No, You May Not Pay Your Workers In Chicken Sandwiches…

By Fiona Ong - Shawe Rosental LLP

March 2, 2023

Or, really, in anything other than money. That was the lesson learned by a Chick-Fil-A franchise recently, 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 DOL got involved. So, as (most!) employers know, the Fair Labor Standards Act 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.” (That’s the DOL’s emphasis!)

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.

But I suppose one argument that could have been made is whether these folks were really “volunteers,” because they were being paid in meal vouchers. Interestingly, the FLSA states that: “’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” includes food, but also that “board” is in connection with “lodging.”) Of course, there are pretty strict rules around when this is permitted (and you can take a look at these details in a DOL Field Assistance Bulletin, if you’re really interested). 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 (remember that state and local minimum wage rates may be higher than the federal!). (And I’m going out on a limb here to predict that the actual cost of the Chick-Fil-A meals covered by the five vouchers per shift is likely well under the minimum wage). In addition, it would be important to ensure that state law also permits employers to credit the cost of board and lodging to the required wage. While state wage-hour laws generally mimic the FLSA, there can be significant differences or omissions – for example, Maryland has not adopted the highly compensated employee exception to the FLSA that was the subject of a recent U.S. Supreme Court case.

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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