Ralph’s idea of setting up a non-profit farm so he can have volunteers will certainly work for him given his mission and dedication to training. But it will only get him so far. For the most part, non-profit farms can have unpaid volunteers. However, non-profit farms need to pay attention to three key limitations.

1. Non-profit farms cannot ask a regular employee to “volunteer”

A non-profit farm cannot suddenly require a regular employee to do the work they regularly do for free or require additional unpaid work. This is obviously unfair to the employee who expects compensation for their work. With that said, the farm can have a one-off event, such as a weekend fundraiser, and open up volunteer opportunities to regular employees. However, the farmer cannot require employees to participate in such “volunteer” opportunities or make it in any way a condition of continued employment. Effectively forcing an employee to volunteer is by no means volunteering!

2. Non-profit farms cannot provide unpaid volunteers everything they need for their livelihood in exchange for their work

Nonprofit farms also need to be cautious about situations where they’re providing “volunteers” everything they need for their livelihood in exchange for their work. This is based on a U.S. Supreme Court opinion, which is known as the Alamo case. The Alamo case is the strongest legal guidance we have to go on to determine when it’s acceptable for non-profits to have volunteers. The background facts of the case help put these guidelines in perspective. The Alamo case involved a nonprofit organization that ran a set of commercial operations including making and selling clothing, distributing candy, and raising animals to sell as meat. The organization ran these operations to help train and rehabilitate previously homeless folks with drug dependency issues. The organization provided these folks food, shelter, and job training. In exchange, the recipients “volunteered” for the non-profit’s different commercial operations. The Supreme Court said this was not okay. Here’s why. The “economic reality” was that the nonprofit provided these folks everything they needed for their livelihood. They were dependent on the arrangement for their survival and couldn’t simply leave. This type of arrangement put the workers in a potentially coercive power structure, which is precisely why employment laws exist.

The takeaway is this: If the non-profit farm provides everything its volunteers need—such as room, board, and clothing for long periods of time—it risks creating an employment relationship.

3. Non-profit farms cannot use unpaid volunteers to compete at an unfair advantage with other farms

Non-profit farms must also be sure not to undercut prices to give them a leg up over other farms. This is again based on the Supreme Court’s insights in the Alamo case. The court pointed out that the “economic reality” of how the nonprofit was structured gave the non-profit an unfair advantage over competitors. Because the non-profit wasn’t paying the workers minimum wage, it was able to sell its candy, clothing, and meat products at a far lower price point than their competitors. The court said this isn’t fair to others engaged in commerce. Based on this economic reality, the court said that the “volunteers” were actually employees and that the non-profit was required to pay them minimum wage and follow other employment laws.

The lesson here is that non-profit farms can’t leverage their unpaid volunteers as a way to compete at an unfair advantage with other farms. The farm must play fair, or it loses its privileges as a non-profit to have volunteers.

What does this mean for the non-profit farm that wants to have volunteers?

Farmers who have or are thinking about having a non-profit farm will want to be careful about how they structure volunteer arrangements. First, they must not require regular employees to “volunteer” for free. Second, it’s recommended that the non-profit farm not provide their volunteers with everything needed for a livelihood—such as room, board, clothing, and so on. The non-profit farm may want to consider making its volunteer positions part-time or temporary as this will less likely appear as though the volunteers are depending on the nonprofit entirely. Finally, the non-profit farm must be careful not to compete with an unfair advantage with for profit farms. A simple way to do this is to price the items the non-profit farm sells at market-level prices.