Dear Ask Rita in HR: In order to foster a culture of giving, my nonprofit organization requires employees to give an annual gift each year. While I agree that we should support the work of our organization, I object to the idea that I am forced to donate. It’s gone so far that my supervisor will stand over my desk and ask me to write a check. Is this legal? What are my options for saying no?
Dear X: While nonprofits are always looking for creative ways to raise revenue, there is no question that requiring employees to make financial donations is unlawful. As to the legal reasons why, I’ll take you back to the dawn of the industrial revolution, when industry created company towns, where workers were paid in script and were forced to buy their supplies and lodging from the company. In response to these practices, the federal Fair Labor Standards Act, and similar state laws, were adopted which prohibited any type of “kickback” in wages to the employer. The text of the FLSA regulations is very clear on this point:
Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.” The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee. This is true whether the “kick-back” is made in cash or in other than cash. 29 C.F.R 531.35
In other words, the law would not only prohibit the employer from requiring employees to donate cash, food for fundraisers or donations for a silent auction would similarly be prohibited.
That said, nothing prohibits voluntary donation of such items. Because of these strict anti-kick-back regulations, employees who want to voluntarily donate cash to their nonprofit should not do it via payroll deduction, but instead be directed to use a standard donation process.
Aside from the legal restrictions, pressuring employees to give or donate things to office events has the potential to create morale problems since not all employees are in the same personal financial condition to make contributions or donations. This could result in employees feeling less valuable compared to other employees. For all these reasons such requests should come with no pressure from management or singling out employees unable to give.
Similar limitations found in the FLSA prohibit employers from requiring employees to volunteer to work for their own or another nonprofit organization. When an employer directs a non-exempt employee to volunteer, the time is compensable worktime. FLSA2006-4 While there are limited circumstances under which a non-exempt employee can volunteer, to perform work at their own nonprofit, employees can never be performing their regular duties or during their regular working hours. DOL Fact Sheet #14A
This article does not provide legal representation or legal advice. Nothing provided in this column should be used as a substitute for advice or legal counsel.