Friday, September 13, 2013

The Continued “Employee” versus “Volunteer” Debate: Categorization of Volunteer Firefighters under the FMLA and FLSA

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In Mendel v. City of Gibraltar, No. 12-1231, 2013 U.S. App. LEXIS 16922 (6th Cir. Aug 15, 2013), the Sixth Circuit recently held, in a 2-1 decision, that a group of volunteer firefighters who receive a substantial hourly wage for responding to calls whenever they choose to do so, are “employees” within the meaning of the FLSA and FMLA.  In doing so, the Court reversed the judgment of Judge Roberts of the United States District Court for the Eastern District of Michigan, which had concluded that the firefighters were “volunteers” for the purposes of the two statutes.  Chief Judge Batchelder wrote the Sixth Circuit opinion, in which Judge Merritt joined, and Judge Kethledge wrote a separate dissenting opinion. 

The terms “employ” and “employee” have the same definition under both the FLSA and the FMLA. See 29 U.S.C. § 2611(3) (providing that for the purposes of the FMLA, the terms “employ” and “employee” have the same meaning as given in 29 U.S.C. § 203(e) and (g), the definitions section of the FLSA).  Thus, the Mendel decision focused exclusively on the definition of those terms under the FLSA.  In applying the Supreme Court’s “economic reality” test set forth in Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947), and upon consideration of “the ‘striking breadth’ of the FLSA’s expansive definition of ‘employ’”, the Sixth Circuit concluded that the firefighters “fall within the FLSA’s broad definition of employee,” as they “are suffered or permitted to work… and they even receive substantial wages for their work.”

The court considered a 1986 amendment to the FLSA’s definition of “employee”, 29 U.S.C. § 203(e), which provides that individuals who volunteer to perform services for a public agency are not “employees” for the purposes of the statute.  However, that exception only applies where the worker in question “receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered.” Id.  Thus, the operative question was whether the monies paid to the firefighters constituted “compensation”, or whether it was instead just a “nominal fee”.  As the Court noted in its opinion with regard to this particular question:

The official regulations provide guidance at this juncture. The regulations define ‘volunteer’ as ‘[a]n 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.’ 29 C.F.R. § 553.101(a); see also 29 C.F.R. § 553.104(a) (employing similar language). The regulations proceed to recognize, ‘Volunteers may be paid expenses, reasonable benefits, a nominal fee, or any combination thereof, for their service without losing their status as volunteers.’ 29 C.F.R. § 553.106(a).  The specific provision addressing nominal fees provides, in part, ‘A nominal fee is not a substitute for compensation and must not be tied to productivity. However, this does not preclude the payment of a nominal amount on a 'per call' or similar basis to volunteer firefighters.’ 29 C.F.R. § 553.106(e). Finally, the regulations caution, ‘Whether the furnishing of expenses, benefits, or fees would result in individuals’ losing their status as volunteers under the FLSA can only be determined by examining the total amount of payments made (expenses, benefits, fees) in the context of the economic realities of the particular situation.’ 29 C.F.R. § 553.106(f).
Mendel, 2013 U.S. App. LEXIS 16922 at *12-13.

In concluding that the monies paid to the firefighters was compensation rather than a nominal fee, the Court noted that:

The firefighters do not receive ‘a nominal amount on a 'per call' or similar basis.’ 29 C.F.R. § 553.106(e). Rather, they render services with the promise, expectation, and receipt of substantial compensation. See 29 C.F.R. §§ 553.101(a), 553.104(a). Each time a firefighter responds to a call, he knows he will receive compensation at a particular hourly rate—which happens to be substantially similar to the hourly rates paid to full-time employed firefighters in some of the neighboring areas. Essentially, the Gibraltar firefighters are paid a regular wage for whatever time they choose to spend responding to calls. These substantial hourly wages simply do not qualify as nominal fees.
Id. at *13.  

The Court recognized the seemingly counter-intuitive conclusion that so-called volunteer firefighters could be classified as “employees” rather than as “volunteers”.  But, the Court chalked that result up to “[t]he fact that the FLSA’s categories of ‘employee’ and ‘volunteer’ do not necessarily match the common use of those terms or popular perception in general.” Id. at *17.

