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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Labor Talk Blog: What Makes a Volunteer? Sixth Circuit Clarifies Test for Determining Employment Status of Volunteers

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November 26, 2014

Volunteerism is good and should be encouraged by employers. However, with its use come concerns that the persons engaged in the labor may not actually be considered volunteers by the courts. This is particularly true in the Sixth Circuit, where the court of appeals has rejected the "threshold-remuneration test," an employer-friendly test that looks primarily and initially at whether there was any compensation or remuneration provided or intended for the work. The Sixth Circuit instead applies a balancing approach in which it considers all the common law of agency factors, raising questions as to how a court might "strike the balance." In light of this uncertainty, employers should consider the following:

  • Be careful when providing any benefits to volunteers, as such benefits show the persons are more akin to employees. If benefits can be characterized as "presently vested benefits with real financial value given as consideration for continued service," a court may find sufficient compensation for services giving rise to a finding of employment. If benefits will be provided, consider limiting them to only those that are accessible to the public generally.
  • Be wary of any "path to employment" concept. If "there is a sufficiently probable and clear path to employment from volunteer to paid position," this factor favors the finding of an employment relationship.
  • Never require volunteers to work a fixed schedule. Allow volunteers to maintain discretion over their own time.

A recent Sixth Circuit decision may also help remove some uncertainty. In Marie v. Am. Red Cross, 2014 U.S. App. LEXIS 21620 (6th Cir. 2014), two nuns (the "plaintiffs") volunteered for the Red Cross and the Ross County Emergency Management Agency. They later filed suit alleging, amongst other things, that the nonprofits had violated the law by terminating their working relationships on account of their religious beliefs. Applying the common law of agency, the lower court found the plaintiffs were not employees and thus could not pursue their discrimination claims. The plaintiffs appealed. On appeal, the Sixth Circuit again considered each of the common law of agency factors and affirmed the lower court.

Interestingly, the Sixth Circuit noted that no one factor should be given more weight, but then found it difficult to adhere to its own standard. The Court explained "[t]he economic reality is that when volunteers work without traditional forms of remuneration like salary and benefits, employers are generally without leverage to control that volunteer's performance." Id. at *29. And "control is 'the crux of Darden's common law agency test.'" Id. (quoting Weary v. Cochran, 377 F.3d 522, 525 (6th Cir. 2004)). In fact, "this Court has repeatedly held that the 'employer's ability to control job performance and the employment opportunities of the aggrieved individual' are the most important of the many factors to be considered." Id. at *26 (quoting Janette v. Am. Fid. Grp., Ltd., 298 F. App'x 467, 472 (6th Cir. 2008)) (emphasis added). Accordingly, the economic realities of the relationship "significantly undercut" the plaintiffs' claim that they were employees.

This is a significant holding for employers. Despite admonitions that each factor should be considered equally, clearly a lack of compensation will still weigh heavily against any finding of an employer-employee relationship, much like in the "threshold-remuneration test." Employers, especially nonprofit employers who often use volunteers, should remain mindful and take note of the suggestions above.

For more labor and employment information, visit www.BassBerryLaborTalk.com.


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