September 6, 1995
Your question is, what are the legal implications of the city building a fire hall, partly with volunteer labor, and partly through subcontracting out particular jobs?
Four legal questions come to my mind when a city constructs its own building and uses volunteer labor:
The first question is, does the city fall under the Tennessee Contractor's Licensing Law? [Tennessee Code Annotated, section 62-6-101 et seq.] That law requires the construction of certain projects costing over $25,000 to be done by a licensed contractor. As you can see from the enclosed MTAS publication on that issue, The Tennessee Contractor's Licensing Act and Why Your City's Building Inspector Could Go to Jail, the State Contractor's Licensing Board takes a broad view of that Law. However, in my opinion, that law does not apply to a municipality building its own building for its own purposes. In other words, the city can act as its own "general contractor" without running afoul of that law. However, an subcontractor who exceeds the $25,000 trigger in the law does have to be a licensed contractor. [Tennessee Code Annotated, section 62-6-102(1)(B)]
The second question is, is the city required to have an architect or engineer design the building? That is not an easy question to answer. Generally, when a building or other public work "involves architecture, engineering or landscape architecture," the plans, specifications and estimates must be prepared by a registered architect or engineer. However, the statute does not apply if the complete cost of the building is less than $25,000, unless it "alters the structural, mechanical, or electrical system of the project." [Tennessee Code Annotated, sec. 6-2-107]
From what you tell me, the fire hall is a relatively simple project; however, I do not know if it "involves architecture, engineering, or landscape architecture" or if its total cost will exceed $50,000, and the work "does not alter the structural, mechanical or electrical system of the project."You will have to decide whether the building meets those qualifications. To help you with that decision, I am also enclosing an article I wrote for the Tennessee Chapter of the American Public Works Association, entitled Where Are You Tennessee Code Annotated, section 62-2-107.
The third question is, does the city plan to buy materials for the building that will be installed or otherwise used by subcontractors in the construction of the building? If that is so, the subcontractors will have to a use tax equal to the sales tax on those materials. [Shelby County v. King, 620 S.W.2d 493 (1981).]
The Tennessee Tort Liability Act makes municipalities liable for dangerous structures. [Tennessee Code Annotated, section 29-20-101 et seq.] For that reason the city should take great care to make sure the building is properly constructed.
The fourth question is, for liability purposes, what is the status of volunteers working on the building? They do not meet the definition of an "employee" under either the Tennessee Tort Liability Act or the Workers Compensation Law. However, the city is potentially liable under the Tennessee Tort Liability Act for injuries they may suffer, or injuries they may cause, that arise from the negligent acts of city employees, including negligent supervision. For that reason, the city should be extremely careful about the use of such volunteers and should supervise them closely. That can be tough to do, particularly where, as is often the case, the volunteers are highly qualified people in their trades and professions, including building trades and professions.
Let me know if I can help you further in this or any other matter.
Sidney D. Hemsley
Senior Law Consultant