The Legal Perils of Employing “Volunteers” in Your Start-Up Business

Written by Dan Dwyre
JD Candidate 2026 | UCalgary Law

Imagine you get an unusual text message from a casual acquaintance, who asks you to buy a lottery ticket for them: “I could do it myself, but I’m just too busy lately” they say, before adding “If the ticket wins, you might be in line for a share of it…maybe”.
 
Only the most selfless of us would be rushing out for a quick pick. Yet, many early-stage entrepreneurs rely on their extended network for “volunteer” coding, marketing, and design work. This practice can be a legal time bomb—exposing founders to claims for unpaid wages, unjust enrichment, and loss of intellectual property (“IP”).
 
The intellectual property risk
 
Imagine a coder and a graphic designer volunteer to spend a couple of hours per week with an early-stage start-up. The developer creates a customer facing app and the designer produces the company’s logo. These “volunteers” may now have a claim to some of the firm’s most visible assets.
 
Founders should know that inventions and creative works are generally presumed to be the property of the individual creators, meaning that they presumptively belong to the volunteers, even if made at the company’s request.[1]
 
Employment contracts and their ancillary documents typically deal with assignment of IP,[2] but such provisions are often omitted from volunteer agreements (if such agreement exists at all). While certain laws provide exceptions to the standard presumption of IP ownership, these typically apply only to creations made in the course of employment.[3] It would be legally awkward for a start-up to first claim that an individual was a volunteer, only to later argue in court that the individual was actually an illegally underpaid employee, producing IP as part of their job.
 
The minimum wage mandate
 
In Alberta, minimum employment standards are set out in the Employment Standards Code[4] and its associated regulation,[5] though other laws—such as the Workers’ Compensation Act[6]—also affect the relationship between an employer and employee.
 
Collectively, the Code and the Regulation impose numerous duties upon employers, including the obligation to pay employees a minimum wage and keep detailed records on the hours worked by an employee. Currently, employees must receive a minimum wage of at least $15.00 per hour.[7]
 
The Code and the Regulation offer a series of provisions that deal with how to calculate whether the employee is being paid the minimum wage. There are also a variety of rules and special exceptions that apply to certain industries or compensation structures, including commission-based employees, live-in care workers, and those working in remote areas for long periods of time—such as fire tower lookouts. Collectively, these exceptions are decidedly “last century” or “old economy” and don’t speak to the challenges facing start-ups.
 
Disguised Employment
 
But wait—we’re talking about volunteers, not employees, right?
 
The Code unhelpfully defines an employee as someone “employed to do work who receives or is entitled to wages” and doesn’t expressly contemplate volunteers or unpaid work at all.[8] While it might be argued that a true volunteer isn’t entitled to wages, courts have deemed “volunteer” relationships that bear hallmarks of employment as disguised employment.[9]
 
In the past, courts have looked to context and details to decide if someone is an employee. Volunteering for civic, charitable, or humanitarian reasons, on an unscheduled or irregularly scheduled basis, and performing tasks different than those of paid employee(s) will often qualify work as a true volunteer relationship.[10] The economic purpose behind the work of start-ups likely prevents classification of unpaid workers as volunteers.
 
There are exceptions for unpaid work done by students in Alberta; such work must occur as part of a formal training course, work experience program, or off-campus placement organized by an educational institution.[11]
 
Offers of equity
 
Some start-ups may offer volunteers small equity positions in exchange for work done, either initially (with a vesting provision, hopefully) or retroactively. This might be an equally fraught strategy should the value of the compensation be less than the required minimum and may be a violation of the Code’s requirement for earnings to be paid in Canadian currency;[12] it may also be seen by the courts as further evidence of a disguised employment relationship.
 
Returning to the lottery ticket analogy
 
There is surprisingly little reported case law in Canada arising from claims of former volunteers of start-ups over unpaid wages, unjust enrichment, or IP ownership. Perhaps these types of claims tend to settle out of court, or the contested amounts have—so far—not supported civil action.
 
Anecdotally, volunteers are heavily sought by early-stage start-ups and volunteers respond positively to these invitations, viewing their work as a favour or as an act of personal development. The opportunity to reap future benefit from a future liquidity event (like that winning lottery ticket) is often a minor consideration.
 
For start-up founders, the risks related to volunteer labour (if recognized at all) are seen at best as a necessary cost of doing business and at worst as yet another bridle on innovation.
 
A call for reform
 
It’s worth asking: what changes could be made to the Employment Standards Code and Regulation to recognize and accommodate the “volunteer labour” reality of Alberta start-ups?
 
Like the industry-specific recognitions made in the past for “old economy” employers and employees, can new exceptions be made that encourage modern industry while still protecting workers?
 
Perhaps the answer to this question will enhance Alberta’s reputation as a centre of business growth and innovation.


[1] Bryce C Tingle, Start-up and Growth Companies in Canada, 3rd ed (LexisNexis Canada Inc., 2018) at 136.

[2] Ibid, at 137.

[3] Ibid.

[4] Employment Standards Code, RSA 2000, c E-9 [Code].

[5] Employment Standards Regulation, Alta Reg 14/1997 [Regulation].  

[6] Workers Compensation Act, RSA 2000, c W-15.

[7] Regulation, supra note 5 at s 9(1)(iii).

[8] Code, supra note 4 at s 1(1)(k).

[9] Re Allado, [2021] ALRBD No 100 at para 120.

[10] Re Venables (c.o.b. Momentum Gymnastics), [2018] BCESTD No 11 at para 30.

[11] Regulation, supra note 5 at s 8(g).

[12] Code, supra note 4 at s 11(2).