Business And Contract Law For Firefighters
Most firefighters’ primary familiarity with contract law is likely to come from their participation in collective bargaining activities. Business planning experience is more wide-ranging and depends heavily on the personal history that brought an individual to his or her position in the profession. For the many firefighters who decide to pursue off-duty business ventures, however, both business planning and contract law will take on new dimensions. In addition to the demands of starting and managing a business, as public employees firefighters must be mindful of the formation rules and reporting requirements for secondary employment that will be the norm in many areas.
Scarborough Law Office, LLC was founded by a career firefighter who earned a law degree while serving in the Central Jackson County Fire District. In the eight years between graduating from law school (2012) and retiring as the Sni Valley Fire District Fire Chief, (2020), Attorney Scarborough had multiple opportunities to explore the intricacies of the relationship between public employment and outside ventures. We welcome your business planning questions at our Blue Springs office at any time. Call 816-230-5550 to book a consultation.
Firefighting can be a rewarding career, but its opportunities for remuneration are sometimes limited. While collective bargaining agreements often secure key benefits and cost-of-living wage increases for firefighters, both fire districts (independent political subdivisions of Missouri) and fire departments (most often operating within the structure of a city government) are bound by the realities of public coffers and the limitations of local tax revenues. For financial reasons, then, as well as for a chance to explore additional talents and interests when they are off-duty, many firefighters start their own small businesses on the side.
If you go into business by yourself and conduct that business under your own name, then generally by default you are treated as a “sole proprietor” for legal and tax purposes. This means you may not have to go through complicated additional filings for your business, when the time comes for annual income tax returns, separate from your individual tax obligations.
The downside to the simplicity of a sole proprietorship is that it leaves a great deal of risk exposure. Sole proprietorships are not treated as separate legal entities for tax purposes; the expenses and the revenue related to your business are considered part of your individual income (and deductions). Any tax debt incurred as a result of your business is your personal tax debt (and vice versa). Legal liability generally follows suit: You are personally liable for any mistakes you make running your business, which means that even your firefighter’s pay can theoretically be seized to pay a debt incurred as part of a legal judgment against your business.
An LLC, or limited liability company, is a business structure many entrepreneurs use to place a protective “shield” of sorts between their personal finances and those of the businesses they have founded (anecdotally, we also hear that some find that the clear separation between business and personal accounts makes their bookkeeping easier). The Internal Revenue Service (IRS) does not consider there to be a maximum number of members for an LLC, so some newly forming partnership businesses may prefer to create LLCs in order to offer the members some personal liability protection.
In practice, however, the single-member LLC tends to be one of the most popular business structure options for individuals just starting out. Unless the owner files a specific form electing to be taxed as a corporation, a single-member LLC is treated as a “pass-through” or disregarded separate entity for tax purposes. As the United States Small Business Administration (SBA) explains, this policy helps sole LLC owners avoid having their income taxed once for the business (as corporate tax) and again when they pay themselves from the business profits (as individual income tax). At the same time, a single-member LLC still confers some of the protections of separating business and personal liability, without the added complexities of corporate governance. A conversation with Scarborough Law Office, LLC may help you decide whether a single-member LLC makes sense for your own small business.
A contract is an essential part of any business venture. Often firefighters are well aware of the importance of an iron-clad contract through their experience of union negotiations, the results of which many firefighters experience in their regular pay and benefits.
Being aware of the value of a clear, comprehensive contract that lays out legally enforceable expectations for and of both sides is often a long way from developing the expertise to draft and review such documents. Few know that gap better than the Scarborough Law Office team! Coming from a career in fire safety to the practice of law gives a unique perspective on the acumen many firefighters bring to their off-duty entrepreneurship and an intimate familiarity with the circumstances under which it may be time to call a professional. It is our honor to provide that legal guidance to Missouri firefighters capitalizing on their ingenuity outside the firehouse.
When a fire safety professional decides to explore opportunities in other areas during his or her off-duty hours, the business plan will need to account for a number of legal considerations that do not typically apply to individuals working in fields other than public service. At Scarborough Law Office, LLC, we are pleased to assist Missouri firefighters with business planning for their off-duty ventures by reviewing and advising on many of these concerns.
