Business

Volunteer or employee? Employers beware of volunteer misclassifications

by Sheryl Johnson

The Ontario Superior Court recently ordered Toronto-based student travel firm S-Trip to pay a group of former staff $450,000 after misclassifying the workers as ‘volunteers’, when in reality they should have been categorized and compensated as ‘employees’. Photo credit: Twitter/S-Trip

 

Are you part of an organization that relies on volunteers? Many not-for-profit corporations such as charities, social clubs, service clubs (e.g., Lions and Rotary), and athletic clubs rely on the contributions of their volunteers given limited operational dollars to ‘staff’ their organizations.  Such volunteering is known as “good volunteering” and relieves against the provision of the minimum statutory entitlements afforded to “employees” under various employment-related legislation. However, there are times when organizations can be exposed to liability as “employers”.  

What is a volunteer vs. an employee for the purposes of the Ontario Employment Standards Act, 2000 and its regulations (collectively the “ESA”) is not defined. However, the ESA Policy and Interpretation Manual (the “Manual”) indicates that the ESA does not apply to volunteers as they are not considered to be “employees” under the ESA. Though, the Manual notes that the Employment Standards Program must still inquire into whether someone is a “true volunteer” or an employee. This is what occurred in the class action suit brought against S-Trip, discussed below. 

What is a volunteer is defined in the Ontario Regulation 385/9d 6 to the Occupational Health and Safety Act, as “a worker who performs work or supplies a service but who receives no monetary compensation for doing so other than an allowance for expenses or an honorarium.” Meaning, organizations may well find themselves on the hook to ensure volunteers safety the same as it provides for its employees, however, unless the volunteer is a member of any “volunteer force”  as defined under the Workplace Safety and Insurance Act  (“WSIA”) (i.e., volunteer ambulance brigade or ambulance services; municipal volunteer fire brigades or firefighters; first response teams; or auxiliary police forces) they likely will be ineligible for WSIB coverage under WSIA.

Further, while section 5 of the Ontario Human Rights Code (the “Code”) provides protection to persons in employment, it does not define what “employment” is or isn’t. In application, the Ontario Human Rights Tribunal (OHRT) has determined that the Code applies to “volunteer employment”.  

In the S-Trip case notwithstanding the ability of this for-profit student travel company to pay employment standards entitlements, it used “volunteers” as Destination Staff and caused them to work up to 14-hour days. In support of its classification of Destination Staff as volunteers, S-Trip had Destination Staff sign a standard form agreement acknowledging they are not entitled to any benefits provided for under the ESA (despite the fact that employees cannot contract out of their rights under the ESA). Added to this, S-Trip enticed volunteers into entering such agreements with the hope to secure full-time employment with its ongoing advertisement of full-time salaried S-Trip Leaders positions on their “job board” supported by regular internal and external communications that “80 per cent of its full-time staff started as destination staff”. 

Under this action the 1,170 volunteers claimed that they should be classified as employees and entitled to wages and benefits under the ESA and relied on the following contextual factors in support of the same: 

  1. They are the main point of contact between customers and S-Trip (i.e., are essential to the operations of S-Trip’s business);
  2. S-Trip’s operations and their duties serve no civic, religious, or charitable purpose as S-Trip is a for-profit company;
  3. S-Trip subjected them to a six-step interview process, which includes a background check;
  4. S-Trip provided them with extensive guidelines and manuals to follow;
  5. S-Trip provided them with extensive training, including on-the-job training by its staff;
  6. S-Trip subjected them to performance reviews and evaluations;
  7. S-Trip required them to wear standardized uniforms;
  8. S-Trip assigned them mandatory duties and schedules;
  9. S-Trip compensated them for their work with honorariums that differed based on position and level of seniority but not on the number of hours worked; and
  10. The compensation provided to them increased with seniority. 

In June 2022, the Ontario Superior Court approved the settlement agreement that required a S-Trip all-inclusive payment of $450,000 and the re-classification of Destination Staff as employees for the purposes of the ESA. 

Key takeaways

The Court’s approval of a settlement agreement does not endorse any specific test or factors to consider when classifying individuals as employees or volunteers. However, the contextual factors listed above provide insight into factors the Courts will take into consideration when determining an individual’s status as an employee vs. a volunteer. Significant consideration will be had of: 

  • Any defined terms and provisions of the applicable employment legislation (e.g., the no contracting out of the minimum statutory protections of the ESA);
  • Whether there is a power imbalance between the parties structuring the relationship and what the individual’s perception of their services/status is; 
  • The conduct of the parties, including whether there is any misleading, inducing, or bad faith conduct (e.g., falsely dangling the possibility of full-time employment); and
  • Whether there are other similarly situated individuals receiving employment compensation for similar work (i.e., Destination Staff vs. Trip Leaders). 

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