CP# 2011-7154 Rallatos v. The ARC of Atlantic County
State of New Jersey
New Jersey Department of Labor & Workforce Development
Division of Workers' Compensation
Atlantic County C.P. 2011-7154
|The ARC of Atlantic County,|
B E F O R E : HONORABLE CARMINE J. TAGLIALATELLA
JUDGE OF COMPENSATION
A P P E A R A N C E S :
Lawrence A. Mintz, Esquire
Goldenber, Mackler, Sayegh, Mintz, et. al.
1030 Atlantic Avenue
Atlantic City, NJ 08401
Attorney for the Petitioner
Dorothy T. Daly, Esquire
Christie, Parabue, Mortenson & Young, P.C.
Sentry Office Plaza, Suite 703
216 Haddon Avenue
Westmont, NJ 08108
Attorney for Respondent
This matter comes before the court on the ARC of Atlantic County’s (hereinafter “Respondent”) motion to dismiss this claim as it argued that Vasiliki Rallatos’s (hereinafter “Petitioner”) activities on May 20, 2010 were not compensable under N.J.S.A. 34:15-7 et seq.. It is Respondent’s assertion that the Petitioner should be considered a volunteer and not an employee for the purposes of determining compensability. In opposition to the motion, Petitioner contends that a discount that was extended to her in connection with her activity for Respondent qualifies as sufficient financial consideration to meet the definition of “employee” under N.J.S.A. 34:15-36.
The parties have stipulated that Petitioner was on the premises of the Respondent on May 20, 2010. As to all other issues, Respondent has left Petitioner to her proofs. It was pointed out that Respondent did initially provide Petitioner with authorized medical care. However, it is clear that such care was offered without prejudice and Respondent has since disputed the foundational issue as to Petitioner’s status as an employee.
In order to frame the issue for the court, the parties were asked to submit briefs in support of their arguments. These letter briefs were reviewed prior to the taking of testimony regarding the facts of Petitioner’s association with Respondent. The parties produced the Petitioner as well as two lay witnesses for testimony on June 7, 2012. The only documentary evidence submitted was marked as R-1, “The ARC of Atlantic County Volunteer Application.”
The Petitioner testified that she was aware of the Respondent’s thrift store in Ventnor having shopped there for some time prior to her more formal association. She said that she purchased from there regularly before submitting the application to volunteer. Unfortunately, Petitioner had the time to volunteer because she had been laid off from work as a teacher. She spoke about having “time on [her] hands” while she was looking for work and collecting unemployment benefits. Petitioner discussed her previous experience with volunteering her time to other organizations. While in high school she did some volunteer work for the VA Hospital; she also volunteered her time at a library while living in Miami. She said that she believed it was a good thing to give her time to community organizations that she felt were important; and she did agree that the Respondent was such an organization.
During her direct examination, Petitioner explained about the fifty percent (50%) discount on all items in the thrift store offered to those who volunteered their time. She was told about the discount when she submitted her volunteer application (R-1 in evidence) and she testified that it was “a great incentive.” While she did admit that she would have “possibly” volunteered at the store without the discount, she noted that the discount helped her because she was unemployed.
The Respondent produced two witnesses: Lynn Lippert, Human Resources Director for the Respondent; and Phyllis Terlecky, the lead volunteer at the thrift store. Through their testimony the court learned that Respondent does not treat its volunteers in any way like it does its employees. There are no benefits to administer and no paperwork or reporting that deals with the volunteers; as such, Ms. Lippert had no contact with the Petitioner. On the other hand, Ms. Terlecky did have contact with her. It was her responsibility to make the schedule for the volunteers. This involved discerning when they could work and what times and shifts needed to be covered. Further, Ms. Terlecky testified that she had never been paid any wage as a volunteer, nor had any other volunteer; but she was aware of the discount. She referred to it as an “unwritten rule” that volunteers were to get a reduction on the price of goods at the thrift store.
The court found the testimony of all of the witnesses to be credible. In fact, their testimony was largely corroborative. It helped to get a sense of the “business” of the thrift store and its value for the Respondent. It is also clear that this operation could only work if there were volunteers and donors to allow it to remain viable.
Following testimony the court conducted a brief session of oral argument to help illuminate the meaning of “employee” in this context. Both attorneys braved the court’s questions surrounding the definitions and meanings of words and phrases such as “value”, “financial consideration”, “employee”, and “volunteer.” The interpretation of these words and phrases are at the heart of the case.
Any analysis under the Workers’ Compensation Act must begin with the statute. We start with N.J.S.A. 34:15-36 which defines an “employee” as “synonymous with servant, and includes all natural persons,…, who perform service for an employer for financial consideration,…”. While the legislature used the term “servant” which might indicate a very broad range of persons included in the definition, this is tempered by the requirement of “financial consideration” in order to establish the relationship. Clearly, the old notion of ‘master-servant’, while referenced, is not wholly applicable.
The definitional tension is illustrated in the cases that follow: In the case of Goff v. County of Union, 26 N.J. Misc. 135, 57 A.2d 480 (Dept. Labor 1948) the opinion clearly states that in order to create the employer-employee relationship, there must be service performed for financial consideration. Id. at 138. Mr. Goff was incarcerated in the Union County jail and while doing some painting he was injured. Goff consented to do the painting as it would mean that he could receive some extra food. To the court, the provision of the “extra” food was not sufficient consideration to create an employment relationship for compensation benefits.
