Employees FAQ 15
Can a municipality compensate a person for volunteer work without affecting the person's status as a volunteer under the Fair Labor Standards Act (FLSA)? What about volunteer firefighters?
Yes, to a limited degree. In general, volunteers cannot be compensated for the services they provide. They are, after all, "volunteers." The FLSA defines a "volunteer" as an individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered. Individuals are considered volunteers only where their services are offered freely and without pressure or coercion, direct or implied, from an employer. The law provides that an individual shall not be considered a volunteer if the individual is otherwise employed by the same public agency to perform the same type of services as those for which the individual proposes to volunteer. Although volunteers cannot receive compensation, the Fair Labor Standards Act (FLSA) allows volunteers to receive expenses, reasonable benefits and/or a "nominal fee" to perform services without jeopardizing their status as volunteers.
Payments to volunteers for expenses must reasonably approximate actual or out-of-pocket expenses incurred by the individual in connection with providing the hours of volunteer services. Some examples of permissible expenses include the costs of meals, transportation, equipment, uniform cleaning or allowance, and tuition and books to attend classes to teach the volunteer to perform his or her job better.
More difficult questions are what are "reasonable benefits" and what is a “nominal” fee. Reasonable benefits may include the costs of inclusion in the organization's group insurance plans (such as health, life, disability, workers' compensation or liability plans); inclusion in the organization's pension or retirement/investment fund plan; and "length of service" awards. Other benefits found reasonable in a DOL Wage and Hour letter dated Nov. 19, 1986 include minimum city water and sewer allotments, valued at $9 and $5.50 per month respectively, and membership in the city's swimming pool for three months ($20 per month for individuals and $30 per month for families) and a contribution to a retirement investment fund (valued at $250 per year, with an increase of $25 per year up to $500).
Fees paid to bona fide public-sector volunteers must be "nominal." Because the FLSA and its implementing regulations do not define what "nominal" means, such fees have been the type of payment most likely to cause confusion among employers. In the past, DOL has stated that "whether a specific amount is “nominal' depends on the economic realities of the situation and has refused to provide guidelines or specific amounts applicable to all (or even most) possible situations. However DOL's implementing regulations set forth several factors that it weighs in determining whether a fee is nominal. These include:
- the distance traveled by the volunteer to perform the services;
- the time and effort expended by the volunteer;
- whether the volunteer has agreed to be available "around the clock" or only during specific time periods; and
- whether the volunteer provides services as needed throughout the year.
The “nominal” fee question has been particularly troublesome for municipalities with regard to volunteer firefighters and was finally addressed in DOL Letter Ruling FLSA 2006-28, issued August 7, 2006, in response to a request from the International Association of Fire Chiefs (IAFC). This letter ruling is noteworthy and important because it marks the first time that DOL has set forth any type of bright line rule. It states that DOL will presume a fee is nominal as long as the fee does not exceed twenty percent (20%) of what the public agency would otherwise pay to hire a full-time person to perform the same services. The letter states that "the market information necessary to complete this good faith determination is generally within your members' knowledge and control. Any full-time firefighter a particular fire department has on its payroll would be a good benchmark for this calculation. Absent such information, a fire department or similar entity may look to information from neighboring jurisdictions, the state, or ultimately, the nation, including data from the Department of Labor, Bureau of Labor Statistics."
The DOL emphasized that FLSA regulations require that nominal fees must "be considered in the context of any other benefits or expenses paid and the economic reality of the particular situation."
DOL has made it clear that a nominal fee is not a substitute for compensation and may not be tied to the worker's productivity (e.g., payment of hourly wages for services rendered). According to DOL, the above factors "focus upon whether the fee is actually more analogous to a payment for services or recompense for something performed and, hence, not nominal." DOL states that to the extent that payments are tied to productivity (e.g., payment of hourly wages for services rendered), are similar to "piece rates" or are comparable to "production bonuses," there is a greater likelihood that such fees are not nominal.
Nonetheless, DOL acknowledges that many firefighters are compensated on a "per call" basis and has emphasized that the prohibition against tying a volunteer's fee payment to his or her productivity does not preclude paying a public-sector volunteer a fee on a per-call or per-assignment basis as long as the compensation may fairly be characterized as tied to the volunteer's sacrifice rather than productivity-based compensation.
The IAFC's letter to DOL posed numerous scenarios, varying the type of payment made to volunteers. The variations included payments per shift, month, or year, and differences in the average number of shifts, calls, and/or hours worked by the volunteers. DOL stated that assuming the fee is determined to be nominal, it is "less relevant whether it is paid on an annual, monthly or daily basis."
If there is any doubt as to whether the compensation to be provided to a volunteer would result in the loss of the person's volunteer status, it is advisable to obtain a Wage and Hour Opinion Letter from the DOL.For citations to legal authority for the above statements, please request Employees 311.