Volunteers in CDBG-DR: Managing Labor Compliance

CDBG DR housing programs often work with other organizations to help repair or rebuild homes after a disaster. Some of those organizations are nonprofit or community groups which use volunteer labor for construction, reconstruction, or rehabilitation projects. This raises an important question: If volunteer labor is used on a CDBG-DR construction project, do federal labor standards such as the Davis-Bacon and Related Acts (DBRA) still apply?

The short answer is yes in many cases. Some volunteer labor may be exempt from DBRA wage requirements, but only in certain situations. Simply having volunteers does not automatically exclude the project from labor compliance review. Grantees still need to:

1. Decide whether the project falls under DBRA.
2. Confirm that each person meets HUD’s definition of a volunteer.
3. Maintain documentation supporting that determination.

Does the project fall under DBRA?

Before looking at individual volunteers, start by determining if the housing project is subject to DBRA at all.

DBRA generally applies to projects where CDBG-DR funds cover some or all of construction contracts over $2,000. For housing projects, DBRA applies only if the property has eight or more units. 

As a result, many single-family homeowner rehabilitation or reconstruction projects may fall outside DBRA requirements altogether. However, if the project does meet the DBRA threshold, such as larger multifamily rehabilitation, grantees need to look at the individuals on the project to see if each person qualifies as a volunteer. 

Do the individuals meet HUD’s definition of a volunteer?

HUD defines volunteer labor in a very specific way. Under 24 CFR Part 70.3, a volunteer is “an individual who performs services for a public or private entity for civic, charitable, or humanitarian reasons, without promise, expectation, or receipt of compensation, on a HUD-assisted or insured project which is subject to a requirement to pay prevailing wage rates . . .  the services must be offered freely and without direct or implied pressure or coercion from an employer,” and “an individual cannot be treated as a volunteer if that individual is otherwise employed at any time in the construction or maintenance work for which the individual volunteers.”

It is not enough for an organization to label workers as volunteers. The grantee should be able to document that the individual:

• Is providing services freely without pressure, and
• Does not hold a paid role in the same type of construction or maintenance work.

Payment and Support for Volunteers

Even if individuals meet the definition of volunteer, can they still receive any form of payment or support? HUD recognizes there are instances where volunteers may receive expense reimbursements, reasonable benefits, or nominal fees while still qualifying as a volunteer. However, these payments need to be reviewed carefully. 

For example, if an organization provides volunteers with mileage reimbursement, meals, uniforms, or other limited support, the grantee should evaluate whether those items are consistent with 24 CFR Part 70.3 (b).  HUD states that these types of payments may be allowed, but only after reviewing the total amount and considering the overall circumstances.

If the organization provides stipends, recurring allowances, gift cards, per-unit payments, or any other payment that could resemble compensation, the grantee should take a more cautious approach and consider seeking HUD for   a formal determination.

Payments should not function like wages or be tied to productivity. The closer a payment looks like compensation, the harder it will be to defend the individual’s status as a qualified volunteer.

Sweat Equity

In some nonprofit housing programs, future homeowners contribute a required number of labor hours toward the construction of their own home or another family’s home as a condition of program participation. This is often referred to as sweat equity.

Sweat equity is different from volunteer labor because the individual is required to perform work as a condition of receiving assistance. Since the individual is receiving something of value, it does not meet HUD’s definition of a volunteer.

In these situations, the work is more likely to be treated as paid labor, and prevailing wage rules may apply. As always, grantees should review how the program is set up and document their decision.

Projects with Both Paid Labor and Volunteer Labor

Many projects include both paid workers and volunteers. For example, a nonprofit organization may use licensed contractors for specialized trades while volunteers perform general construction support. 

If the project falls under DBRA, paid workers remain subject to applicable labor standards requirements. Grantees will still need to ensure proper wage determinations, labor standards clauses, contractor eligibility checks, certified payroll review, worker interviews, and other required compliance steps.

At the same time, grantees should document the volunteers separately. Part 70.4 (d) and (e)  require documentation for projects performed entirely by volunteers and for projects that include a mix of paid workers and volunteers. For mixed projects, the grantees must document and provide HUD with the name and address of the agency sponsoring the project, a description of the project, names of the volunteers, number of volunteers, and hours worked.

In practice, this means the grantee should maintain two sets of records: one for covered paid workers and one supporting the volunteer exemption.

Incorporate Compliance into Program Design Early

For programs that have volunteers, grantees should address these requirements in the program’s written policies, subrecipient agreements, and project-level review process. At a minimum, the program should be able to answer the following questions before construction begins:

• Is the project subject to DBRA based on the funding source, construction scope, contract amount, and residential unit threshold?
• Which entity is providing or coordinating the volunteer labor?
• What specific work will volunteers perform?
• Are any paid contractors or subcontractors also working on the project?
• Are any volunteers also employed by the grantee, subrecipient, contractor, subcontractor, or organization in the same construction or maintenance work?
• Will volunteers receive any expenses, benefits, stipends, allowances, gift cards, or other payments?
• If payments are provided, has the grantee obtained the appropriate HUD determination or guidance?
• Is any labor being provided through a sweat equity model or as a condition of receiving assistance?
• What records will be maintained to document volunteer names, hours, work performed, project description, and the basis for treating the individuals as qualified volunteers?

Addressing these questions before work begins can help avoid issues later in monitoring review or audit. 

Common Areas of Risk

Volunteer labor can provide meaningful support to disaster recovery housing programs, but it can also create compliance risk if not managed carefully. Common risk areas include:

• Treating all nonprofit-provided labor as volunteer labor without reviewing individual worker status.
• Assuming that volunteer involvement makes the entire project exempt from DBRA.
• Failing  to differentiate between qualified volunteers and sweat equity participants.
• Allowing stipends or other payments without a HUD determination on whether they classify as compensation .
• Using volunteers and paid workers side by side without maintaining separate documentation.
• Omitting volunteer records from the project file because no certified payroll is required for volunteers.
• Failing to include labor standards requirements in contracts where paid covered work is also being performed.

For CDBG-DR housing programs, volunteer labor should be treated as a compliance issue that requires both project-level and worker-level review. Qualified volunteers may be exempt from DBRA requirements, but that exemption is narrow and depends on careful analysis.