donations

individual.4 Moreover, state law strictly prohibits public employees from receiving additional compensation for performance of their official duty.5 It also prohibits public agency officials from receiving gifts over a certain value for their own personal benefit, or the benefit of any other individual person.6 However, a fire protection district organized under the Fire Protection District Law of 1987, generally may accept any revenue, money, grants, goods, or services from any person “for any lawful purpose of the district.”7

B. Public Perception & Other Restrictions on Private Fundraising Activity

Despite the ability to accept a donation for a district’s lawful purpose, fire districts and other local agencies may still prefer to direct private fundraising efforts through a public charity recognized as “tax exempt” under Internal Revenue Code section 501(c)(3). Reasons for doing so warrant careful consideration and discussion with district leadership and counsel. These reasons include, and are not limited to: recognition by members of the public that donations to 501(c) (3) organizations are tax deductible, professional management of fundraising activities, flexibility to engage in fundraising activities that are not available to public agencies, and public perception.

4 See 26 U.S.C, § 170, subd. (c)(1)-(2)(C); IRS Publication 526 (2022), p. 3.

5 Cal. Const. Article XI, section 10(a); 33 Ops.Cal.Atty.Gen. 143 (1959). Additional compensation means that compensation which is over and above the amount fixed by contract or by law when the employee rendered their services.

6 See Gov. Code, § 89503; see also Gov. Code, § 82028, FPPC Factsheet: Limitations and Restrictions on Gifts, Honoraria, Travel and Loans for Local Public Officials (Dec. 2022).

7 Health & Safety Code, § 13898.

Unlike certain eligible nonprofit organizations, local agencies cannot engage in raffles or controlled games (e.g. casino nights) to raise private funds, even for public purposes.8 In addition, members of the public may view a public agency’s private fundraising efforts as an improper use of agency staff time, or as the agency “double-dipping” in public resources from constituents who already support the District’s mission through taxation, assessments, and fees.

For these and other reasons, districts should use caution before engaging in private fundraising activities, or accepting donations of money or goods from their constituents. Some districts may want to obtain 501(c) (3) status, or establish or partner with a nonprofit 501(c) (3) to engage in these activities to benefit the district. LCW attorneys are experienced in navigating complex donation questions, creating nonprofit corporations, and obtaining tax-exempt status, and can help districts evaluate these issues for their agency.

LCW has 30+ consortiums across the State! Consortium members enjoy access to quality training throughout the year, discounts on other LCW products and events, and unlimited, complimentary telephone consultation with an LCW attorney on matters relating to employment and labor law questions (including questions involving COVID-19, supervisory skills, and negotiation matters!). We’ve outlined a recent consortium call and the provided answer below. Client confidentiality is paramount to us; we change and omit details in the ERC Call of the Month.

Question:

We have full-time firefighters who work under the FLSA 7k exemption for 106 hours during a 14-day period. We want to provide them with a stable biweekly check based on 106 hours, but they can work either 96 hours or 120 hours in a 14day period. If we do this, can we then take the hours “owed” out of the following pay period?

For example, a firefighter works 96 hours in Weeks 1 & 2 but is paid for 106 hours (thereby “owing” us 10 hours). That same firefighter works 120 hours in Weeks 3 & 4 and is again paid for 106 hours. However, since they “owe” us 10 hours, we would only pay them for 4 hours of overtime.

Answer:

The agency can lawfully negotiate with the bargaining unit representing the firefighters to provide firefighters a stable biweekly check only if the agency establishes an overtime prepayment plan. This plan would allow the agency to pay firefighters 106 hours biweekly and establish a prepayment overtime bank for each firefighter to draw overtime advancements.

A prepayment arrangement does not change the City’s obligation to pay FLSA overtime compensation on the firefighter’s specific regular rate of pay. The prepayment plan allows the agency to advance money to the firefighter, which is then deducted from the overtime compensation bank when the firefighter works the overtime. To accurately account for fluctuations in the regular rate of pay, or any pay increases, it is important to track these advances on a dollar-for-dollar basis, not hour-forhour. The agency should also negotiate with the firefighters’ union to allow the agency to deduct any prepaid overtime from the employee’s final paycheck to avoid a gift of public funds.

Using the example you provided, the prepayment plan would work as follows:

Firefighter is paid 106 hours for week 1 & 2, but only worked 96 hours. Rather than reducing the firefighter’s next paycheck by 10 hours, the agency would need to calculate the firefighter’s compensation for each workweek, including the overtime based on actual hours worked. Any overpayment remaining after than calculation would be an advancement of overtime pay that would be tracked in a bank and reduced when the firefighter works overtime in excess of the wages paid. In any workweek where prepaid overtime is insufficient to equal the additional overtime compensation due to the employee, the difference would be paid on the next regular pay day, so that the overtime compensation is never paid in arrears.