard. California wage protection is not confined to an ordinary contractual employment relationship. Making a promise to pay an indispensable threshold could exclude workers the wage laws were designed to protect. Id. at 6–9, 23–26.

At the same time, traditional nonprofit volunteers remain a recognized category. The court rejected an interpretation that would turn every person contributing labor to a charity into an employee. It also rejected a categorical rule excluding volunteers from all commercial fundraising functions of a nonprofit. The context of the relationship mattered more than whether the work involved selling something. Id. at 13–16.

The nonprofit had to establish two conditions

The first condition asks whether the worker freely agreed to work for a personal or charitable benefit rather than compensation. The second asks whether the organization's overall use of volunteer labor was a subterfuge to evade wage laws. Once a worker supplies prima facie evidence of employment, the nonprofit bears the burden of establishing the nonemployee volunteer exception. Id. at 17 & n.7.

For the first condition, an express or implied promise of wages remains relevant, but compensation may take a noncash form. Benefits made contingent on labor or satisfactory performance can support a finding that they function as wages. On the other hand, ordinary room, board, or small gratuities associated with treatment do not automatically establish paid employment. The court also identified coercion and the duration of dependence as potentially relevant. Id. at 18–20.

The second condition prevents a freely signed volunteer agreement from ending the inquiry. For a rehabilitation program, the court considered whether the work and other components were reasonably calculated to serve rehabilitation, with a limited inquiry into the nonprofit's actual and reasonable belief in that purpose. Replacing paid workers with people doing identical work could also be relevant. Mere cost savings inherent in volunteer service were not enough by themselves to resolve the issue. Id. at 21–22.

A signed volunteer form did not settle the disputed record

Program documents stating that participants were not employees were relevant context, but the wage-law inquiry could not stop at that label. The court also rejected treating statutory language about services for remuneration as a rule that unpaid work could never qualify as employment. Id. at 23–26.

This is a nonprofit volunteer analysis, not simply the ABC test for independent contractors. It also does not supply a universal definition of employee status for every other statute. The opinion specifically distinguishes wage-law coverage from the FEHA cases on which the nonprofit relied. Id. at 26 n.9. The independent-contractor wage guide addresses a different classification question.

The remand required evidence, not an automatic wage award

The appellate court vacated the judgment and remanded for application of the correct test, with evidentiary objections to be resolved as necessary. It did not itself decide all disputed facts, calculate unpaid wages, certify every proposed claim, or find that the nonprofit acted unlawfully. Id. at 26–27 & n.10.

A review of a comparable arrangement should examine enrollment documents, the actual work and schedule, promised and delivered program benefits, how benefits relate to performance, freedom to leave or decline work, and whether unpaid labor replaces paid positions. Those records test the two conditions rather than treating either a charitable mission or an employee label as conclusive. The employment litigation practice can review the particular arrangement and its procedural history. Any wage recovery requires the governing law and facts of the actual claim.