8th Circuit rules rehab program participants aren’t employees

Minimum wage laws broadly define “employ” as “to suffer or permit to work.” Sometimes, however, being permitted to work doesn’t mean someone is an employee. A recent case from the U.S. 8th Circuit Court of Appeals illustrates one of these exceptions.

Background facts

DARP, Inc. is a non-profit drug and alcohol recovery program that serves people who can avoid imprisonment in a criminal case by agreeing to participate in its program. It is a residential program and provides its participants with room and board, clothing, and other necessities. There’s no charge to those who participate in the program.

DARP believes that developing a work ethic is central to its recovery program, and participants are required to work for local for-profit businesses as part of the program. DARP provides transportation to and from work but doesn’t compensate the participants for work performed while in the program. The local businesses also don’t pay the participants, but they do send DARP a predetermined amount of money for each hour worked by a program participant. This amount is generally 50% higher than what the minimum wage and overtime laws would require. These payments from local businesses are DARP's only source of revenue.

DARP participants filed a suit against DARP, Inc. and Hendren Plastics, Inc. They alleged that the companies failed to pay them the minimum wage required by the Arkansas Minimum Wage Act (AMWA).