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Wisconsin District Court Holds Volunteer who Helped Set up Defendants’ Business Should Be Reclassified as an Employee

A Wisconsin District Court has held that a volunteer, Catherine Okoro, who helped set up a defendant’s business, Pyramid 4 Aegis (Aegis), was in actuality an employee and thus covered by the provisions of the Fair Labors Standards Act (FLSA). Okoro v. Pyramid 4 Aegis, Dist. Court, ED Wisconsin 2012.

The plaintiff and defendant agreed on these facts: Okoro was an insurance agent who sold workers’ compensation insurance to Battles, for the business he was setting up, Aegis. Afterwards Okoro performed a variety of tasks for Battle, including cleaning the office, making purchases, setting up the payroll, and other administrative duties. Whenever Okoro worked, she noted the time that she started work, the time that she stopped working, and kept track of the total hours that she worked. Okoro recorded her time on a time sheet that she created for Aegis.

According to Okoro, she never agreed to volunteer for Aegis; at all times, she expected to be compensated for her work. Specifically, Okoro expected to be paid $2,000 per month for her work, but agreed to defer her compensation until Aegis built up a paying clientele.

Battles admitted Okoro was to be compensated if she qualified as an administrator and if the business had enough money in the future. Battles further stated that when Okoro sold him worker’s compensation insurance for Aegis, she told him “that she wanted to learn the group home business and therefore, she would learn the business by working at Aegis for no compensation.” Finally, Battles said he never saw a time sheet until the litigation started, and neither approved nor signed any time sheet submitted by Okoro.

Okoro and Battles also agreed that they began a romantic relationship after Okoro began working for Aegis, and Okoro filed the lawsuit after they broke up.

In determining whether someone is an employer or a volunteer, the District Court noted that the FLSA had no specific test. Therefore the test for employment was governed by a reasonableness standard that takes into account the totality of the circumstances; and in applying the reasonableness standard, a court must review ” ‘the objective facts surrounding the services performed to determine whether the totality of the circumstances’ establish volunteer status, … or whether, instead, the facts and circumstances, objectively viewed, are rationally indicative of employee status.” Purdham, 637 F.3d at 428 (quoting Cleveland v. City of Elmendorf, 388 F.3d 522, 528 (5th Cir.2004)). In addition a court should consider whether the objective facts supported an expectation or contemplation of compensation, whether the employer received an immediate advantage from any work done by the individual, the relationship of the parties, and the goals of the FLSA. See Alamo Found., 471 U.S. at 300-01; Rutherford Ford Corp. v. McComb, 331 U.S. 722, 730 (1947)

The District Court found that Okoro performed substantial work for Aegis, Aegis reaped a direct and immediate benefit from her work, and she had a reasonable expectation that she would be compensated for her work. Furthermore, the FLSA’s purpose is “remedial and humanitarian” and is to be interpreted broadly.
The District Court held Okoro performed work for Aegis as an employee and not as a volunteer.

The Las Vegas law office of Lagomarsino Law did not represent anyone involved in any cases that may be referenced above. This commentary is for educational purposes. If you would like to be represented by an attorney in our Las Vegas office, contact our office for a free confidential case review and receive a response within 24 hours. Call Toll Free 866-414-0400.