FLSA2018-24 — Application of section 7(k) to nonprofit, privately-owned volunteer fire departments

U.S. Department of Labor Wage and Hour Div is ion
Washington, DC 20210
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FLSA2018-24
November 8, 2018
Dear Name*:
This letter responds to your request for an opinion concerning whether nonprofit, private
volunteer fire departments that contract with state municipalit ies and counties to provide fire
protection services to the general public are “public agencies” entitled to the pa r tia l overtime
exemption in S ection 7(k) of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207(k)—and if
not, whether they would become public agencies if the state enacted legislation that defined them
as “polit ic a l s ubdivis io ns.” This opinion is based exclusively on the facts you have presented.
You represent that you do not seek this opinion for any party that the Wage and Hour Division
(WHD) is currently investigating or for use in any litigation that commenced prior to your
request.
BACKGROUND
Your letter represents that your client, a nonprofit firefighters’ association, consists partly of
nonprofit, privately owned volunteer fire departments that contract with North Carolina
municipalit ies and counties to provide fire protection services to the general public. These fire
departments do not consider themselves political subdivisions and do not avail themselves of the
pa r tia l exemption in Section 7(k). They provide fire protection services as independent
contractors, purchase most of their own equipment, and independently elect their board of
directors, which appoints their officers. Their bylaws give them independent judgment and
discretion over their operations.
These fire departments receive public funds from the North Carolina Department of Insurance
and their local government clients. Additiona lly, the North Carolina legislature has authorized
local governments to collect a “fire fee” from taxpayers, which he lps to fund the fire
departments. The local governments also provide oversight; for example, they may review and
audit the fire departments’ financials and budgets, make suggestions or provide input concerning
the ir funding, and appoint several nonvoting seats to the ir board of directors. Upon dissolution,
the fire departments’ bylaws require the distribution of their assets to the government for a public
purpose.
GENERAL LEGAL PRINCIPLES
The FLSA provides a partial exemption to the overtime pay requirements of Section 7(a) for
employees of public agencies engaged in fire protection activities. See 29 U.S.C. § 207(k).
FLSA Section 3(x) defines a “public agency” as, among other things, “any agency of ... a State,
or a political subdivision of a State.” 29 U.S.C. § 2 03(x); see 29 C.F.R. § 553.1(c). “The key
factors in determining whether a private party should be considered a public agency are whether
the entity is directly responsible to public officials or to the general public and whether the

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parties’ contracts designate them as state agencies rather than independent contractors.” Wilcox
v. Terrytown Fifth Dist. Volunteer Fire Dep’t, Inc., 897 F.2d 765, 767 (5th Cir. 1990) (holding
that a nonprofit f ir e f ightin g corporation that is required to provide its annual budget to the loc a l
government, is funded a lmos t e xc lus ive ly by local taxes, is subject to local government audit,
and whose contract gives the local government “governing authority” over its operations is a
public agency); Powell v. Tucson Air Museum, 771 F.2d 1309, 1311–12 (9th Cir. 1985)
(applying the same two-part test) ( c iting Skills Dev. Servs., Inc. v. Donovan, 728 F.2d 294, 300
(6th Cir. 1984) (holding that a “political subdivision” is an entity “created by the State to
constitute a department or administrative arm of the government or administered by individuals
who are responsible to public officials or the general public”)). State la w declarations and
interpretations identifying an entity as a public agency or political subdivision are not
dispositive. Cf. NLRB v. Nat. Gas Util. Dist. of Hawk ins Cty., Tenn., 402 U.S. 600, 602–03
(1971) (holding that, under the National Labor Relations Act, federal law determines whether an
entity created under state law is a “political subdivision”).
In determining whether an entity is “directly responsible” to the public, the “single most
determinative factor” is w he the r public of f ic ia ls s e lect and control the entity’s board of directors.
WHD Opinion Letter FLSA 1226, 1986 WL 383425, at *4 (Mar. 18, 1986); see WHD Opinion
Letter FLSA 730 (Oct. 9, 1990) (describing appointment and removal of board members as “the
key factor”); see also Powell, 771 F.2d at 1312 (focusing on appointment and removal of board
members); Williams v. Eastside Mental Health Ctr., Inc., 669 F.2d 671, 679 (11th Cir. 1982)
(same). Another important factor is whether public officials hire and fire the entity’s employees.
Powell, 771 F.2d at 1312; see also Sk ills Dev. Servs., 728 F.2d at 300 (identifying “internal
control”—the “ability to discipline or fire administrators”—a s indic a tive of a politic a l
subdivision). “[S ]ubstantial state regulation” alone does not e s ta blish public control. Powell,
771 F.2d at 1312; Williams, 669 F.2d at 679.
OPINION
Based on the facts you have provided, the nonprofit, privately owned fire departments that you
describe are not public agencies within the meaning of Section 7(k) and are therefore not e ntitle d
to its pa r tia l overtime exemption. To begin with, the fire departments do not satisfy the first
Wilcox factor because they are not “directly responsible” to public officials or to the general
public. See Wilcox, 897 F.2d at 767. They purchase most of their own equipment, exercise
independent judgment and discretion over their operations, and—most importantly—
independently elect their board of directors. See, e.g., WHD Opinion Letter FLSA2008-14, 2008
WL 5483053, at *1–2 (Dec. 18, 2008) (finding that a private volunteer fire department that
contracts with municipal governments to provide fire protection services, receives funding
through public taxes and fees, independently elects its directors, and independently hires and
f ir e s its employees is not a public agency); WHD Opinion Letter FLSA 1226, 1986 WL 383425,
at *4 (describing appointment and removal of board members as the “single most determinative
factor” of public control). The fact that local governments provide some of their funding; may
review and audit their financials, budgets, and funding; and appoint nonvoting seats to their
board of directors does not alone establish the requisite public control to make the fire
departments directly responsible to the public. Moreover, the fire departments do not satisfy the
second Wilcox factor because the ir contracts designate them as independent contractors, not as
state agencies. See Wilcox, 897 F.2d at 767.

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The potential sta te le gis la tion described in your letter would not make the fire departments public
agencies entitled to the partial exemption in Section 7(k) because it would not limit the fire
departments’ operational independence or otherwise alter the analysis discussed above. The
definition of “polit ical subdivision” is a question of federal law, and declarations under state law
“are not necessarily controlling.” Nat. Gas, 402 U.S. at 602–03 (looking past formal labels to
the entity’s “actual operations and characteristics”). To transform a fire department into a public
agency under Section 7(k), the state government must functionally e s ta blis h “internal control”
over the fire department’s operations. See Skills Dev. Servs., 728 F.2d at 300. This pr ima r ily
involves the power to appoint or remove board members or officers, or to hire or fire employees.
See, e.g., WHD Opinion Letter FLSA 1226, 1986 WL 383425, at *4 (describing the ability to
appoint or remove board members as the “single most determinative factor” of public control);
Powell, 771 F.2d at 1312 (describing the ability to hire or fire employees as indicative of public
control); Sk ills Dev. Servs., 728 F.2d at 300 (describing the ability to discipline or fire
administrators as indicative of public control).
We trust that this letter is responsive to your inquiry.
Sincerely,

Bryan L. Jarrett
Acting Administrator
*Note : The actual name (s ) was re move d to prote ct privacy in accordance with 5 U.S.C.
§ 552(b)(7).