If a NC city contracts with a private hospital to assign uniformed, armed city police officers to provide security at the hospital full time, does the city have to obtain a private security license under Chapter 74C?

Plain-English summary

James Kirk, who administered NC's Private Protective Services Board, asked AG Lacy Thornburg whether a NC city needed a Chapter 74C private protective services license when the city contracted to assign six uniformed, armed municipal police officers full time to a non-profit hospital. The officers wore municipal uniforms, were armed as police, drove municipal vehicles, and enforced both general law and the hospital's internal rules. The hospital paid the city more than $600,000 over the first four years of the contract.

The AG's answer: no license required. Two reasons did the work.

First, the Private Protective Services Act applies to a "private person, firm, association, or corporation . . . engaging in a private protective service business or activity." G.S. 74C-2. A municipality contracting to provide its own police officers to a third party is not a private firm in a private protective business. The officers remain municipal officers performing official duties; the contract simply structures the city's deployment of those officers and the cost-sharing with the hospital.

Second, G.S. 74C-3(b)(2) explicitly exempts an employee of a political subdivision "while engaged in the performance of his official duties within the course and scope of his employment." The officers here were on duty as municipal officers, in uniform, enforcing the law. The fact that they also enforced hospital rules did not flip them into private security guards.

The AG was careful to limit the scope of the opinion. The opinion applies to a contract structured this way: officers performing services as their regular official duties, paid for through the city by the hospital, with no off-duty individual hiring of officers. If the contract had instead let the hospital hire officers directly during off-duty hours, that would be a different question (and likely the PPSA exemption would not apply, because off-duty officers working for private employers are doing private security work, not official municipal duty).

The opinion also expressly did not pass on whether the city had statutory authority to enter such a contract in the first place. It only answered the licensing question, assuming the contract was otherwise valid. The authority question would turn on the city's general home-rule powers and any specific limits on extraterritorial or contract policing services.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Chapter 74C has been amended several times since 1988, including the introduction of categories of regulated activity (armed/unarmed guard, alarm systems, private investigations, etc.) and changes to the exemptions for off-duty law enforcement. Anyone with a current question about municipal-to-private contracting for police services should consult the current Chapter 74C, current Private Protective Services Board rules, and any current AG opinions or court decisions on contract policing.

Background and statutory framework

NC's Private Protective Services Act (Chapter 74C) regulates the private security industry: armed and unarmed guards, alarm-system installers and monitors, private investigators, private polygraph examiners, and security consultants. The point of the regulation is to set training, licensing, and conduct standards for people who hold themselves out as a private alternative to public police services.

The Act's coverage is keyed to the "private" nature of the activity. G.S. 74C-2 defines the regulated business as one engaged by "any person, firm, association, or corporation" in the "business or activity" of private protective services. The Act lists categories of regulated activities (armed and unarmed guarding, private investigation, alarm systems, etc.) and requires licensure for each.

G.S. 74C-3 contains the exemptions. Subsection (b)(2) exempts an employee of any political subdivision of the State "while engaged in the performance of his official duties within the course and scope of his employment." That exemption exists because municipal police officers, sheriff's deputies, and other public law enforcement officers are already regulated under separate occupational licensing and oversight schemes (the NC Criminal Justice Education and Training Standards Commission, the Sheriffs' Education and Training Standards Commission, etc.). Layering Chapter 74C licensing on top of those frameworks would be both redundant and conceptually confused.

The contract in the opinion was structured to keep the officers in their municipal-police status. They wore municipal uniforms, used municipal equipment (vehicles, radios, weapons), and performed law-enforcement functions. The hospital paid the city, not the individual officers, for the service. That structure put the officers on duty within the course and scope of municipal employment, which triggered the exemption.

The AG distinguished this scenario from off-duty officer work. NC officers commonly hire out during off-duty hours to private employers (clubs, retailers, special events) as private security. When officers do that, they are typically not exempt under G.S. 74C-3(b)(2) because they are not "engaged in the performance of [their] official duties." That arrangement either requires the officers (or the employer arranging them) to comply with the PPSA, or fits within a separate carve-out for off-duty law enforcement that has its own conditions (uniform, equipment, identification, reporting, supervision).

The hospital's enforcement of "rules and regulations of the hospital" did not change the analysis. Municipal officers commonly enforce non-criminal rules of various institutions (campus rules at colleges, posted rules at public parks, etc.) as part of their police function. The fact that the rules originate with the hospital rather than the city does not convert the officer into a private security guard.

The financial arrangement (more than $600,000 over four years) is large but does not change the legal characterization. The hospital is paying the city for the city's police services; the city is providing them through municipal officers. It is functionally a contract for police services, not a private security retainer.

