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RISKVUE ARCHIVE | INDUSTRY WATCH > NONPROFITS

What the Board Should Know About Volunteer Liability and the Volunteer Protection Act

A nonprofit can be held liable for its own actions (direct liability) and the actions of those working on its behalf (vicarious liability). The reverse is also true: volunteers can be held responsible (liable) for their actions on a nonprofit’s behalf. Before the last decade, lawsuits against volunteers—although permitted by law—were extremely rare. Beginning in the mid-1980s, however, lawsuits against volunteers grew in number and attracted the attention of national media. At about the same time, insurance premiums for nonprofits rose dramatically, coverage exclusions increased, and certain coverages became unavailable.

Several federal legislators began proposing ways to remove the liability ”chill” from volunteering. In 1986, Congressman John Porter (R-Ill.) introduced federal legislation intended to insulate volunteers from liability for “simple mistakes.” Porter dramatized the problem by assigning bill number 911 to his proposed Volunteer Protection Act. Congressman Porter also hoped that the federal bill would lead to the adoption of volunteer protection laws at the state level. In 1990, President Bush released a model act and called for state-by-state adoption. Although every state now has a law pertaining specifically to the legal liability of volunteers, the statutes lack uniformity and consistency.

In June 1997, President Clinton signed into law the Volunteer Protection Act of 1997 (VPA). The VPA provides that, if a volunteer meets certain criteria, he or she has a defense to a suit alleging simple or “mere” negligence and cannot be held liable for that alleged wrongdoing. In cases where the volunteer does not meet the act’s criteria, he or she may still enjoy some measure of protection as long as he or she has not engaged in conduct that is specifically prohibited. The VPA preempts the laws of any state, except in cases where a state specifically provides greater protection from liability or in cases where the state has eliminated applicability because all parties to an action are citizens of a state.

While the VPA may achieve its principal goal of reducing the disparity in the existing state liability laws, its intent and effect have frequently been misrepresented. The law is also sufficiently vague as to make it difficult to predict how the courts will interpret it. It will be some time before we can thoughtfully analyze judicial interpretations of the act. In the meantime, many volunteers will continue to view the VPA as providing complete protection against lawsuits. Many nonprofit boards will put their organizations in jeopardy of financial ruin by assuming the promise of “protection” suggested by the legislation.

Every nonprofit board should recognize the limitations of the VPA:

1.  The VPA does not prohibit lawsuits against volunteers. Volunteers may be sued for their actions or inactions. If sued personally—and without the promise of indemnification from the sponsor nonprofit—a volunteer will still be required to mount a personal legal defense. This typically involves hiring counsel, appearing in court, and paying legal and court fees.

2.   The VPA does not prohibit lawsuits against nonprofits or limit the liability of an organization for harm caused by volunteers. In fact, the sponsor of the original bill—Congressman John Porter—intended the opposite. Porter stated, “The idea here is that if litigation must arise from volunteer activity, the nonprofit organization itself should be named, not individual volunteers.”

3.  The VPA will probably not discourage would-be plaintiffs from bringing suits against volunteers. Instead of discouraging litigation by prohibiting certain actions, it is arguable that the VPA simply provides valuable guidance to counsel. With a copy of the VPA in hand, counsel for a plaintiff alleging injury will simply style the pleading so that it fits within the statutory exceptions and limitations of the act.

4.  The VPA does not shield a volunteer from the frustration, time, or expense associated with defending a lawsuit. The fact that judgments against volunteers are extremely rate is of little solace to those who have been sued. It is unlikely that the VPA will result in the quick dismissal of lawsuits against volunteers, thereby enabling the volunteers to avoid the frustration and time involved in mounting a defense. It is more likely that the VPA will only absolve the volunteers from liability at the end of the day—after the trier of fact (judge or jury) has considered the case.

5.  The VPA does not provide any protection for the most common sources of lawsuits against volunteers: claims alleging the negligent operation of a motor vehicle and employment-related claims alleging violation of federal or state civil rights laws are specifically excluded from coverage under the VPA.

6.  The VPA does not prevent a nonprofit from seeking indemnity from a volunteer whose actions resulted in harm. A volunteer who causes harm may still be called to account. The VPA preserves the right of a nonprofit to sue a volunteer to recoup the amount it has spent on a claim. Some argue that this provision of the law negates the “protection” afforded.

7.  The VPA does not negate the need for liability insurance. While a variety of tools are available for financing risk, many nonprofits choose insurance as the preferred financing strategy. Judgments against nonprofits are relatively rare. However, substantial defense costs are likely anytime a lawsuit is filed. Since the VPA does not stop someone from filing suit, exposure to costly legal fees is always possible. Liability coverage that pays the cost of a legal defense may protect a nonprofit from ruin.

8.  Many nonprofit boards are now relying on the VPA for protection it does not afford. A false sense of security and misrepresentations of the act are widespread. These misreadings of the act range from the belief that the VPA prohibits suits against volunteers and nonprofits to the belief that the VPA protects a nonprofit against claims filed by a volunteer.

Some have described the passage of the VPA as a hard-won battle. Others have expressed the view that the VPA adds confusion rather than clarity to the volunteer protection landscape. It will be several years before an assessment of the VPA’s impact can be made. Until then, every nonprofit should continue to strive to improve safety in the delivery of services and programs. This commitment should extend to any and every program involving volunteers.

ABOUT THE AUTHOR

Reprinted with permission from the Nonprofit Risk Management Center (www.nonprofitrisk.org). For more information on the risks facing nonprofit boards or to discuss any of the issues in this article, contact the author, Melanie L. Herman, at Melanie@nonprofitrisk.org or 202-785-3891.

riskVue | The webzine for risk management professionals
June 2005



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