The answer would appear to be yes, it's in violation, according to the logic the state has published. I found a five-page 2009 guidance letter about volunteers and interns, which shows how individual situations should be analyzed, in some detail.

The specific situation that the guidance letter focused on is an assisted living facility, where

The purported volunteers perform a number of activities including, by way of example, leading religious services, leading an Alzheimer's support group, providing musical entertainment, taking residents on walks, tending to caged birds and running bingo games.

After a careful analysis, counsel for the New York State Department of Labor concludes:

The employer's failure to pay such volunteers is in violation of the New York State Labor Law. The Legislature limited the use of volunteers to entities "organized and operated exclusively for religious, charitable or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual."

I've been thinking about this. On the one hand, I personally see SE as operating for educational purposes. But on the other hand, it's not exclusively educational. The net earnings do inure to the benefit of private shareholders, apparently.

I'm thinking the place to ask about this might be the New York Regional Solicitor's Office.

Update: I've found something that points in the opposite direction, please see my alternative answer.

There is a strong case to be made that the answer is yes.

Five Factors

New York law uses five factors to determine if someone is an employee:

1. the degree of control exercised by the employer over the workers
2. the workers' opportunity for profit or loss and their investment in the business
3. the degree of skill and independent initiative required to perform the work
4. the permanence or duration of the working relationship
5. the extent to which the work is an integral part of the employer's business.

The objective is to determine "whether, as a matter of economic reality, the workers depend upon someone else's business for the opportunity to render service or are in business for themselves."¹ Not all factors have to be satisfied in order for the worker to be considered an employee.

Degree of Control Exercised

SE has numerous policies moderators are expected to follow, and SE can and has removed moderators that do not follow these policies. Inactive moderators are demoted.

Profit, Loss, and Investment

Moderators are not paid, but SE profits from their work. Investments made by moderators in order to moderate are de minimis.

Skill and Independent Initiative

Moderation is a skill, but moderators are limited to specific sites and their work is directed via queues.

Permanence of Relationship

Moderatorship is for indefinite duration, sometimes described as "for life".

Integral Part of Business

SE depends on moderators for answer quality.

Applicability of Minimum Wage

LAB § 652 applies to "any individual employed or permitted to work by an employer in any occupation"², where occupation is defined as "an industry, trade, business or class of work in which employees are gainfully employed." Since paid moderators exist, moderation is an occupation for the purposes of the minimum wage.

1: Brock v. Superior Care, Inc., 840 F.2d at 1059.
2: With millions of inapplicable exceptions. Note that a nonprofit educational organization is one of those exceptions, but SE is not nonprofit.

IANAL. I don't work here.

I am a moderator, and stuff like this scares me.

Now, I love the enthusiasm here, but pretty much, if mods were counted as volunteers and had to be paid... we probably would be burning off money I'd rather see on development of the network and better formal community resources.

We've had discussions over whether mods should be paid before. We don't really want it. Sure we want a certain level of fair protection, but for most of us, it is far more important that the company pay attention, and expend resources for things like more community management, and development, social, design and code.

SE has a total of about 300 employees. There's about twice as many mods.

Many of those mods probably wouldn't leave their current employment, and hiring all of us puts a certain pressure on us to perform. I just took a break because I needed a break. It was indefinite, and I came back because I felt it was needed.

So, for most part I suspect this would likely simply end up ripping out most of our formal moderation capability. It's simpler for SE to close down a bunch of sites than even pay 500 people across at least a dozen countries, in terms of both paperwork and actual finances, even if it was a minimum wage.

It might also affect a broad swathe of the tech industry.

And honestly? I don't even see how this would make things better for any of us. It would probably kill off the network, not get justice for anyone, and probably bankrupt SE so badly someone would buy it for pennies.

So essentially... hell no, and what are you trying to do?

No, no, no, no, no, no, no, hell no, NO! NO!

I do not work here, I do not want to work here and if I were to be offered money I would run away. I have absolutely no desire and no interest to enter a financial agreement with Stack Exchange. As far as I'm concerned, I answer to the communities that elected me, not to the company that happens to be running the software those communities use.

SE provides a free platform and I use that platform. If mods are going to be considered employees, why stop there? Everyone involved in an SE community, each one of the several million users is here contributing content and/or moderation for free. Are we going to call all of them employees? There's not a huge difference between users with diamonds and users without. We're all here for the questions and answers. Are you going to call all of these millions employees now?

Most importantly, I categorically do not want that kind of relationship with SE. Not only because I wouldn't want to work for a company that has shown itself to be as morally bankrupt as SE (I don't even know if I want to remain a mod here, let alone become an employee!), but more importantly, I don't want this to become a paid activity. I come here to have fun and learn stuff. If I accept money from SE, I also accept I have obligations towards them. I do not want this.

