Imagine you own a boutique event venue. You host weddings, pop-up markets, community gatherings. It is a labor of love, and like most small businesses built on passion, it comes with a built-in support network. Friends who help set up on big event weekends. A regular who loves the place and jumps in to run the door. A family member who pours drinks at the bar when things get busy. Nobody asks for money. You cover dinner, gas, maybe a gift card. You call them volunteers, because that is what they feel like.

Now imagine one of them slips on a wet floor during setup and ends up in urgent care with a fractured wrist.

No workers' comp coverage in place. No premiums paid. And the moment the words "she volunteers here" reach the intake paperwork, a clock starts ticking on a compliance review that will cost far more than any dinner you ever bought.

This scenario plays out regularly for Washington state business owners who are doing exactly what they think is fine. The gap between what feels like volunteering and what the law recognizes as volunteering is wider than almost anyone expects, and it has a way of revealing itself at the worst possible moment.

The Washington state rule that surprises almost everyone

Here is the part most for-profit business owners have never heard, stated plainly on L&I's own website:

Washington state L&I: Official Guidance
"For-profit businesses are presumed not to have volunteers. Workers' compensation coverage is not available to volunteers of for-profit businesses unless the volunteer is a qualified student volunteer in a school-sponsored, unpaid work-based learning program."
Source: lni.wa.gov — Volunteers & Workers' Compensation

Read that again slowly. For-profit businesses are presumed not to have volunteers. Not "volunteers are discouraged." Not "volunteers require extra paperwork." The legal presumption in Washington state is that if someone is performing work that benefits your for-profit business, they are a covered worker. The burden falls on the business to prove otherwise, and that bar is genuinely high.

"For-profit businesses are presumed not to have volunteers. The burden is on the business to prove otherwise, and that bar is high."

Why "they were happy to help" is not a defense

It feels unfair because the intent was good. The people helping genuinely wanted to be there. No one was coerced. So why does the law treat them as employees?

Because the law is not about intent. It is about exposure. When someone performs work that benefits a for-profit business, they take on physical risk. They lift things, move through spaces with wet floors and sharp edges, operate equipment. If something goes wrong, they should not have to bear the full financial weight of that simply because the business owner used the word "volunteer."

Washington's workers' comp system exists precisely to close that gap. The question L&I asks is not "did they want to be paid?" It is "did they perform work that benefited a for-profit operation?" If the answer is yes, coverage is the expectation.

The limited exceptions for for-profit businesses

When a for-profit business may have a legitimate volunteer
  • Qualified student volunteers enrolled in a school-sponsored, unpaid work-based learning program, with school authorization on file.
  • In limited circumstances: both parties intended volunteer status in advance, the individual received no compensation or thing of value, and the work was genuinely outside normal business operations.
  • Meals and reimbursement for actual out-of-pocket expenses may be permitted, but any amount beyond actual costs may trigger covered worker status.

Notice what is not on that list. A friend who loves your business. A family member helping out. A loyal regular who offered. Someone who said they did not need to be paid. None of those are exemptions. They are simply descriptions of the people most likely to get hurt and most likely to be unprotected when it happens.

What the exposure actually looks like

When coverage is not in place and someone is injured, the financial picture gets complicated quickly. Under RCW 51.48.010, an employer who failed to secure workers' comp coverage faces:

50-100%
Of the full injury cost owed as a penalty on top of the claim
RCW 51.48.010
2x
Unpaid premiums or $1,000 minimum, whichever is greater
RCW 51.48.010
Personal
Liability for medical costs, lost wages, and more
RCW 51.48.010

In the scenario above, a fractured wrist is the entry point. Surgery, follow-up care, lost wages during recovery. Costs that workers' comp would have handled cleanly if coverage had been in place. Without it, the full weight of that claim lands on the business personally.

A note on federal law

FLSA & IRS: Federal exposure

Washington state L&I is the primary authority here, and the state rules are clear. But it is worth knowing that federal law stacks on top of them, not in place of them.

Under the Fair Labor Standards Act, the U.S. Department of Labor's position is unambiguous: individuals generally may not volunteer services to for-profit private sector businesses. The FLSA defines employment broadly, and private businesses that allow workers to put in unpaid hours open themselves to federal wage and hour complaints. Critically, a worker's agreement to volunteer is not a legal defense. Employees cannot waive their right to minimum wage and overtime, and the FLSA does not recognize that waiver even when it is in writing and mutually agreed upon.

If a misclassified "volunteer" is later determined to be an employee, the business may face:

  • FLSA back pay for all hours worked, calculated at minimum wage, plus overtime where applicable
  • Liquidated damages equal to the back pay amount as an additional federal penalty
  • DOL civil penalties up to $1,000 per FLSA violation
  • IRS assessment for unpaid payroll taxes, including the employer's share of Social Security and Medicare for every affected pay period
  • Penalties for failure to file W-2 forms and failure to withhold income taxes, plus accrued interest
  • Federal unemployment tax liability for the period of misclassification

These federal consequences run concurrently with Washington state's L&I exposure. A single uninsured "volunteer" who gets hurt on your premises can simultaneously trigger a workers' comp review, a federal wage and hour audit, and an IRS inquiry. When in doubt, consult a qualified tax advisor or employment attorney in addition to contacting L&I.

The harder truth about "helping"

There is a human dimension to this that compliance conversations often miss. The people who show up to help a for-profit business are almost always people who genuinely care. They are there because of loyalty, community, love of the place. That is a beautiful thing.

Which is exactly why leaving them unprotected is so serious when something goes wrong. They showed up because they trusted you. And if something happens on your watch without coverage in place, that trust does not soften the financial blow they are about to absorb.

Securing proper coverage is not a bureaucratic formality. It is honoring the relationship. It is being able to say: if you get hurt helping me build this thing, I have got you covered.

"It's not about whether they want to be paid. It's about whether they deserve to be protected."

What to do now

If people are regularly helping your for-profit business operate, whether it feels like volunteering or not, it is worth a clear-eyed look at how those relationships are structured. Reclassifying helpers as properly covered workers often costs far less than the exposure of a workers' comp claim, a state and federal wage audit, and an IRS inquiry landing at the same time.

L&I's Determinations Unit can help you evaluate your specific situation before it becomes a problem. Contact them at Determinations@Lni.wa.gov or call 360-902-6868. They would far rather help you get it right upfront than sort out problems after the fact. For questions about federal tax obligations, reach out to your tax advisor or the IRS directly.

Using volunteers, or people who feel like volunteers, to help run your for-profit business? It is worth a quick look before the wrong kind of event puts everything to the test.

Check my volunteer situation

Sources

This article is for informational purposes and reflects Washington state L&I compliance standards and applicable federal law. This is not legal or tax advice. Rules vary by circumstance and business type. When in doubt, consult a qualified HR or legal professional, or contact L&I directly.