The opinion's scope caveats are worth noting. The AG did not address whether the city had authority to enter the contract (a question that would turn on the city's general home-rule powers under Chapter 160A, the geographic scope of municipal police authority, and whether the hospital was within or outside the city limits). The AG also did not address what happens if the contract is restructured to have officers work the hospital detail during their off-duty hours; that would be a different exemption analysis and could well require PPSA compliance.

Common questions

Can any NC city contract to provide police services to a private entity?

This opinion did not decide that. It assumed the contract was valid and answered the licensing question only. Whether a city has statutory authority to enter such a contract depends on the city's home-rule powers, the geographic location of the private entity (within city limits, just outside, etc.), and the type of services being provided. City attorneys typically analyze this under Chapter 160A and any relevant case law on the scope of municipal police authority.

What if the hospital had hired the same officers to work hospital security during their off-duty hours?

That would be a different question. Off-duty officers working directly for a private employer are typically not exempt under G.S. 74C-3(b)(2) because they are not "engaged in the performance of [their] official duties." That arrangement either requires PPSA compliance or fits within separate rules for off-duty law enforcement (which have their own conditions for uniform, equipment, identification, and reporting).

Does it matter that the hospital paid the city over $600,000?

No. The payment goes to the city, not the officers individually. The city deploys its officers as part of their official duties, and the hospital reimburses the cost. The financial arrangement is large but does not change the legal characterization.

What if the officers enforced both criminal law and hospital rules?

The AG specifically said that enforcing hospital rules does not turn municipal officers into private security guards. Municipal officers often enforce non-criminal rules of institutions (campus rules, park rules, transit rules) as part of normal policing. The mix of criminal and non-criminal enforcement is consistent with the officer's official status.

Does this opinion apply to sheriff's deputies under contract to a private entity?

The opinion specifically addressed municipal police, but the underlying exemption in G.S. 74C-3(b)(2) extends to any employee of a political subdivision. A county sheriff contracting deputies to provide on-duty law enforcement services to a private entity would be in a similar posture, with the exemption analysis turning on the same "official duty" question.

Source

• Landing page: https://ncdoj.gov/opinions/municipality-contracting-to-provide-security-at-local-hospital/

Original opinion text

Requested By: James F. Kirk, Administrator, Private Protective Services Board

Questions:

1. Does Chapter 74C of the General Statutes require that a municipality obtain a private protective service license when the municipality provides police services on a contractual basis to a non-profit hospital?

2. Does the fact that the municipality maintains liability insurance on the officers assigned to furnish police services to the hospital change the answer to Question 1?

Conclusions:

1. No.

2. No.

Question 1. A municipality has entered into a contract with a non-profit hospital under which the municipality has agreed to assign six municipal police officers to provide full-time police services to the hospital. The contract provides that the officers shall be in uniform, shall be armed, and shall have access to a municipal police vehicle. The police officers are to be responsible for enforcing all applicable local, State, and federal laws and also the rules and regulations of the hospital. The hospital will pay to the municipality as consideration for the police services provided during the first four years of the contract an aggregate sum in excess of $600,000.

It is our opinion that a municipality is not required under such circumstances to obtain the license provided for in the Private Protective Services Act. The Act applies to a private person, firm, association, or corporation ". . . engaging in a private protective service business or activity in this State . . . ." G.S. § 74C-2. It is clear that the contract calls for the assignment of municipal police officers to the hospital as a part of their official duties and not as private security guards. The fact that the police officers also enforce the rules of the hospital does not change the officers into security guards.

Furthermore, the Act excludes law enforcement officers from its coverage while the officers are on duty. G.S. § 74C-3(b)(2) specifically exempts any employee of a political subdivision of the State from the Act so long as the employee ". . . is engaged in the performance of his official duties within the course and scope of his employment with the . . . political subdivision . . . ." The officers involved here who are assigned to provide law enforcement services at the hospital are performing their official duties within the course and scope of their employment by the municipality and, therefore, are exempt from the Act by its terms.

The scope of this opinion is restricted to the particular facts of this matter previously stated. We emphasize that the opinion is based upon the view that the contractual police services are performed by the officers as their regular official duties as municipal employees. There is no provision in the contract for the services to be furnished to the hospital during the officers' off-duty hours. Further, this opinion does not pass upon the authority of the municipality to contract to provide police services to the hospital.

Question 2. The fact that the police officers assigned to the hospital duty are fully covered under the municipality's liability insurance does not alter or modify the answer to Question 1. To the extent that it has any significance, it supports the conclusion that, when providing police services to the hospital, the officers are employees performing their duties within the course and scope of their employment by the municipality.

LACY H. THORNBURG
Attorney General

Teresa L. White
Associate Attorney General