Can Volunteers Be Paid? Stipends, Expenses, and Taxes

Yes, volunteers can be paid in limited ways. Federal law lets public agencies and nonprofits reimburse volunteers for expenses, offer reasonable benefits, and pay a nominal fee without turning them into employees. For-profit businesses are a different matter: they generally cannot accept volunteer labor at all. The question of whether volunteers can be paid really comes down to who the organization is, how much the payment is, and what form it takes.

Reimbursing Actual Expenses

Paying a volunteer back for out-of-pocket costs is the safest form of payment. Mileage, supplies, required uniforms, and similar documented expenses can all be reimbursed without creating an employment relationship. Federal regulators treat these payments as returning the volunteer’s own money rather than compensating them for work.

The key is that the reimbursement has to match what the volunteer actually spent. Receipts, mileage logs, or comparable records need to back up the amount paid. When the payment exceeds documented costs, the excess starts to look like wages. An organization that hands a volunteer $200 for “supplies” against $50 in receipts has effectively paid $150 in compensation, and that gap can trigger reclassification.

For driving on behalf of a charity, the IRS sets a fixed charitable mileage rate. For 2026, that rate is 14 cents per mile.¹ Unlike the business mileage rate, this figure is set by statute and doesn’t move with gas prices. Organizations can reimburse at that rate or at actual cost, and reimbursements paid to nonprofit volunteers are specifically excluded from 1099-NEC reporting.²

Nominal Fees and Stipends

Beyond reimbursement, organizations can pay volunteers a small token amount without converting them into employees. The catch is that the payment must stay nominal. The Department of Labor uses a 20% benchmark: if the fee doesn’t exceed 20% of what the agency would pay a full-time employee for the same work, the Department presumes it’s nominal.³ The comparison uses prevailing wages for similar responsibilities in the same geographic area. A volunteer firefighter in a city that pays full-time firefighters $50,000 could receive up to roughly $10,000 in annual fees and stay inside the safe harbor.

The 20% figure comes from DOL opinion letters about public agency volunteers, particularly coaches, extracurricular advisors, and firefighters. It’s the Department’s working interpretation of the regulations, not a bright-line rule written into the statute. Once a fee climbs above that threshold, the Department is far more likely to conclude the person is actually an employee entitled to minimum wage and overtime.³

A few structural rules keep nominal fees from sliding into wages:

The fee cannot be tied to productivity or output. A flat monthly amount is fine; a per-unit bonus is not.⁴
Regular schedules are allowed. A volunteer providing year-round periodic services can receive a monthly or annual stipend without losing volunteer status.⁴
Per-call payments are permissible. Volunteer firefighters, for instance, can receive a nominal amount each time they respond.⁴

When disputes arise, courts and regulators look past the label on the arrangement and apply an economic reality test. If the payments and control look more like someone earning a living than someone donating time, the person is an employee no matter what the paperwork says.

Benefits Volunteers Can Receive

Public agencies can include volunteers in group insurance plans, covering health, life, disability, and workers’ compensation, and can also offer pension benefits or length-of-service awards. These benefits are allowed as long as they are of the type commonly provided to volunteers of government agencies.⁵ These are treated as reasonable benefits, not compensation, and don’t count against the nominal fee threshold.

For-Profit Businesses Cannot Use Volunteers

The Fair Labor Standards Act draws a hard line at the commercial sector. Work performed for a for-profit business is presumed to be employment that requires at least the federal minimum wage. A company cannot accept volunteer labor even when the person genuinely wants to donate their time for experience or personal reasons. The exemptions that cover public agencies and nonprofits don’t extend to commercial enterprises.⁶

Nonprofits aren’t fully insulated either. When a nonprofit runs a commercial operation, such as a gift shop, a fee-based clinic, or a catering business, the people working in that commercial activity are covered by the FLSA the same way any for-profit worker would be.⁶ A volunteer shelving donated books for a thrift store’s charitable mission is on solid ground. A volunteer running the register at the same organization’s for-profit retail arm may not be.

Limits When Public Employees Volunteer for Their Own Agency

Public employees face a specific restriction: they cannot volunteer to perform the same type of services they’re already paid to do for the same agency.⁷ “Same type of services” means work similar or identical to the employee’s paid duties. A city nurse cannot volunteer nursing services at a health clinic run by the same city.⁸

The rule exists to stop agencies from pressuring employees into unpaid overtime. Public employees can still volunteer for a different type of work within the same agency. A police officer could volunteer as a youth basketball coach for the city’s parks department, because coaching isn’t the same service as law enforcement. The Department of Labor evaluates these situations case by case, looking at actual duties rather than job titles.⁸

The regulations also require that a public agency volunteer offer their time freely, without any pressure or coercion from the agency.⁹

How Volunteer Payments Are Taxed

Expense reimbursements that match documented costs are excluded from gross income and don’t need to be reported on tax forms. The IRS instructions specifically exclude expense reimbursements paid to nonprofit volunteers from 1099-NEC reporting.²

Stipends and nominal fees work differently. These payments are taxable income to the volunteer. When the total reaches $600 or more in a calendar year, the organization must file a Form 1099-NEC reporting the payments to the IRS.² The tax owed depends on the volunteer’s overall income and filing status, like any other non-employee compensation.

Amounts below $600 are still taxable to the volunteer. The $600 figure is a reporting threshold for the organization, not an exemption from tax. A volunteer who receives $400 in stipends owes income tax on that amount when filing, even though the organization isn’t required to send a 1099.

What Happens If the Line Gets Crossed

Misclassifying someone as a volunteer when they should be an employee is expensive. The organization owes back wages for all unpaid hours, plus an equal amount in liquidated damages, which effectively doubles the bill. An employee suing privately can also recover attorney’s fees and court costs.¹⁰

The statute of limitations runs two years from the violation, extending to three years if the violation was willful.¹⁰ For an organization that has been misclassifying volunteers for years, that accumulated liability adds up quickly.

The Department of Labor can also impose civil fines for willful or repeated minimum wage and overtime violations, and those amounts are adjusted for inflation each year.¹¹ Willful violations can lead to criminal prosecution, with fines up to $10,000 and up to six months in prison for a second offense.¹² Criminal charges are rare, but the combination of doubled back wages, civil penalties, and legal fees makes misclassification one of the more costly compliance mistakes a nonprofit or public agency can make.

Before setting up any payment structure for volunteers, an organization should map its plan against three questions: Is this reimbursement backed by documented cost? Is any stipend well under 20% of a paid employee’s compensation for equivalent work? And is the volunteer doing work that a paid employee at the same organization isn’t already doing? Payment arrangements that answer yes to all three tend to stay on the right side of the line.

1
Internal Revenue Service. Notice 2026-10 – Standard Mileage Rates
2
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
3
U.S. Department of Labor. FLSA2007-3NA – Opinion Letter on Nominal Fees
4
eCFR. 29 CFR 553.106 – Payment of Expenses, Benefits, or Fees
5
eCFR. 29 CFR Part 553, Subpart B – Volunteers
6
U.S. Department of Labor. Fact Sheet 14A – Non-Profit Organizations and the Fair Labor Standards Act
7
Office of the Law Revision Counsel. 29 USC 203 – Definitions
8
eCFR. 29 CFR 553.103 – Same Type of Services Defined
9
eCFR. 29 CFR 553.101 – Volunteer Defined
10
U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act
11
U.S. Department of Labor. eLaws – Fair Labor Standards Act Advisor – Enforcement
12
Office of the Law Revision Counsel. 29 USC 216 – Penalties