Many fire departments set limitations on the amount of work firefighters on their full-time roster can perform in other areas. These “moonlighting” restrictions may apply even to your own business. The specific language of your fire district’s policies will structure how narrow or wide your options may be. Getting clear guidance from an attorney familiar with both the operations of fire districts and the needs of firefighters interested in building business ventures in their off-duty hours may prove extremely valuable in identifying precise limits and helping you find a way to pursue your goals without violating district policy.
You have probably heard the expression “off-duty police officer involved” at some point. If you stop and reflect, how often were those contexts positive? Often news reports and (it has to be said) local gossip will emphasize the profession of an individual who works in public safety when there is potentially negative news to share, even if none of the events under discussion have anything to do with the individual’s job. For this reason, among others, it is very common for fire districts and other public employers to establish “conduct” policies that apply to their employees even when these individuals are not engaging in work activities.
Usually the aim of such policies is to ensure that individuals employed by a government office do not erode the public trust by engaging in conduct outside their work that reflects poorly on the employer. Occasionally, as well, these policies may be employed to help ward off any appearance that public employees are using their office to serve a personal agenda, or inappropriately commenting on internal matters. Most types of work are unlikely to raise concerns of this type, but there can sometimes be surprising exceptions. We generally recommend taking a “better safe than sorry” approach and reviewing your employee handbook closely to determine how it applies to your off-duty ventures. Often an attorney may be in a position to assist you with this review.
Individuals who work in any form of public service generally accept that their choice of primary career will limit to some degree their options for a second job or “side hustle,” whether that work is with another employer or a personal venture by the public employee. Some of the most critical limitations to keep an eye on, for firefighters hoping to build a business outside the firehouse, is the potential for an appearance of conflict of interest. Appearance is an important word in this context because the rules regarding conflicts of interest for public employees generally apply even when there is no implication that actual wrongdoing has occurred; that is, the rules are designed to prevent erosion of public trust, not just activity that is prohibited for other reasons (e.g., conflicts of interest in procurement).
As a firefighter, while on duty you are protected against the outcomes of job-related injuries by workers’ compensation. Like other government employees, you may also enjoy the benefits of “sovereign immunity” to protect you against personal liability for certain actions taken in the course of fulfilling your duties. You probably already know that none of these will apply while you are working on your own behalf; understanding the risk mitigation strategies and liability protections you can implement in their place is another matter.
We typically recommend a consultation with an attorney who can review your exact circumstances to get a full picture of the options and how they apply. Generally, however, you will want to take a close look at insurance policies. Homeowner’s insurance generally does not cover business activities on the premises, and your personal auto insurance policy may not cover accidents incurred while using your vehicle for work (check the terms of your policy). General liability insurance is an option for many entrepreneurs; you may also want to speak with an attorney about whether an “errors & omissions” policy (common in certain professional fields) makes sense for your situation.
Many Missouri fire districts will have policies requiring firefighters to provide disclosures regarding their secondary employment. If you are working for a fire department organized under a city government, then the city will set the policies for all public safety personnel employed by the city. Employees of the State of Missouri are frequently subject to a once-annual disclosure of the nature and scope of any secondary employment activities; you may want to begin by treating the expectations set at the state level as a guide, and review your employee handbook with an attorney to determine how to meet the more specific requirements of your district. Keep in mind that different ranks and positions may be subject to different disclosure rules and limitations on secondary employment.
Usually the aim of such policies is to ensure that individuals employed by a government office do not erode the public trust by engaging in conduct outside their work that reflects poorly on the employer. Occasionally, as well, these policies may be employed to help ward off any appearance that public employees are using their office to serve a personal agenda, or inappropriately commenting on internal matters. Most types of work are unlikely to raise concerns of this type, but there can sometimes be surprising exceptions. We generally recommend taking a “better safe than sorry” approach and reviewing your employee handbook closely to determine how it applies to your off-duty ventures. Often an attorney may be in a position to assist you with this review.
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Firefighters are a highly motivated crowd with a great deal of individual and collective ingenuity, so it is no surprise that many of them turn to entrepreneurship in their off-duty hours, not just to earn additional income but to expand their skills and explore new interests. These off-duty ventures can be deeply rewarding, but the demands of public employment also mean that they must be approached with caution to maintain compliance with state ethics and local reporting requirements.
At Scarborough Law Office, LLC, we have had the pleasure of navigating these waters more than once, and we welcome your call with questions about business planning for your off-hour ventures. Reach us at our Blue Springs office today by calling 816-230-5550.