Relationship between nonprofit volunteers and for-profit companies raises questions

Companies that profit from nonprofit concessions labor raise serious questions, lawyers say.
Published December 20 2014
Updated December 21 2014

TAMPA — Julio Alvarez Jr. has worked concessions at Tampa Bay Buccaneers games since 2004.

The retired Army lieutenant colonel and father of two has sold food and managed beer stands, work that generated thousands of dollars for two multibillion-dollar food service companies — first Levy Restaurants, now Aramark.

But there's one thing Alvarez, 55, has never done in his years working at Raymond James Stadium: earn a paycheck.

Alvarez leads a crew that volunteers at Bucs games to raise money for the Knights of Columbus Council 14084 in Valrico. He and his men are part of a massive volunteer workforce, locally and across the nation, that sell food and drinks for concessions companies in exchange for donations to their nonprofits.

Until recently, that workforce included New Beginnings of Tampa, one of the city's largest charities for the homeless. The week after a Tampa Bay Times story detailed New Beginnings' controversial "work therapy" program, which puts homeless men to work in exchange for shelter and food, both Aramark and Tampa Bay Rays concessions company Centerplate canceled their contracts with the charity.

That reaction has drawn attention to the little-known but widespread use of volunteers in the concessions industry. Aramark and Centerplate, which both declined to comment for this report, portray the practice as philanthropic.

On its website, Aramark says its nonprofit fundraising program "is a dependable source of income and has supported churches, youth sports, food banks . . . and civic groups.''

Labor lawyers say such fundraising arrangements raise serious questions.

What companies call charity, lawyers said, almost certainly helps profits. Rather than paying employees minimum wage and associated labor costs and taxes, concessions companies get volunteers to work for commission-based payments to their nonprofit, usually between 6 and 10 percent of sales. Concessions companies may even get a tax deduction on their volunteer workers.

"That's incredible," said Catherine Ruckelshaus, general counsel for the National Employment Law Project, a labor advocacy group. "If they're for-profit, they can't outsource their workers to a nonprofit and thereby shield themselves from their responsibilities under the Fair Labor Standards Act."

To volunteers like Alvarez, the games provide an irreplaceable fundraising source. The Knights of Columbus made $21,000 from events last year, he said.

"It'd take a lot of pancake breakfasts to be able to come up with anything close," he said.

Labor lawyers contacted for this article all issued the same caveat: Large companies like Aramark and Centerplate pay their own lawyers a lot of money to ensure federal labor law isn't violated.

Still, lawyers expressed surprise when told how heavily concessions companies rely on volunteers. In one online advertisement in New Orleans, for example, Centerplate stated volunteers staff 95 percent of its stands at New Orleans Saints games.

"If you're a for-profit company, it's very difficult for you to use unpaid volunteer labor," Ruckelshaus said. "You don't want to turn off the spigot of contributions to these nonprofits . . . but you can't do it on the backs of workers."

Ryan Morgan, co-chairman of Morgan & Morgan law firm's employment department, agreed.

"If you have the same 100 people at the Bucs game doing it every week for the season, that starts to make my radar go off,'' Morgan said. "I have a hard time saying that's okay."

Federal labor law is complex, experts said, and concluding whether a company is in violation can be difficult. The Fair Labor Standards Act, which ensures federal minimum wage of at least $7.25 an hour for employees, does have broad exemptions for nonprofits.

But these contractual arrangements — where volunteers work on behalf of nonprofits such as church groups or high school bands, but do work that generates income for for-profit companies — fall into a gray area, experts said.

Aramark and Centerplate declined to release copies of their contracts with nonprofits. But a volunteer for a local nonprofit (not Alvarez) provided a copy of an Aramark contract to the Tampa Bay Times.

The contract, which covered July 2014 to June 2015, required nonprofits to work at least five events from a list including Buccaneers games, University of South Florida football games, the Outback Bowl, a One Direction concert, and Monster Jams I and II.

The contract makes it clear no volunteer should expect to get paid.

"All volunteers engaged in the Concessions Operations on Group's behalf shall not, under any circumstances, be deemed to be employees of Aramark, and Group shall so advise each volunteer in writing in advance," it states. "Aramark shall not be required to pay any wages, nor extend any benefits, to such volunteers."

In exchange for the labor, Aramark pays nonprofits 10 percent of food and nonalcoholic beverage sales and 6 percent of alcoholic beverage sales, with a minimum payment of $40 to $85 per volunteer, depending on the type of concessions stand. (Alcoholic drink stands workers get $40 minimums; club-level food stand workers get $85 minimums.)

Aramark subtracts sales taxes and any transaction costs for debit or credit card payments before calculating the money that goes to nonprofits.

Alvarez and his fellow Knights of Columbus members — he usually brings about 15 — have earned as much as $1,500 for a game, Alvarez said, and as little as $600. Their $21,000 in 2013 was high, he said. The Knights usually make $11,000 to $16,000 per year.

Nonprofits can make more money each year at Tampa Bay Rays games, thanks to baseball's long season. Becky Schafer, former fundraising coordinator for the Seminole High School Band Boosters, said her group usually makes between $90,000 and $110,000 per year staffing a stand on the third-base side of Tropicana Field for all 81 Rays home games.

The Seminole boosters need nearly $500,000 annually to cover band costs, Schafer said, so Rays games are vital.

"If we didn't have the Trop, our band program would really suffer," she said. "It's our most lucrative fundraiser."

While volunteers may not have a problem with their arrangements with Aramark and Centerplate, the Fair Labor Standards Act doesn't just protect employees from unfair labor practices. The law also protects competing companies.

But in the concessions industry, it's hard to find a company to complain about the use of volunteers. Aramark, which claimed $13.5 billion in revenues in 2012, and Centerplate are two of the world's largest. Delaware North, which runs concessions for the Tampa Bay Lightning, also uses volunteers. So does Levy Restaurants, which worked Raymond James before Aramark took over in 2013.

It is not unprecedented for a long-running and widely accepted use of free labor to suddenly spark controversy and legal action. The entertainment and magazine publishing industries used unpaid interns for years, but recent lawsuits have curtailed the practice. In October, NBCUniversal settled a class-action lawsuit filed by thousands of former interns for $6.4 million. In November, Conde Nast settled a similar case for $5.8 million.

Federal labor officials have expressed frustration that violations like the ones that prompted those settlements are common, but legal action is still rare. One reason: Unpaid interns are reluctant to complain to the Department of Labor, or sue prospective employers for a few months of back wages.

Similarly, concessions volunteers have little motivation to cause trouble for companies that send thousands to their nonprofits.

"No one's complaining," Ruckelshaus said. "So it doesn't surprise me there hasn't been enforcement. But that doesn't mean it's legal."

Contact Will Hobson at [email protected] or (813) 226-3400. Follow @TheWillHobson.

   
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