I also find this ethically dubious. I freely chose to come here and spend my time on these sites. SE didn't force me. I found the sites, discovered I enjoyed answering here more than on the forums I used to be active on, and stuck around. After all these years of doing so for free, I now suddenly decide I should have been getting paid? That just feels backhanded. I don't want to be that guy.

This also seems patently absurd. It would mean that every single site on the internet that is hosted by a for profit entity and has a support forum would now have to pay the people who ask or answer questions on their forums. We are not going to the SE offices and volunteering our time there. We just answer or ask question on an online platform. I can't imagine any serious lawyer would consider that "working". Should I now ask for money from chess.com because I spend my time there offering others the opportunity to play against me?

We are volunteers. We chose to be volunteers. Don't make us into employees, please.

This meta discussion might just be the trigger that causes history to repeat itself like in the The Aol [sic] Chat Room Monitor Revolt of the 1990s.

Relevant quote:

As happens to many growing Internet companies, Aol’s [sic] users turned against the company when its behavior took on a decidedly corporate feel. In 1999, during an online meeting with all community leaders, Aol [sic] management announced that volunteers would no longer receive free Internet service; instead they would receive a discounted rate. At the same time, Aol [sic] began to monetize its chat rooms and message boards by introducing advertisements.

Suddenly Aol [sic] felt like the for-profit it had always been, not the community that had relied on volunteers since its early days. Monitor Brian Williams tried to organize a strike in response to the reduction in their compensation. When Aol [sic] responded by firing him, he got a lawyer.

Uh-uh ...

I'm not a lawyer or a legal scholar, so I'm going to ignore the exact legal prescriptions and instead explore the spirit of the law. How much are moderators like employees?

The tasks that moderators do are tasks that moderators could be paid for: handling complaints (typically submitted via flags), handling support requests (typically submitted via meta), performing tasks that others cannot do after verifying that the action is warranted (editing, closing, reopening, deleting, …), providing guidance and leadership to the community (again typically via meta), etc. Community managers do those tasks as part of their paid job.

Moderators never have any obligation to work on a particular schedule. Moderators do not have any obligation to work, withone significant exception: moderators on Stack Overflow are expected to spend a minimum of time. I'm not aware that this has ever been enforced, but it's possible that some SO mods who stood down voluntarily because they couldn't keep up with the expected level of activity would have remained if there hadn't been any pressure for them to maintain a high level of activity. Even with this caveat, in terms of obligation to perform, moderators are different from employees, who have to work when the employer requires it.

Moderation is more of a gig. The legal status of paid contractors is a point of legal and political debate in many jurisdictions. Regardless of whether habitual contractors should be treated like employees, they always expect to be paid for completed work.

So what moderators do can be considered work. Do moderators work as directed by the company? The moderator agreement — which has no legal force, since it isn't a contract (the most that Stack Exchange can do if they don't like what a moderator did is dismiss the moderator, and they legally can do that even if the moderator hasn't violated the agreement) — states:

I will abide by the then-current Terms of Service of $SITENAME, and other moderator policies made available to me,

(…) I acknowledge and agree that I am an independent volunteer moderator to $SITENAME and I am not an employee, agent or representative of Stack Exchange Inc., and I have no authority to bind Stack Exchange Inc. in any manner.

These statements do not fully characterize moderatorship on Stack Exchange. Moderators are not only expected to abide by the terms of service and other policies, but also to enforce certain policies, such as the code of conduct. Moderators do not have authority to speak on behalf of the company, but they are often perceived to do so. Moderators are go-betweens, representing the company to the community and representing the community to the company. While moderators have considerable latitude in how they apply directives from the company, the company sets the boundaries. For example:

As a moderator, you're held to a higher standard and are expected to set a positive example for your community. (…) After that, if you cannot in good conscience follow it, reach out so we can find a replacement for you.

There are situations in which you cannot be a moderator and do nothing. Specific performance is expected. The only punishment is dismissal — but if an employee fails to perform as directed, the punishment is rarely worse than dismissal.

I can't speak for everyone, but for my part a major reason why I resigned¹ was because I was in some respects an agent of the company. This doesn't by itself imply a subordination relationship: I would have reacted in the same way if I'd been a member of a non-profit organization that had done something unconscionable and I'd lost any hope or interest of changing the organization from the inside.

This brings us to another criterion: are moderators purely subordinates of the company, or are they to some extent participants in decision making? Here the answer is very clear: moderators don't have a say. The company decides.

