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Free labor or liability nightmare?

As cities continue to face budget crunches, the use of volunteer and inmate labor may look like an attractive proposition. Be aware, however, there are potential costs and risks involved with using both.

Volunteers
Volunteers have long been a valuable resource for municipalities. They serve in a variety of capacities as firefighters, coaches, festival organizers, and board and commission members. Also volunteers may assist during times of emergency.

Regardless of what role the volunteer may play, there are two categories of associated risks for the municipality: actions by the volunteer that cause harm and actions that inflict harm on the volunteer.

Federal and state laws may limit the entity's and volunteer's liability. If the volunteer was acting within the course and scope of his official duties and not in a criminal, willful or wanton manner, the South Carolina Tort Claims Act moves the liability from the individual to the entity (S.C. Code of Laws, "15-78-70). The Act provides the entity some protection by placing caps on the amount for which it can be held liable. (S.C. Code of Laws, "15-78-120) For federal suits, there is no cap.

In addition to the liability potential from a volunteer's action, the entity could be held liable if the individual is injured while volunteering. 

Generally volunteers do not receive compensation other than reimbursement for expenses. That makes them ineligible for workers" compensation. Only volunteers who receive compensation and those with an "authorized status" as defined by state law (i.e., volunteer firefighters, reserve/auxiliary police officers, rescue workers) are covered under the workers" compensation law. If injured, a volunteer not covered by workers" compensation could file a claim against the municipality's liability insurance provider.

To limit its liability, the municipality may want to purchase an accident medical insurance policy to cover volunteers who are not covered by workers" compensation. Another option is to have volunteers sign a waiver of liability acknowledging the risks and agreeing to not hold the city liable for any injuries.

Because the waiver is a legal document, municipal officials should consult with their attorney before going this route. Requiring a waiver may have an intangible, goodwill cost. Individuals may decide not to perform the volunteer service, or the city may be seen in a negative light if it relied on the waiver and refused to cover the individual hurt while volunteering for the city.

Inmate labor
In 2005, the South Carolina General Assembly passed a law allowing municipalities to extend workers" compensation coverage to inmate laborers. This law shields municipalities from potential lawsuits involving inmate injuries associated with their work assignment. While disability benefits are limited under the compensation system, medical benefits associated with an "on-the-job" injury are unlimited and could affect future insurance premiums for a municipality.

Using inmate labor may also generate other types of claims arising from negligent supervision and negligent entrustment, to name a few. It is imperative that a municipality implement sound practices regarding the use, safety and supervision of inmate labor. Inmates must receive proper training and protective equipment for their assigned tasks.