In order to save some money, companies frequently hire interns, who are either unpaid or not paid very much. Recently, several companies have had to face legal action from unpaid interns alleging they should qualify as paid employees under the federal Fair Labor Standards Act (FLSA), but most for-profit companies don’t try to save money by using volunteers.
Only not-for-profit companies, such as charities and community organizations, can legally use volunteers. According to the federal Department of Labor (DOL), Rhea Lana Inc. was had volunteers selling items at the company’s semi-annual sales of children’s clothing, toys, etc. The company leases the space and handles the logistics for these events.
The volunteers/consignors who help sell the clothing at these events are not paid for their time, although they are allowed to purchase items before the general public and prominently display their own items for sale in order to improve their own profits. Consignors take home about 70% of the proceeds from the sales of their items.
The DOL sent two letters, both of which explained that Rhea Lana’s use of volunteers at their sales was illegal. One letter went to the company, while another went to the volunteers. Continue reading