As used in this subchapter, unless the context otherwise indicates, the following words shall have the following meanings:
(1) “Employee” means a person acting on behalf of a governmental entity in any official capacity, whether temporarily or permanently, and whether with or without compensation from local, state or federal funds, including elected or appointed officials, volunteer firefighters and rescue squad members where the rescue squad receives full or partial financial support from political subdivisions or from the State, but the term “employee” shall not mean a person or other legal entity acting in the capacity of an independent contractor under contract to the governmental entity.
(2) “Governmental entity” means any municipality, town, county, administrative entity or instrumentality created pursuant to Chapter 8 of Title 22 or Title 9, any municipality created by a special act of the General Assembly, any housing authority created pursuant to Chapter 43 of Title 31, any parking authority created pursuant to Chapter 5 of Title 22, any municipal business improvement district authority created pursuant to Chapter 15 of Title 22 and all registered volunteer fire companies and volunteer rescue squads.