Work exchange programs are a part of the culture at American yoga and dance studios. The idea is simple: clients who agree to volunteer at the studio a few hours a week get a reduced rate on their yoga or dance classes. And the appeal is obvious: the studio saves on labor costs, and the client saves on class fees.
The problem is that most so-called “work exchange” programs are illegal.
Since the passage of the Fair Labor Standards Act during the New Deal, the law in America has been very clear: a for-profit company has to pay at least the minimum wage to anyone it employs. And that minimum wage cannot be paid in-kind or through barter. Just like a coffee shop cannot pay its part-time baristas in lattes, a yoga studio cannot pay its part-time front desk workers in class credits. Under the Fair Labor Standards Act (with a small handful of exceptions) the one thing a for profit company must give, in exchange for work, is the minimum wage, paid in dollars.
So there is no such thing as volunteering for a for-profit company, even if it gives you free services in exchange.
A libertarian might say that this rule is just the government’s way of forcing people to pay taxes for being friendly with each other. By compelling a business like a yoga or dance studio to pay the minimum wage to a patron who would happily work for free, the government gets the opportunity to extract payroll taxes from a simple human transaction. A progressive might reply that every hour of labor that a business gets for free is one hour less of wages available to underprivileged Americans eager to find paid work. But whether the libertarian or the progressive is right, the Fair Labor Standards Act is the law: for-profit yoga and dance studios cannot accept volunteer help, and cannot reimburse their workers with anything less than the minimum wage.
If you are a yoga student and you volunteered for a studio, the lawyers at Granovsky & Sundaresh can help. Contact us today.
And if you own a yoga or dance studio and you have questions about how to structure your business to comply with federal and state minimum wage laws, our lawyers can help you, too.