Excerpted from a Shawe Rosenthal LLP Blog by Fiona Ong
No, you may not pay your workers in chicken sandwiches or, really, in anything other than money. That was the lesson learned by a Chick-Fil-A franchise, as the U.S. Department of Labor recently announced.
According to a CBS news story, the franchise posted on its Facebook page: “We are looking for volunteers for our new Drive Thru Express!… Earn 5 free entrees per shift.”
When someone (correctly) pointed out that this was “unacceptable,” the franchise then responded, “We’ve had multiple people sign up and enjoy doing and have done it multiple times. People who sign up for this chose it voluntarily.”
The franchise also described the drive-thru job “simply for those who want to earn some free Chick-fil-A.” I’m sure the franchise management was pretty pleased with itself for coming up with this creative, low-cost way of cutting down on labor costs.
But it’s no wonder the U.S. Department of Labor (DOL) got involved. So, as most employers know, the Fair Labor Standards Act (FLSA) and state laws require employees to be paid at least minimum wage for all hours worked. And (here’s the part that this franchise missed), as the DOL states in their elaws Advisor on the FLSA, “Under the FLSA, employees may not volunteer services to for-profit private sector employers.”
Now, individuals can volunteer their services “for public service, religious or humanitarian objectives” to non-profit organizations. But even that has some rules – employees of public sector, non-profit employers may not volunteer additional time doing the same work for which they are paid.
Interestingly, the FLSA states: “’Wage paid to any employee includes the reasonable cost, as determined by the Administrator, to the employer of furnishing such employee with board, lodging, or other facilities, if such board, lodging, or other facilities are customarily furnished by such employer to his employees.”
Traditionally, “board” also includes food. Of course, there are pretty strict rules when this is permitted. Moreover, the “reasonable cost” means “not more than the actual cost to the employer,” which is likely pretty low for a chicken sandwich.
Of course, even if permitted, the reasonable cost of such board or lodging must meet or exceed the minimum wage. And I’m going out on a limb here to predict the actual cost of the Chick-Fil-A meals covered by the five vouchers per shift is likely well under the minimum wage.
And although I adore fried chicken sandwiches, I would be more than irked if my firm chose to pay me that way. Legal tender, not chicken tenders.
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