However, “financial consideration” need not be in the form of a wage. The case of Britten v. Berger, 18 N.J. Misc. 215 (Dept. Labor 1925) is demonstrative. Mr. Britten agreed to provide janitorial services in exchange for a place to live without paying rent. This was sufficient financial consideration to create an employment contract for workers’ compensation benefits and Mr. Britten’s estate was awarded same. The case of Heget v. Christ Hospital, 26 N.J. Misc. 189 (Hudson County 1948) involves a student nurse who was injured. While the trial court dismissed the claim, it was reinstated by the county court with the judge holding that since there was “pecuniary gain” by the hospital and given that the hospital provided room and board to the student, there was ample financial consideration to award compensation benefits. Id. at 191.
Petitioner relies most heavily on the Appellate Court’s decision in Kraivanger v. Radburn Association, 335 N.J. Super. 169 (App. Div. 2000). Ms. Kraivanger (14 years old at the time of the accident) was engaged as a counselor-in-training, or CIT, for the Radburn Association. While she was not paid a regular wage for her work, she did receive compensation for one training day and she had to file an IRS W-4 form as well as an INS I-9 form and supply “working papers”; all forms were required by respondent. Also, there were “regular” counselors who were paid for their work and petitioner was hoping to be hired as one at a later time.
The court in Kraivanger found that there was some financial consideration that passed from respondent to petitioner. In making that finding the court noted the filing of IRS and INS documents as well as the one day of pay for the training session; this distinguished petitioner from a so-called “true volunteer.” The court went on to hold that employee status exists “if any financial consideration at all” is exchanged between the parties. Id. at 172. This would appear to be a very low standard for the establishment of employer-employee relationship in order to award workers’ compensation benefits.
However, there is still this notion of a “true volunteer” and how that might be defined. Respondent relies on Armitage v. Trustees of Mt. Fern M.E. Church, 37 N.J. Super. 367 (Morris County 1954) for an answer. Mr. Armitage was one of 28 trustees of the respondent and it was decided that they would build an addition to the church. Church members were solicited for subscriptions (in units of $120) to cover the costs and it was provided that any subscriber could perform labor at a rate of $1.50 per hour as a credit against their pledge. Petitioner subscribed for two units and while doing some carpentry work on the addition he suffered an injury. In affirming the decision of the bureau, the county court found that there was not an employer-employee relationship as petitioner’s work was “voluntary and he did not perform services for the church for financial consideration as contemplated by R.S. 34:15-36,…”. Id. at 370.
Respondent not only argues that Petitioner is a “true volunteer”, but that there was no consideration of gaining anything when she engaged in her work for the thrift store. Returning to the Petitioner’s testimony it is clear that she started the process with Respondent for altruistic reasons. She had shopped at the thrift store and was a supporter of the work Respondent was doing for its members and the community. She had a history of volunteering and had placed applications with several other charitable organizations. She was collecting unemployment benefits and had free time to donate. The thrift store was nearest to her home, so when they accepted her application she was happy to work there. The discount was a bonus and it did not appear to the court that she would not have taken the position if there was no discount. Her own testimony indicated that it was likely she would have volunteered without the discount.
Petitioner has argued under Kraivanger that the discount is of some value, both generally and specifically for herself; and it is this ‘value’ that is sufficient to form the basis of the financial consideration between the parties. While the court agrees with Petitioner’s argument that the discount has a value; all that is of value is not financial consideration.
Here we go back to the basic legal definition of consideration. Consideration is a benefit conferred as an inducement to a commitment. It can be commonly seen in the standard employment agreement whereby a worker works the job for which he is paid a wage by the employer. There are many other forms of consideration; far too numerous to list here. The question for this court is: Was the 50% discount afforded to Petitioner an inducement to get her to commit her time and services to Respondent? The answer: No.
The court is also mindful of the broader implications for charitable organizations as a result of this decision. Many of these groups rely on donations and volunteers in order to make ends meet and survive. Given the importance of their work to society, the court is careful to consider imposing any further burdens on such entities. While the instant matter was decided solely on the facts presented in light of the cases and the Act, the issues noted are not peripheral to those organizations that are trying to do good works for the poor and disabled.
Therefore, in light of the analysis and review of the statute as set forth above, the court finds that Petitioner was not an employee of Respondent as it is defined by Section 36 of the Workers’ Compensation Act and the cases cited. As such this claim petition shall be DISMISSED with prejudice. The Respondent shall prepare the proper form of Order for the court’s execution. There shall be a stenographic fee payable to Jersey Shore Reporting Services for the day of testimony in the amount of $150 by Respondent.
________________________________ June 28, 2012
HON. CARMINE J. TAGLIALATELLA, JWC
 The acronym “ARC” represents the “Association of Retarded Citizens” and while Respondent states that the full name is no longer used due to current word usage standards, its name is illustrative of it purpose and goals.
 In fact, even if Ms. Rallatos were a wage earning employee, the IRS would not consider the discount a taxable event. See generally I.R.C. Sec. 132(a)(2); Reg Sec. 1.132-1(a)(2) and I.R.C. Sec. 132(c)(3); Reg Sec. 1.132(b)(1).