Do volunteers count as employees under the Affordable Care Act?
There has been growing concern in recent months that proposed regulations under the Affordable Care Act could drive volunteer fire departments all over the country out of existence, or dramatically change the delivery of these services.
These regulations could require local governments to either provide health care coverage to some firefighters, or pay huge penalties under the “employer shared responsibility” provisions of the ACA. The threshold for providing mandatory health insurance coverage or penalties is reached with 50 full-time and part-time equivalent employees.
On Jan. 10, in response to public concern and Congressional activity, the U.S. Department of Treasury issued a notice stating that the final regulations relating to employer-shared responsibility will “generally” not require volunteer hours of “bona fide volunteer firefighters and volunteer emergency medical personnel” at governmental or tax-exempt organizations to be counted when determining whether an employer is obligated to provide health care coverage.
While the new notice is a step in the right direction, governmental units and other tax-exempt employers must remain cautious for two reasons: The notice only addresses firefighters and emergency medical personnel that Treasury deems “bona fide” and does nothing about other types of “volunteers,” and Treasury’s definition of the terms “volunteer” and “employee” may be much narrower than most employers understand.
People volunteer to provide many types of services to government or tax-exempt organizations, including serving on commissions or boards, assisting at public events, staffing libraries, providing firefighting and medical services, etc. Treasury has historically viewed allof them as “employees” if they received anyamount of pay or benefit in return for their services. Treasury’s January notice only backs off from that position for “bona fide volunteer firefighters and emergency medical personnel.” The use of this terminology suggests that there are many “volunteer” firefighters and first responders who will not be deemed “bona fide volunteers,” probably because their pay or benefits are “too generous.”
The ACA regulations are issued jointly by Treasury, the Department of Health and Human Services, and the Labor Department. Labor Department regulations issued under the Fair Labor Standards Act provide that persons can be “volunteers” if they receive only expense reimbursement, reasonable benefits or a “nominal fee” for rendering services, but are “employees” if they receive an hourly wage or other remuneration that is more than “nominal.” The DOL has previously issued decisions stating that firefighters who were paid hourly (as little as $7/hour) for fire calls and training sessions are “employees” and not “volunteers.”
Moreover, under FLSA, an individual employed to provide services to an entity cannot provide the same type of services to that entity as a “volunteer.” For example, a full-time township firefighter cannot “volunteer” to cover on-call fire department hours for the township without compensation.
We are not optimistic that the relief promised in the notice will be extended beyond firefighters who receive nothing more than a very small “per call or per session” payment and who have no other working relationship with the employer. We do not know whether the ACA final regulations will be similar to, narrower or broader than the FLSA regulations or bear any similarity to them at all.
In any case, the new notice provides no relief for any other kind of volunteer. Under the proposed regulations, every volunteer who receives any amount or form of “remuneration” will be considered an “employee” whose hours of service must be counted under the ACA. The proposed regulations require actual hours of service to be recorded, or the “employee” must be credited with eight hours of service for every day (or 40 hours/week) on which any services are provided.
The same is true for every elected or appointed official.
If enough “employees” have enough “service,” the employer will be deemed an “applicable large employer” under the ACA, and will be obligated to offer health care coverage to all “employees” who have an average of at least 30 hours of “service” per week.
Some of this may change in the future. Once Treasury’s final regulations are released, governmental and nonprofit employers can evaluate whether they need to continue tracking the time of all volunteers and elected and appointed officials. In the meantime, we recommend that governmental and tax-exempt employers track the hours of all individuals who receive any pay or benefits for their services. Failure to do so could cause significant problems. If individuals do not meet the definition of “volunteer” under the final regulations, employers who fail to keep accurate records of firefighters and other service providers might be required to provide health care coverage or pay hefty penalties. We recommend that these employers begin gathering and maintaining time records immediately as time records in 2014 will determine the 50-employee threshold for the mandate in 2015.
David Fernstrum, Nikole Canute and Timothy Tornga are attorneys with Mika, Meyers, Beckett and Jones in Grand Rapids. They can be reached by calling 632-8000.