The State of Tennessee is taking an interesting and innovative approach to combating the nation-wide problems associated with a lack of volunteer firefighters. Late last week, the Tennessee Senate passed a bill aimed at providing financial incentives for volunteer firefighters in that state. The incentive, which is anticipated to cost the state almost $5 million for fiscal year 2021-2022, provides volunteer firefighters with a $600 annual stipend following the completion of at least 30 hours of firefighter training. According to Mountain News, more than 60 percent of Tennessee firefighters are volunteers and many spend their own money buying equipment and paying for training. The stipend is designed to ease the financial burden individuals face by serving as volunteer firefighters.
Providing volunteer firefighters financial stipends is relatively common in today’s volunteer fire service. But not all organizations understand the impact of making such payments. Failure to understand the impact of providing volunteer firefighters a stipend could result in that firefighter losing his or her volunteer status and actually becoming an employee. The prospect of a volunteer losing his or her volunteer status will impact numerous areas of the law, from workers compensation to wage and hour regulations. For the purpose of this discussion, we will focus only on the FLSA.
The financial stakes in these types of situations are significant. Imagine the financial implications for a volunteer fire department that is ordered to pay its volunteer firefighters minimum wage for all the time spent responding to calls, training in-house, standing by in the fire station, and attending off-site trainings. Now, double that number (i.e., liquidated damages) and include attorneys’ fees for both the “volunteer” firefighters’ attorney and the department’s attorney. The overall total costs from a simple mistake could prove catastrophic for the organization.
The FLSA and Department of Labor (DOL) regulations allow fire departments to provide volunteer firefighters with nominal fees and reasonable benefits. However, numerous courts and the DOL have found paying a volunteer firefighter compensation creates an employee/employer relationship, regardless of the amount. This leads us to a logical question. What is the difference between a nominal fee and compensation? While the difference may seem insignificant at first glance, fire service leaders responsible for managing volunteers must understand it. Department of Labor regulations, opinion, and several court decisions help clarify the difference.
Generally, factors utilized to determine whether stipends provided to volunteer firefighters can be considered a nominal fee [volunteer status] or compensation [employee status] include the following. First, a volunteer firefighter must offer his or her services for a civic or charitable reason. If the volunteer firefighter is offering services in the expectation or contemplation of receiving compensation, they are likely no longer a volunteer. Second, any payment that is given to a volunteer firefighter tied to his or her productivity (i.e., pay by the hour) is automatically considered compensation. Once a volunteer firefighter receives compensation, he or she is no longer a volunteer, and is an employee. Finally, the DOL has offered an opinion that any nominal fee paid to a volunteer firefighter must be less than 20 percent of the wages that a full-time employee performing similar work would earn. By understanding these basic concepts organizations can avoid some of the common pitfalls associated with providing volunteer firefighters with a nominal fee.
There are several interesting and noteworthy components found in the stipend program being proposed in Tennessee. First, the program is being funded by the state and not individual fire departments. Assuming the state provides the money directly to the individuals, there are no real FLSA concerns regarding this stipend. An employment relationship must be established in order for a volunteer to claim status as an employee. There is likely no employment relationship between individual volunteers and the state of Tennessee. Second, a program like this could augment nominal fees and reasonable benefits already offered by many volunteer fire departments across the state. Volunteer fire departments often feel the need to continually increase stipends in an effort to recruit and retain volunteers. Unfortunately, this is where problems can arise. A volunteer fire department’s modest FLSA compliant stipend program instituted ten or fifteen years ago may have grown and expanded to a point that it no longer meets the FLSA’s requirements. As a result of this evolution, these volunteer firefighters may now be employees and not volunteers.
This is a simple overview on one small (but very important) topic area related to the FLSA and volunteer firefighters. It is important to note that, there may also be state wage and hour laws that impact the type and way volunteer firefighters receive stipends. As is often the case with wage and hour issues like this, fire department leaders should consult with local legal counsel with specific questions related to stipends provided to volunteers. However, best practices require fire department leaders responsible for volunteers to understand the basic requirements of the FLSA and enact FLSA compliant policies and procedures related to any financial incentives given to volunteers.
For more on the Tennessee training stipend program, click here.