In his dissent, Judge Kethledge noted that the firefighters had to perform a great number of tasks (152 hours of training, passing an examination, and then completing an additional 73 hours of training each year) for which they were not compensated, and that, taking only the annual training into account, that amounted to the firefighters receiving “little more than minimum wage.” Id. at *20.  Judge Kethledge indicated that he would thus hold that the firefighters are volunteers.  Further, Judge Kethledge noted that the FLSA defines “employ” in 29 U.S.C. § 203(g) to mean “to suffer or permit to work”, and that the Supreme Court had defined “work” for those purposes, in Tenn. Coal, Iron, & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944) as meaning “physical or mental exertion” that is “controlled or required by the employer.”  He reasoned that here, the city “neither controls nor requires the firefighters’ efforts’, as the firefighters generally worked without supervision, and were not required to respond to fires at all if they chose not to.  He concluded that “[p]ersons that need a Family and Medical Leave Act are presumably persons who need leave not to show up for work.  That description does not apply to the City of Gibraltar’s firefighters.  I respectfully dissent.”

In contrast to the Mendel case, the Eleventh Circuit held last year, in a per curiam opinion in Freeman v. Key Largo Volunteer Fire & Rescue Dep’t, Inc., 494 Fed. Appx. 940 (11th Cir. 2012), argued before Judges Hull, Martin, and Cox, that a volunteer firefighter was a volunteer, rather than an employee, under the FLSA.  As in Judge Kethledge’s dissenting opinion in Mendel, the Eleventh Circuit based its decision, in part, on a finding that the fire district in question did not supervise the plaintiff, and did not set the plaintiff’s schedule. Freeman, 494 Fed. Appx. at 943.  The Court also noted that (a) the fire department / fire district contract made a clear distinction between volunteers and employees; (b) volunteers were paid $5.00 per hour while employees were paid between $16.83 and $20.04 per hour; (c) the most that the plaintiff volunteer firefighter could earn in a month was $1,200 regardless of the number of hours he spent at the fire station or the number of emergency calls he responded to; (d) the fire department needed permission from the fire district to hire paid employees; (e) the plaintiff’s schedule varied depending on his availability; (f) the district did not mandate standard operating guidelines for volunteer firefighters; (g) the plaintiff’s individual rate of pay was not set by the fire department or fire district; and (h) besides W-2 forms, the fire department did not provide any employment records to the plaintiff, and the plaintiff did not allege that the fire district had any employment records for him. Id. at 943-44.  The Court concluded that based on the above factors, “the economic reality is that Freeman is not an employee of the Department or the District.”

Whether the Mendel and Freeman cases represent a circuit split on this issue, or whether they are instead distinguishable on their facts, is not entirely clear.  According to Judge Kethledge’s view of the Mendel case, both cases involved a lack of supervision, schedules which varied according to the individual workers’ availabilities and which were not controlled by the fire departments or districts, and pay which (at least when considering time spent training and taking examinations without compensation in the Mendel case) was near or below minimum wage.  However, the cases also appear to differ factually in some respects.  At least with regard to the time spent actually responding to calls, and excluding Judge Kethledge’s consideration of unpaid time spent training and taking exams, the rate of pay in the Mendel case was $15 per hour – three times the $5 per hour in the Freeman matter.  And, the Freeman opinion speaks of a monthly cap on volunteers’ earnings, while no such cap is discussed in either the Mendel majority opinion or dissent.  Whether these and the other factual differences between the two cases are sufficient to explain the difference in the two holdings, one can only surmise.

This issue has also been litigated under state and local statutes.  See, e.g., City of Ft. Calhoun v. Collins, 500 N.W.2d 822, 826 (Neb. 1993) (a volunteer fire department is not an employer within the meaning of the state fair employment practices act).  And, the above cases certainly do not represent the first time that similar issues have been litigated with regard to volunteer firefighters. See, e.g., Bryson v. Middlefield Volunteer Fire Dept., Inc., 656 F.3d 348 (6th Cir. 2011) (reversing District Court’s holding that that plaintiff volunteer firefighter had to receive “significant renumeraction” in order to be considered an employee for the purposes of her Title VII claims, and holding that compensation is only one of a number of factors that should be considered in making that determination); Haavistola v. Community Fire Co., 6 F.3d 211 (4th Cir. 1993) (holding that the issue of whether a volunteer firefighter was an employee, for the purposes of her Title VII sex discrimination claim, involved fact-intensive determinations on which the trial court was not equipped to rule on the basis of a summary judgment record alone).  Indeed, these cases are only part of the larger longstanding debate over the proper characterization of workers as employees versus volunteers, whether certain workers can rightfully be characterized as unpaid interns or externs, and the similar issue as to whether workers should be categorized as employees as opposed to independent contractors.  For several of our firm’s prior publications on those topics, see, e.g.:
  • The Department of Labor’s Internship Test under the FLSA, available here;
  • Misclassification of Employees as Independent Contractors, available here; and
  • FLSA Developments: Missclassification as Independent Contractors, Unpaid Interns, the Status of DOL Opinion Letters, and the Meaning of Clothes Under Section 3(o), available here.
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