On December 17, 2021, a California appellate court issued its opinion in Woods v. American Film Institute. This case affirmed the legal principle that volunteers who expected no compensation do not qualify as nonprofit organization employees.
Background of the Case
Since 1987, the American Film Institute (AFI) has held an annual film festival in Los Angeles for which it uses volunteer workers. A volunteer manager coordinates the volunteers, who must attend a mandatory orientation and work a minimum number of shifts. Woods, who volunteered for four days during the 2017 film festival, filed a putative class action lawsuit against AFI, claiming that she and others qualified as employees. She also claimed that AFI was not a charitable organization that could use volunteer labor, even though it is a tax-exempt nonprofit organization dedicated to the film industry. As a result, she alleged that AFI denied them benefits that employees were entitled to under state law, such as minimum and overtime wages, meal and rest breaks, and wage statements.
The Trial Court’s Ruling
First, the trial court explicitly rejected Woods’ argument that state law disallowed AFI from using volunteers. The court reasoned that both employees and independent contractors expected payment for their work, whereas volunteers did not expect payment for their work. Accepting Woods’ interpretation of the law would prevent any organizations from using volunteers in California legally.
The trial court further denied certification of the class because workers are not employees unless they expect compensation. As a result, the common issues would not predominate over the individual issues of each member of the putative class. Woods appealed from the order denying certification of the class of persons who worked for AFI without pay during the film festivals.
Finally, the trial court found no evidence of an unlawful meal and rest break policy that AFI uniformly applied to volunteers or putative class members. Instead, AFI had an unwritten meal and rest break policy that encouraged volunteers to take as many meals and rest breaks as long as needed throughout their shifts. Again, the individual issues raised by this unwritten policy would predominate over any common issues.
The Appellate Court Ruling
The appellate court affirmed the trial court’s decision, finding that it acted within its discretion in finding that the individual issues would preclude common issues from predominating. Specifically, it reiterated the standard for certification of a class action. The question must be of common or general interest to many parties, so it is impracticable to bring all of them before the court. The common issues of law or fact must predominate over the individual issues of the parties. The joint trial of those common issues must be beneficial, desirable, and feasible, as well as fair and efficient.
The court reasoned that the putative class members identified by Woods could contain individuals who volunteered their time for AFI and expected to be paid, as well as those who did not expect to be paid. As a result, the court would have to determine whether each class member expected to be paid for their time as a threshold question to whether they qualified as an employee of AFI. If the class members did not expect to be paid, then they would qualify as volunteers, who by their nature are unpaid, and not employees entitled to compensation. Therefore, the individual issues raised by this inquiry outweighed the issues common to all class members.
Finally, the appellate court noted that the state’s Labor Code does not explicitly address whether volunteers for nonprofit organizations must receive the same minimum standards and benefits to which employees are entitled. However, based on the court’s legal analysis, it concluded that volunteers for nonprofit entities are not employees as defined by California’s wage and hour rules.
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