Relying on law enforcement exemption? Be prepared to show volunteers meet the test

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in Small Business Tax Deduction Strategies

The Fair Labor Standards Act requires most employers to pay hourly employees overtime if they work more than 40 hours per week. But government agencies that employ fewer than five people in fire protection or law enforcement aren’t required to pay those employees overtime.

A common problem is that many small public agencies rely on volunteers to perform firefighting and law enforcement duties. If that’s true at your agency, make absolutely sure those “volunteers” meet the volunteer test.

To be considered true volunteers, the individuals must perform a service for civic, charitable or humanitarian reasons, without the promise, expectation or payment of compensation. Be prepared to show that your employee count excludes only true volunteers.

Recent case:
James Ebersbach had worked for the village of McArthur as a paid auxiliary police officer for three years when he sued for unpaid overtime. He claimed that there were more than five auxiliary police officers on the service roster. Therefore, he argued, the village wasn’t exempt from paying for overtime.

The village told the court that it really had fewer than five law enforcement and firefighting employees on the payroll. Any additional personnel were volunteers.

The court ordered the village to prove each and every person who was listed as a volunteer met the test. Managers now will have to prove that those they listed as volunteers had a charitable, civic or humanitarian reason for working as volunteers who were neither promised nor expected to be paid for the hours they put in.

Absent proof, the volunteers are employees and will be entitled to overtime. (Ebersbach v. Village of McArthur, No. 07-CV-1223, SD OH, 2008)

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