On September 7, the U.S. Department of Labor (DOL) issued two new opinion letters covering specific factual inquiries into federal Fair Labor Standards Act (FLSA) rules regarding volunteer work and tip sharing by restaurant managers. A third opinion letter — on bona fide meal periods — will be covered in another blog.
The FLSA covers most private employers so these opinion letters provide helpful guidance on unique wage-and-hour issues. However, California’s wage-and-hour laws may provide more or different rules than the FLSA, so employers need to be aware of both sets of laws when applying this guidance.
Employees Volunteering for Their Nonprofit Employers
In opinion letter FLSA2026-12, the DOL was asked to determine whether an exempt employee, such as a supervising director, veterinarian or trainer, who works for a nonprofit organization that breeds and trains service dogs, should be compensated for providing volunteer services to their employer outside of the employee’s normal working hours. In this case, the employee is performing socialization services for juvenile service dogs after-hours, which is not a job requirement or benefit for the employee. In addition, these volunteer duties wouldn’t impact the employee’s regular work duties.
Generally, a volunteer’s work is not compensable when they volunteer their time, expertise, services or labor with no contemplation of pay to a religious, charitable and/or nonprofit organization. The DOL highlights that this rule can extend to employees of these same types of organizations as long as the employee is not “volunteering” their services of the same type of work for which they are employed. In other words, a veterinarian employed by this service dog organization can’t also volunteer their time to perform veterinarian services for the same organization.
Conversely, an employee who is employed as trainer may be performing sufficiently similar duties as those required for the after-hours socialization volunteer work. In this case, that means that the trainer is not truly “volunteering” their time but is providing further services of a similar nature, for which the organization employs them.
Whether an employee is exempt or nonexempt has no bearing on whether the employee is a volunteer but does determine how they should be compensated if their “volunteer” work doesn’t qualify under the FLSA as volunteer work. In this case, if the trainer’s volunteer work is actually compensable because it is too similar to their regular job duties, then the employer needs to evaluate whether that “volunteer” time impacts the trainer’s exemption.
This is where the FLSA and California wage-and-hour laws differ. For the administrative, executive and professional exemptions, the FLSA job duties test only requires that the employee’s “primary duties” are exempt, which means that, under some circumstances, the employee may not spend the majority of their workweek performing exempt duties. Under California law, the exempt employee must spend the majority of their workweek performing exempt duties.
In this case, because the additional hours the trainer is spending socializing the dogs after their normal duties is compensable, these hours could impact the trainer’s exemption by either altering the trainer’s “primary duties” under the FLSA or altering the trainer’s workweek so that the trainer is now not spending the majority of their compensable work hours on exempt duties.
Anytime an employer is allowing volunteer work by their own employees, the employer should consult legal counsel to determine whether these volunteer work hours should be compensable or not and if they may affect any exemption the employer claims.
Tip Sharing by a Manager Moonlighting As a Bartender
In opinion letter FLSA2026-13, the DOL evaluated whether a restaurant employee, who is classified as an exempt manager under the FLSA but occasionally works full bartending shifts, can participate in a tip pooling arrangement where servers “tip out” bartenders, hosts and bussers. The DOL opined that even though the manager performs some work that would qualify as part of the tip sharing program when they tend the bar, being an exempt manager prohibits that worker from participating. However, the manager may keep any tips they directly receive when tending bar.
The FLSA and California law differ on what types of “managers” may not participate in tip pools. While they both prohibit “managers” from participating in tip pooling arrangements, like the one described in this opinion letter, federal and California law define managers differently. Under the FLSA, a “manager” for tip sharing purposes is the same as a worker who is classified as exempt under the executive exemption. However, under California law, the definition is broadened to include any “agent” of an employer who has the authority to hire or discharge any employee or supervises, directs or controls the employee’s actions. This can include workers who wouldn’t meet the executive exemption job duty requirements under the FLSA.
In addition to the different definition of “manager” for tip pooling, a restaurant manager who is classified as exempt in California may lose their exemption if they spend too much time performing nonexempt duties like bartending or assisting the host or bussers. As mentioned above, to maintain the exemption in California, the worker needs to spend the majority of their work hours in the workweek on exempt duties.
Although not the subject of this opinion letter, it is important to note that California also prohibits tip credits against minimum wage, whereas this is permitted under the FLSA. In other words, tipped employees in California still need to earn a minimum wage for all hours actually worked.
Matthew J. Roberts, Associate General Counsel, Labor and Employment
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