A healthcare equivalent of this issue is restrictions against volunteering for human experientation. There are specific instances where it may be a good idea to let people slide, and there may be poorly handled enforcement (one way or the other), but on the whole it is a good law.
If a company can get workers by calling them volunteers, and compensating them in a method that is cheaper than the minimum wage, and not get called on it, they will. And the mentioned "coercion" does happen (
Blog link).
I'm not speaking to the particulars of this case, which looks like it may well be a good candidate for an example of poor enforcement (especially calculating a years' worth of pay when the volunteer only worked part of the year). But there are enough bad actors who would use a setup like this to avoid worker protection laws that some informal handshake-type arrangements may no longer be possible.