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November 10, 1993


The opinion of the court was delivered by: CHARLES A. LEGGE


 This action is brought under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. Plaintiff alleges that he was an "employee" within the meaning of the FLSA during his tenure with the defendant Salvation Army, and that defendant did not pay him the minimum wage mandated by the FLSA. Defendant contends that plaintiff was not an "employee" of defendant under the FLSA, but was a beneficiary of its rehabilitation services.

 Defendant and plaintiff cross-moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The motions were briefed, argued and submitted for decision. *fn1" The court has reviewed the moving and opposing papers, the record and the applicable authorities. For the reasons set forth below, the court concludes that there are no genuine issues of material fact, and defendant's motion for summary judgment is granted and plaintiff's motion for summary judgment is denied.


 Plaintiff was admitted to the defendant Salvation Army's San Francisco Adult Rehabilitation Center for approximately six months in 1989 and 1990. The Salvation Army is an international nonprofit religious and charitable organization which operates 119 Adult Rehabilitation Centers in the United States. The centers are established to provide opportunities for rehabilitation to individuals through counselling, substance abuse education, religious services, and work therapy. The program is voluntary. Admittees to the program become temporary residents of a center and are clothed, fed, and sheltered for a period not usually exceeding 180 days. Persons in the program are called "beneficiaries."

 Beneficiaries receive, in addition to clothes, food, shelter and rehabilitation services, weekly payments for their work starting at $ 7 and increasing to no more than $ 20. The work therapy program is intended to improve the beneficiaries' work habits, develop skills, and build confidence and self-esteem. The work therapy includes sorting donated food, and restoring and sorting donated merchandise. The donated food is used to feed the hungry, including those staying at the Center. The merchandise is donated to the needy or sold by defendant at one of its thrift stores. The money derived from the sales is used to support the rehabilitation Centers and the Salvation Army's other charitable programs. The objective of defendant's activities is to provide rehabilitation benefits to persons such as plaintiff, not to earn a profit for defendant.

 When plaintiff entered the Center, he volunteered to participate in work therapy, counseling, and religious services. Plaintiff's work included refinishing furniture, working on the loading dock at the Center, and sorting donated food and clothing. The furniture and clothing were then placed in the Salvation Army's thrift stores for sale to the public.

 When he was enrolled in the rehabilitation program and was admitted to the Center, plaintiff filled out and signed a Beneficiary Application for Admission. In this form an applicant states who referred him to the Center, for what problems he seeks help, what type of work he prefers, and other matters. On his application plaintiff stated that he was seeking help for "drinking, religious, and employment" problems. Plaintiff also signed a Consent of Treatment, which is a consent to treatment and to sobriety checking. Plaintiff also signed a Beneficiary's Admittance Statement, which stated that those admitted to the program understand that they are "a beneficiary and not an employee of this Center". The nature of the rehabilitation program and the work therapy were explained to plaintiff by the intake counselor. Plaintiff was ultimately discharged from the Center because he resumed drinking.


 This is a case of first impression on the issue of whether a rehabilitation beneficiary, who does work for a charitable organization such as the Salvation Army while a resident of its facility, is entitled to minimum wage benefits under the FLSA. More precisely, the issue is whether a rehabilitation beneficiary such as plaintiff is an "employee" under the FLSA. *fn2"


 The FLSA defines an "employee" as "any individual employed by an employer." 29 U.S.C. § 203(e)(1). "Employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee. . . ." Id. § 203(d). "Employ" means "to suffer or permit to work." Id. § 203(g). The Act requires that minimum wages be paid to an employee who "is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production ...

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