The Fair Labor Standards Act (FLSA) guarantees certain protections for employees’ rights concerning minimum wage and overtime breaches. The FLSA’s protections contain very limited exceptions.
Recently, a church was caught red-handed in attempting to evade the FLSA’s requirements in Cathedral Buffet Opinion. The Defendant, a church, operated a buffet style restaurant for church goers that was operated by unpaid “volunteers.” The U.S. Department of Labor prosecuted claims against the church for violations of the FLSA and recovered nearly $388,507 in back pay for the workers. The DOL’s victory illustrates that even if your employer is a religious organization, and even if you assumed you were a volunteer, that you may still have an entitlement to wages.
The business in question in this case was Cathedral Buffet, Inc., which was operated by Grace Cathedral, a mega-church located near Cleveland Ohio. The restaurant in dispute (Cathedral Buffet) was staffed by two separate groups of workers. One group of workers was classified as volunteers, who weren’t paid anything, let alone minimum wage, for the work they performed at the restaurant. However, the second group of workers were paid at or above the minimum wage. The volunteer group performed essentially identical roles as the group of workers who were paid by the Grace Cathedral. Notably, the church’s minister was responsible for recruitment of the unpaid positions held.
The FLSA mandates that employees be paid at least the federal minimum wage, which is currently $7.25 per hour. The DOL assists private attorneys in the enforcement of this federal law. As Cathedral Buffet found out, the consequences for violating the federal law are severe.
The FLSA is a remedial statute, and its protections for employees are interpreted in the broadest possible sense. When a business classifies a worker as a “volunteer”, and even if the specific worker considers themselves to be undertaking a voluntary role, these factors still do not necessarily enable the business to neglect or avoid compliance with the federal minimum wage and overtime obligations. The FLSA’s reach is wide and applies to all businesses, regardless of whether the business in question is a secular or religious organization.
In response to the Defendant’s argument that the individuals operating the restaurant were volunteers, the DOL argued that the “Defendant’s argument would effectively allow employers such as themselves to evade the FLSA’s requirements by forcing people to work without pay, thereby necessarily precluding such workers from expecting compensation or becoming economically dependent in the first place by virtue of such coercion.”
In finding that the workers were employees that were entitled to the protections of the FLSA, the Federal District Court in Ohio held that the workers were also entitled to liquidated (double) damages because the employer did not meet their burden of proof to establish that the violation of the FLSA was done in good faith. As a result, the Court entered a judgment in favour of the employees for $388,507.
Cathedral Buffet Appeals the Decision to the 6th Circuit
Since the ruling, Cathedral Buffet has appealed the decision to the 6th Circuit Court of Appeals. The church argues that although the business was operated as a commercial venture, the actual business itself did not achieve any profitable results. Moreover, the restaurant had a charitable purpose. The church further argues that they failed to profit from the activities in question and they were supported and subsidized by a tax-exempt church.
Non-profit organizations and other churches that permit “volunteers” to perform tasks for their organization will pay close attention to the 6th Circuit’s decision on this case.
The case discussed in this article was pending in the United States District Court for the Northern District of Ohio, Eastern Division, with Case No. 5:15-CV-1577. Full text of the opinion can be found here.