In a case that could have vast ramifications for the growing number of running races organized by for-profit companies, a judge has agreed to let a lawsuit go forward brought by a volunteer against the parent of the Rock ’n’ Roll series, demanding that she and others who work for free at the events be paid.

The lawsuit, filed in federal court in St. Louis against Competitor Group Inc., alleges that the company uses its partnerships with charities that provide volunteers as “a veneer for recruiting free labor” to operate water stops, escort runners, direct traffic, and do other jobs, in violation of the Fair Labor Standards Act, and contends that these thousands of workers must be paid at least minimum wage—$7.50 an hour in Missouri.

“We do not believe that the volunteers are working for the charities in any meaningful sense,” says Derek Brandt, one of the attorneys who brought the suit.

Then-Competitor Group CEO David Abeles said in a statement when the suit was filed that the charges were “completely baseless,” and that he expected the case to be resolved quickly. He said the company would not comment further while the action was pending.

But U.S. District Judge Ronnie White has now denied the company’s attempt to have the case dismissed, and set a preliminary hearing for this month to hammer out a schedule for the lawsuit to proceed. Competitor Group has asked that the scheduling hearing be postponed so it can have more time to prepare.

Lawyers who brought the suit say they hope to expand the case into a class action that could include all volunteers who worked at Competitor Group events since 2012, the year the named plaintiff, Yvette Liebesman, served as an unpaid bicycle escort in the St. Louis Rock ’n’ Roll Marathon.

If the suit succeeds, “it would have a significant effect on thousands of running events,” including community races organized by local running stores, says Phil Stewart, director of the nonprofit Cherry Blossom 10-miler and editor and publisher of Road Race Management. “It could fundamentally re-order the volunteer component of events.”

Stewart says the fact that such arrangements have been in place for years sets a precedent that may make it hard for the lawsuit to succeed. But labor lawyers and experts in philanthropy say the case could have at least a widespread impact on running companies’ public images and ability to recruit volunteers.

Assembled in 2007 by a venture capital company, Competitor Group runs the Rock 'n' Roll marathons, TriRock triathlons, and Muddy Buddy adventure series. Privately held—now by another venture capital company—it does not reveal its financial information, though founder and then-CEO Peter Englehart said in 2009 that he expected annual revenues to exceed $100 million within a few years.

Partner charities help recruit volunteers and solicit runners, who pay the regular race fees and are encouraged to raise money for the charities. The lawsuit does not name the charity that brought in Liebesman to volunteer. But the lawsuit says that, in order to be recognized as an official charity for the race, the nonprofit had to have at least 10 registered runners paying $165 each, bringing in $1,650 in revenue for Competitor Group.

In exchange, nonprofits could recruit, fundraise, and market themselves as official charities, were allowed to use the event logo, were linked from the race website, and could solicit pledges from runners, the lawsuit says.

Competitor Group says that, depending on the size of an event, it uses from 1,000 to 3,000 volunteers, and has had hundreds of thousands of them since it began organizing races. It also says that about 100 partner charities have raised $310 million through the Rock ’n’ Roll events since the series began in 1998, including St. Jude Children’s Research Hospital, the Leukemia & Lymphoma Society, and the Crohn’s and Colitis Foundation of America.

Other private companies also operate running races and triathlons that use volunteers, including Ironman parent World Triathlon Corporation and RunDisney. (Runner’s World has official charity partners for races it puts on, to which it recommends the runners contribute, but it recruits its volunteers directly.)

The charity connections may make volunteers and runners think events raise more money for good causes than they actually do, says Daniel Borochoff, president and founder of Charitywatch.

“I think the charities are getting used here,” Borochoff says.

He says for-profit companies working with charities to staff their events with volunteers is not much different from a hypothetical retailer giving money to a local charity in exchange for volunteers to work in its stores during the busy holiday season.

“The nonprofit is serving like a recruitment agency,” Borochoff says. “The lines are getting more and more blurred.”

The case would not affect nonprofit race organizers, Brandt says.

“Nonprofits are treated differently under the law,” he says. “As we allege, however, private sector for-profit race organizers cannot use a volunteer labor force.”

From unpaid interns to people who volunteer at events that profit private companies, uncompensated labor is coming under the regulatory spotlight, says Todd Newman, a labor lawyer and a partner at the firm Schwartz Hannum.

The U.S. Department of Labor has intervened four times over the last few years in questions about when and whether workers can go unpaid. One of its advisory opinions came after employees of a university agreed to volunteer at a road race on the campus; the department ruled that the employees could be asked to work for free only if they offered to participate without coercion, did so outside their normal working hours, and were not being asked to perform their regular work duties without pay.

There have been other issues involving volunteers at running events and triathlons. Some medical volunteers who previously worked without insurance coverage have forced for-profit race organizers to provide it, for example. A volunteer at the 2013 All-Star FanFest sued Major League Baseball for alleged unpaid wages; that case was dismissed last year because of an exemption in the Fair Labor Standards Act for “amusement or recreational establishment[s]” that operate for fewer than seven months a year, a category into which Major League Baseball argued its FanFest fell—and the same exemption on which Competitor Group based its motion to have the latest case dismissed.

In its motion, Competitor Group said Liebesman “does not allege that she was coerced to provide those services, that she expected to receive wages, that she expected to receive a paying job at CGI, or that she needed to volunteer in order to support herself.” It said no court has ever held that the law bans for-profit businesses “from engaging willing volunteers.”

Like Stewart, Newman says the lawsuit against Competitor Group is also likely to face high hurdles.

“It sounds to me like it might be a very creative argument by those volunteers that they ought to be paid, if they are going to a local charity with the intention from the very start that they are assisting the charity and they’re not entering into any employment relationship and have no expectation of being paid,” he says. “They may be facing an uphill climb.”

The case does raise thought-provoking questions, though, he says. And given the preponderance of for-profit companies now organizing events like these, “it seemed only a matter of time” before it would be brought.

“It’s an area where employers really need to tread carefully,” Newman says, “because the spotlight from the Department of Labor is on all sorts of volunteer arrangements. These are very new, interesting types of issues.”

Competitor Group has had disputes with its charity partners before. Last year it sued the American Cancer Society when the organization pulled out of a sponsorship agreement under which it paid fees in exchange for the chance to raise money at the Rock ’n’ Roll marathons in Chicago, New Orleans, and Seattle.

Competitor Group says the cancer society raised $5 million through the deal between 2010 and 2012. But the society says the arrangement cost it more than it took in.

Editor's note: An earlier version of this story identified David Abeles as CEO of Competitor Group. Abeles was CEO when the suit was filed in 2014, but is no longer CEO. In addition, a lawsuit filed by a volunteer against Major League Baseball was filed in 2013, not 2014. That suit was dismissed in 2014.

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