Today’s burning question: I am a town manager and we have a small volunteer fire department with a part-time paid fire chief. The chief receives a stipend and is expected to put in 20 hours a week (ie. because he is part-time). However, he occasionally works more – and sometimes a lot more (like 60 hours a week). Can he qualify as an exempt executive like our police chief, even though he is a part-time employee?
Answer: Your question touches on a number of different parts of the Fair Labor Standards Act, and the ultimate answer to what is the best option for you going forward will depend on a number of factors. These factors must be analyzed by your local legal counsel before you make any decisions one way or the other.
Let’s start with a direct answer to your question: the FLSA does not distinguish between full and part-time employees. Thus, your part-time fire chief could qualify as an exempt executive like your police chief. The caveat here is that the fire chief must pass the same salary test as well as the duties test as the police chief to qualify as an exempt executive. There is no separate test for part-time executive employees.
Both the salary test and the duties test are somewhat more involved than what we can get into here (consider attending our FLSA for Fire Departments class, or the Advanced FLSA: Executive Exemption – Fire Officers and Overtime to learn more about this), but here are the bare-bones-basics of the executive exemption:
Salary Test: The chief must be paid on a salary basis and receive no less than $684 per week. There is no offset for part-time executives, so it is $684/week whether the chief works 80 hours/week or 5 hours/week. Assuming your fire chief receives an annual stipend of at least $35,568 (or weekly pay of at least $684), and meets the other requirements of the salary test, he/she passes the salary test.
Duties Test: The chief’s primary duty must be the management of the fire department. The duties test can become difficult when the employee is a captain, battalion chief, or deputy chief, but generally most fire chiefs (chiefs of department) will not have a problem with meeting this requirement.
The chief would need to pass both of the tests in order to qualify as an exempt executive.
In the event the stipend you offer is less than $35,568 ($684/week), the chief would not qualify as an exempt executive even if he/she satisfies the duties test. One option would be to increase the chief’s pay to meet the salary test requirement. Something else to consider: the US Department of Labor may be increasing that $684/week upwards. Thus, increasing the chiefs pay to $684 a week now might result in the need to increase it in the near future to whatever figure the DOL decides upon.
Assuming you opt not to increase the pay to $35,568 ($684/week), the next step in the analysis would be to determine whether the chief qualifies as a volunteer, and whether the stipend you pay is in the nature of being a nominal fee. Again, that analysis is quite complicated and if he/she has already been treated as an employee, it may not be possible to simply begin treating him/her as a volunteer. Nonetheless, let’s consider it as an option.
Paying stipends to volunteers is permissible provided the amount is in the nature of what the DOL considers a nominal fee. We discuss this topic at length in our FLSA Bootcamp for Volunteer and Combination Fire Departments, but if the chief’s stipend is no more than 20% of what it would cost you for a full-time chief to perform the same service, then characterizing the chief as a volunteer may be feasible. Just to clarify, in your case the chief works part-time an average of 20 hours per week. To make an apples-to-apples comparison, if we assume a full-time chief makes $100,000 per year, the most we could offer the volunteer chief is 20% of $50,000, or $10,000. The comparison must be apples-to-apples.
If your chief receives too much of a stipend to qualify as a volunteer, but not enough to qualify as an exempt executive, he/she would need to be treated as an hourly employee, and entitled to overtime in the weeks where his/her hours worked exceed 40 hours (assuming the chief does not qualify for the 7k exemption), or 53 hours (if the chief does qualify for 7k). Deciphering whether the chief qualifies for the 7k exemption – and what the optimum work period would be – would be as complicated as all of the above issues combined, so we will dispense with that – just understand that the 7k option may be a viable one for you and your local attorney to consider if/when the time comes.
Lastly, it is possible that the 7k analysis may not even be necessary if your department has “fewer than 5 employees in fire protection activities.” Under the small fire department exemption, employees in fire protection activities can be paid straight time for all hours worked. Overtime is not required under the small fire department exemption. The limiting factor with the small fire department exemption is the department cannot employ more than four employees in fire protection activities, and that includes full and part-time employees. As such it may be possible to pay the chief straight time for all the hours worked without a concern for overtime.
We covered a lot a ground here but we left a lot of the details out. What you have is a blueprint of issues to consider when making a decision of this nature. You need to sit down with local legal counsel and work through each of these issues, adding in any applicable state and local laws that may come into play. You are not alone in struggling with this issue and I hope this analysis will help other organizations who find themselves in the same situation.
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April 4, 6, 11 and 13, 2023
Advanced FLSA: Executive Exemption: Fire Officers and Overtime
June 15, 2023 – 1:00 PM Eastern