Finally, who benefits from the work of moderators? That's a bit hard to delimit. There are benefits to the world in general, to the community in particular and benefits to the company. The world benefits because the repository of knowledge is better curated. The community benefits because moderators wield some of the tools that make it work and serve a social function to regulate the community. The company benefits because moderators are effectively delegates of the company: the company could hire enough moderators to cover the work that moderators do, but doesn't thanks to the volunteer moderators.

I think I can speak for pretty much all current and former moderators in saying that the reason we do or did this is to benefit the world and the community, not the company.

So are moderators similar to employees? To some extent. Certainly enough that there is no clear-cut yes or no answer. There may be a clear-cut answer within the scope of a specific law, but I'm looking beyond that.

Now I never expected to be paid and I would not have been a moderator for pay. I'm sure that the former is true for all of us and the latter is true for most.

Paid moderators would have a very different relationship with the community. Even though moderators are sometimes perceived as agents of the company, they are first and foremost community members. A monetary relationship would destroy this. Having moderators who are and remain from the community is important for community cohesion and for the health of the community. People who face the same problems that other community members are facing are more likely to take decisions that benefit the community.

Moderators should be giggers, but giggers on behalf of their community, which is itself a volunteer endeavor. The current status is that moderators are giggers on behalf of both their community and the company. This creates ambiguity which is detrimental to everyone: to the company (who may have legal and financial obligations that it hadn't bargained for), to the moderators (who face conflicting responsibilities when the interests of the company diverge from the interests of the community), and to the community (because moderators cannot fully act on their behalf).

This needs to change. The governance of Stack Exchange needs to change. We need to distinguish the platform (the servers, the software), managed by a for-profit company, from the communities (the content, the moderation), managed by a non-profit. And then moderators would be volunteering for a non-profit organization, which carries no expectation of pay.

¹ _{Background: I was a moderator for over 8 years, across 5 different low- to moderate-activity sites (1 to 3 at a time).}

Makoto wrote:

If it is, what's the legal remedy you're seeking?

Stack Overflow Inc. would be made to pay back all of the moderators it's ever had on its site for however many countless hours of work that they had put into the site if this turns out to be something which needs to be enforced.

That would...destroy Stack Exchange.

Without weighing in on the legalities (IANAL) surely one possible remedy would be for SE to be converted into a Not-Profit Charitable (Education) Trust (that might be "Foundation" in American-ese, as in the "Wikimedia Foundation") run by a board of elected trustees abiding to a Trust Deed. People come to SE to ask questions and provide answers, sounds educational to me.

As a charitable trust it could have volunteers. It could maybe run off donations (like Wikimedia) but there is no reason (at least in the jurisdictions I know) that a charity cannot have commercial activity to raise funds (the dreaded word "advertising" comes to mind).

In the US Purdue Pharma is being required/wants to transition from a profit-at-any-cost business into some form of non-profit as part of its restitution for past misdeeds (please do not get sidetracked on the specifics of that case, its just an example), so the idea is not unknown and I don't take credit for it.

Given the recent concerns raised by many over copyright issues and moderator firings I'm guessing there might be quite a few folks who would welcome such a transition regardless of any NY law concerns – I guess the comments/votes will indicate whether that guess is correct.

Over to lawyers to work out the details...

On the "No" side, I found an article that suggests that maybe the Huffington Post model for contributing to online publishing is kosher. I noticed that the Stack Exchange model has some similarities to the Huffington Post model. The article, "AOL Settled with Unpaid “Volunteers” for $15 Million: Why the HuffPost bloggers won’t be so lucky, and why that matters," is here. Here's an excerpt:

Every individual writer has his or her own individual motivations for contributing for the site: to promote a book, to link back to a personal blog, to build a brand, to get clips to work towards a writing job. Together, they form a community of like-minded, but diverse, voices. And The Huffington Post is under no legal obligation to give them anything more than that forum.

[...]

The Huffington Post: it’s a forum for [writers] to express themselves freely, where they can potentially be read by millions, and use that platform to attract attention to their personal blogs or book projects or whatever else they’re working on.

Moderators as "Unpaid volunteers" is wrong in all cases for SE.

NY Agreement

Other answers have already mentioned this, but illegal in New York (NY) could also be illegal in other areas.

Moderator Agreement likely Violates Federal Standards Too

Regardless of any one volunteer's intentions or desires or the agreement that moderators sign (which in itself is likely not be a legal contract), moderators are assigned tasks that normal employees for the site carry out. If work is done by paid employees and the business in question is for profit, then the work is not that of a volunteer. It's employment work.

