Today’s burning question: I am the chief of a volunteer fire department. We are struggling to get enough help weekdays from 6 am to 5 pm. We are thinking about paying some of our folks to be available during these hours. I heard there is a magic number of 20% that we have to be careful of. If career firefighters in my state average $20/hour, can I pay my volunteers $4/hour?
Answer: Volunteer fire departments have to be very careful when it comes to compensating their personnel in any way. At stake is the potential to turn a volunteer who receives a benefit into an under-paid hourly employee who in turn can demand minimum-wage compensation for all of their time, including their volunteer hours.
The Fair Labor Standards Act allows a person to volunteer for a public entity like a fire department provided “the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered.” 29 U.S.C. §203 (e) (4) (A)
The US Department of Labor (DOL) and the courts interpret that language to mean that paying someone an hourly rate is per se compensation. Doing so turns the person into an employee. Thus paying the volunteer $4/hour will likely create a problem for a volunteer fire department. All it will take is one person to challenge it. The volunteer will likely be considered to be an underpaid employee and eligible for minimum wage for all hours worked plus all hours volunteered.
The FLSA draws a distinction between “compensation” and “paid expenses, reasonable benefits, or a nominal fee”. So long as “expenses, reasonable benefits or a nominal fees” are not tied to an hourly rate, they can be given to volunteers without running afoul of the FLSA. The DOL has expressly approved of expense reimbursements, LOSAP, volunteer pension programs, and a number of insurance-oriented benefit programs as valid for volunteer firefighters.
The biggest area of controversy has to do with “nominal fees”. The DOL has taken the position that the term nominal fee means payments that are less than 20% of what a full time employee would cost provided it is not based on an hourly rate. While any payment that is based upon an hourly rate will be considered to be compensation, the DOL treats per call or per shift stipends differently.
Trying to rationalize why the DOL treats nominal fees that are paid per hour differently than those that are paid per call or per shift, is of little use. This is how the DOL interprets 29 U.S.C. §203 (e)(4)(A). Nominal fees paid on a per-call and per-shift basis are permissible provided they do not exceed 20% of what a full-time employee would cost. Per-hour stipends, even if otherwise nominal, are considered to be compensation.
Applying this to your question, paying your volunteers $4 per hour would likely create underpaid employees regardless of what a full-time employee would cost. However, if hiring career personnel for a 10-hour shift would cost you $200, you could pay a shift stipend provided it was less than $40 without running afoul of the FLSA. Personally, I would not recommend tying the shift stipend to exactly 10 hours, but the DOL has approved of per shift stipends in various letter opinions on the subject.
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