What changes are being considered?
The Membership Committee is reviewing the Volunteer Program, as it considers what is best for HPC.
Some options being discussed are:
- Maintaining the current volunteer program with changes to the discount.
Forming a nonprofit Friends of HPC as a 501(c)(3) to manage volunteer activities, which could include education programs, community outreach and other activities not performed by HPC paid staff.
- Modifying the current volunteer program in such a way that volunteers do not work in operations or otherwise do work performed by HPC paid staff.
- Contacting local and state elected officials regarding the Fair Labor Standards Act about potential legislation protecting cooperatives from liability.
- Eliminating the volunteer program and providing member discounts through other avenues.
How many members will be impacted by this change?
Why now? We have been operating this way for many years. What changed to make this an issue?
The volunteer issue was identified as a potential liability in a review of HPC’s 2013–14 finances by an independent certified public accountant. To execute our duties as directors, we must look into and address any significant liability identified in a financial review.
Enforcement of the Fair Labor Standards Act is under the purview of the National Labor Relations Board (NLRB), which at any time can look into issues of noncompliance with the law. This would happen if there is a complaint, or if other similar businesses are found to have violated the law.
At least three other co-ops have had their volunteer programs investigated. One of them, La Montañita in New Mexico, was found to be in violation of the law in the 90s. We never know when a complaint could be raised by a disgruntled employee, customer, or volunteer.
What is the risk? Quantify the liability, if possible.
Violations of the Fair Labor Standards Act are punishable by fines imposed by the Department of Labor. In addition, if it is determined that volunteers are considered employees under the law, we would owe payroll taxes on wages that should have been paid to the volunteers. The liability represented as a line item in the financial review was about $45,000 for FY 2013–14. The estimate from the CPA for FY 2014–15 was about $60,000. Fines imposed by the Department of Labor cannot be easily estimated, and we would be liable for three years previous from the point of ceasing the program.
Why not just accept the risk?
The risk of enforcement of violations of the law is not something that can be accepted by a Board of Directors carrying out their duties to be responsible stewards of the business. Our bylaws state that our decisions comply with the law. In addition, we were advised by the CPA that for issues like this there could be personal liability for directors who do not act to address potential violations of federal law. We have director insurance, but it may not cover personal liability for issues such as this.
Have you received an opinion from a labor attorney who understands co-ops?
Yes. We engaged an attorney who focuses on food issues and who is familiar with how co-ops operate. There is nothing in the opinion that gets us out of addressing the current program in some way. The attorney advised that we not share the opinion in order to protect attorney-client privilege.
How have cooperatives in other states responded to potential liability under the Fair Labor Standards Act?
Most co-ops have discontinued working member programs for a variety of reasons, complying with the FLSA being one. Here are some ways that co-ops have kept working member programs: some pay minimum wage to working members; some send volunteers to area nonprofits and thus keep all volunteer hours outside of co-op operations; some have programs exactly like HPC’s; some offer discounts for volunteer hours and some don’t; some require member labor, offer no discount, and allow only members to shop at their store.
When will the board make a decision about the volunteer program?
The board will vote on changes to both the volunteer program and the discount structure at the April board meeting, 6:00–8:00 p.m. on the 26th of April, 2016. All members are always welcome to attend board meetings.