The Department of Labor

The Fair Labor Standards Act (FLSA) defines employment very broadly, i.e., "to suffer or permit to work." However, the Supreme Court has made it clear that the FLSA was not intended "to stamp all persons as employees who without any express or implied compensation agreement might work for their own advantage on the premises of another." In administering the FLSA, the Department of Labor follows this judicial guidance in the case of individuals serving as unpaid volunteers in various community services. Individuals who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay, are not considered employees of the religious, charitable or similar non-profit organizations that receive their service.

Under the FLSA, employees may not volunteer services to for-profit private sector employers.

The problem is that Stack Exchange is for profit. It does not qualify as a religious, charitable or non-profit organisation.

As demonstrated, Stack Exchange asks for specific work, has a minimum hour requirement, and asks its own employees to do the same work as the volunteers and pays those employees.

Regardless of anyone's feelings, this seems quite clear, unless SE can demonstrate that somehow moderators are working for their own advantage. That's the only path through the law to take.

It's a weak argument, to me; but an argument. Unless there is some competing standard, only a very political judge would rule in favor of SE unless they were redefining what a humanitarian objective was.

Example

My prior post was deleted by a staff-moderator - which you can see if you have enough reputation. Hence, moderation is performed by SE staff. Ironic-qed.

Natural Rights

There is no basis in law for this argument, but I would argue it holds nonetheless. If we have a right to property we have a right to be compensated for our work. Anything else is slavery.

At the end of the day, every person deserves compensation for their work and that any group asking work out of another should be willing to compensate them for it. I do not believe, as a former moderator (not SE), that "a quality forum" is enough of a reward for the duties of moderation which intercede into life and necessitate a divorcing from participation on the forum as one might do if they were not a moderator. So even at the highest level of standards, one’s moral code, (which sometimes supersedes the law when we make decisions) this is still wrong.

Employee protections

These protections are in place as much for moderators as they are for employees of the company, such as community managers. It prevents hours and wages being cut from those already under contract as much as it protects the "volunteers". Wage theft hurts everyone.

Market Advantage

If you think about Q&A sites, quality is a differentiator. Is Stack Exchange getting an unfair advantage over another company that uses paid moderators?

Stack Exchange is Undeniably Useful and Better for the Moderators it Has

All of this was an exercise in explaining the legal field in which Stack Exchange exists. Whether we like it or not. The law is what is written down and codified. Don't get mad at the referees. There are ways, explained elsewhere, for Stack Exchange to change its business model to comply and still provide a great service.

The (non legally binding) consensus answer seems to be yes. SE could side step this one of two ways:

1) The easy way: Spin off the SE platform as a non profit, take the SE for-profit services and separate them from the non-profit community platform. Ad revenue supports operating costs, including paid company officers, and outside a by-law governed maximum cash reserve, charitably contributes overages.

2) The hard way: convert every registered user to a benefit receiving freelance contract employee paid in profit sharing based on reputation. This would no doubt skew activity towards a profit motive, and every user would be required to set up some means of accepting payment. Messy, crazy, but market driven and allows everyone involved to profit.

I personally favor the first approach, but the second is interesting if SE is determined to be autocratic and build a profit engine on top of community contributions.

If it is, what's the legal remedy you're seeking?

Stack Exchange, Inc. would be made to pay back all of the moderators it has ever had on its site for however many countless hours of work that they had put into the site, if this turns out to be something which needs to be enforced.

That would...destroy Stack Exchange.

We'd lose a significant amount of value that has been put onto the network, as well as jeopardize any chance of that value ever coming back, since the cost of moderation is probably on the order of millions of dollars in just man-hours alone.

Consult an actual lawyer with a firm if you wish to watch the world burn as opposed to us.

The US Code Title 17. "Copyrights" - Chapter 1 - Section 101: Definitions states

The term “financial gain” includes receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works.

The Stack Exchange community/network is one big open source project that runs on the Stack Exchange platform. Everyone who contributes effort and content (value) to it receives value in return. That value might be skewed with those who just post questions receiving way more value than they contribute, and moderators providing way more value.

This could get into a State vs. Fed issue and it could also be a matter of moderators are providing a service to the platform, and not content for the community. So it is certainly complicated.

The people who work for SE are the developers, marketers and members of their other teams and the people who support them. These teams produce, maintain, market a product which is a platform that one group of their customers use to create questions and answers on various topics (the others being advertisers). Their customers in the public sites are people who have the hobby of producing questions and answers on specific topics and doing that together with people. People who, for whatever reason, choose to devote their time to SE are not different than people who are in other kinds of club-like communities that use public parks or rented space or other platforms/places that they don't own, some of whom are very highly engaged and others are more casual.

If you are feeling resentful because it feels like a job, it's time to take a break. If it is not fun, take a break. The world will not end and your site will not fall apart if you take a break (or if it does, it was not a functional site anyway). I share the tendency to getting overly involved in things and to feel overly responsible for everything, and the need to step back when it gets unhealthy is a lesson I learned a long time ago. No one else is responsible for your decision to spend the amount of time on a hobby project that you are spending.

No. And here is why I think so:

SO is something that is perhaps based (located) in the US, but it has an international span - a sort of international company if you will. The problem with such companies and legalities is that each franchise must follow rules of country it is located in. But SO doesn't have franchises, so its legal issues are mostly determined by popular vote (using the website is deemed as ok, not using the website is deemed as not ok) and one could argue that location of the website is under jurisdiction of where servers are located at (or the seat of the company) - but in that example, and ever-moving servers are then difficult to place under any jurisdiction - since servers (or their content) can change location, and the company can relocate.

And as that, it shows that any presumed legality of any company that has an online presence is enforced by the country it is in, but since the span of such a company overreaches its territorial borders, it is easily circumvented.

One can argue that the ILA (International Law Association) could get this case, but the issue here is basis of all countries’ constitutions (and by proxy their laws) that are built upon up to five international papers among which are human rights as the original base (among monarchy succession, what constitutes independence of the country... ). So ILA often just translates from the laws of one country to the laws of another - among bigger issues.

In general laws, are detailed implementations and descriptions (with exceptions) of constitutional rights. So if one country A has "By law XX one is deemed qualified for the job once he/she is of right legal age (defined by law XY), and one can start new working position as long as she/he isn't in prior contract..." and country B has "By law XX one is deemed qualified for a job once he/she is of right legal age (defined by law XY), or of amendment of Z.X with consent of their guardian" the main issue is translation from how to make both countries happy that a person who is from country A, working in country B is the right age (with/without consent of their guardian) and it doesn't have a job already.

The reason why any petition often doesn't work here is because we need laws to further explain how people should govern themselves, and any international case must beforehand follow (first) international law and (second) everything else. That is the reason why most terms of services first list the country a company (product) originates from, and then in general laws that are from that country. Since I am in Serbia, Apple will not prosecute me if I mess with its branding/product - I mean they can try... but good luck.

And this is also the reason why most international rules in the Internet society follow basic discrimination (and/or oppression) act with no more than that (constituted by human rights).

So, as conclusion: There is no chance in hell that SO can be beaten in court (or any other legal object) in this case, since everyone already moderating here are:

1. Doing it on their own volition - which means they are willingly breaking the law in their state/country by act of intent
2. Laws don't work retroactively (laws that are made/constituted after company is established don't work on prior issues ) - aka they start working at the moment they are announced public.
3. "I didn't know" - is never a good defending policy. And SO has our data on the server, so any misnomer (however minuscule) in our part can be bad for us in a court of law. Their lawyers know a lot of loopholes, and differences.

And even if someone (by luck/or something else) succeeds in prosecuting SO, that someone is effectively shutting down their own country from SO, and due to nuances in international law differences next moderators could be of anything but American nationality.

In reality, the Internet social community is poorly regulated since no one knows under which law to regulate it. We are used to have local laws as our guides, and no one to take our side. Aside from basic human rights (which are further detailed implemented by law) even if human rights are broken, no one can actually pursue it. We don't have our international government, international laws, and international courts.

So I understand that probably you have found this law of your own curiosity (or desire to be payed for your modeatorship), but SO has no desire (or need) to grant you your request unless you have some leverage.

Employment and labor laws and regulations - for USA citizens

• 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing?

No, written contracts of employment are not required. Federal employment laws do not require employers to provide employees with specific information; however, state and local employment laws may require particular information to be in writing.

But among others, the rest of regulations (explained by these lawyers) is highly dependent on state and local employment laws. If a new law is to be written and accepted, for federal acceptance, over 51% (I think) of states must accept it. If law isn't accepted (as an example of amendment of women rights currently in USA, 38 are needed) or appealing to be accepted, regulation of such laws are independent and outside of the constitution. Built on the constitution, often comes a federal layer of regulations, and then implementations of law from state to state. So laws can differ in nuances or in differences from state to state, and therefore the jurisdiction can vary.

We Are All Responsible for Moderation in SE Communities

The community as a whole is responsible for moderating the community. That makes each user a moderator. The diamond moderators are elected by the community; SE does not select them. There is no way a diamond moderator could be considered an employee of SE. SE doesn't select them and doesn't hire them. Why should SE be required to pay them?