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Legal Corner

Immunity for Non-Profit Officers and Directors

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Sovereign immunity is a historical legal doctrine of old.  Kings and Queens could not be held liable for their actions as sovereigns as early law and government developed.  In current times you will hear this doctrine invoked as a defense against liability whenever a government or government employee is sued in court, for example, in cases of police brutality.  Florida’s sovereign immunity statutes still protect the government and its officials from personal liability in most cases and place limits on the amount of damages recoverable in most cases.

Section 617.0834, Florida Statutes, provides immunity to you as officers and directors of a Section 501(c)(3) corporation not for profit.  You “……shall not be personally liable for monetary damages to any person for any statement, vote, decision, or failure to take an action regarding organizational management or policy…….”; but of course there are exceptions:

  1. If the officer or director failed to perform or breached their duties as an officer or director (see Lawyer Thiele’s Legal Corner, “Duties of Directors,” April 2, 2019;
  2. Reckless or malicious acts;
  3. Deriving improper personal benefit from any transaction (see the Corner, “Conflicts of Interest, September 2, 2019).

Most if not all states have enacted similar laws in order to encourage participation in non-profit community work and to shield your lawful activities from personal liability.

Regarding COVID-19 Vaccinations

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The CAPLAW�s most recent bulletin to all CAA�s advises on employment policies and practices regarding COVID vaccinations (�VAX�), especially for those CAA employers who can and decide to require the VAX for all employees as a condition of employment, which with some CAA�s by implication include visitors, clients, and attendees at meetings of Boards of Directors, and HS/EHS Councils, etc.� The Bulletin and guidance of CAPLAW is available via this LINK

ALPI still conducts Board meetings virtually but may in the near future return to meetings in-person.  This edition of The Corner is to provide you with CAPLAW�s most recent advice on these issues.  This is especially important due to the Bylaws of the corporation and the councils regarding quorum requirements.  Members of the Board and Councils may be missing meetings due to the various effects of the pandemic, timing of their VAX, or fears thereof.

In Florida, due to the Governor�s orders and opinions, the partisan political climate, and due to conflicting guidances from various government entities, there is no specific coherent requirement that ALPI return to in-person meetings at this time.  CAPLAW advises to, �Check state and local laws to determine whether you may ask employees for proof of vaccination ��  The Governor�s order prohibits VAX �passports� by businesses engaged in local, interstate and even international commerce.  That order is not law and is subject to litigation by the cruise ship industry and others.  So far, it has not been interpreted or applied by a court.

Therefore, read and keep in mind the attached information and await further guidance and decisions.

Regarding COVID-19

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The Coronavirus has affected all businesses and employers.  Unfortunately, lawyers are without clear and definite basis to advise our clients on many of the questions that arise daily in their course of business.  At a minimum, we advise to comply with the suggestions of the United States Center for Disease Control, as well as from our state and local governments.  In addition, we are paying attention to our various bar associations, blogs, and emails, from a myriad of sources, providing their suggestions and news. 

ALPI is covered by several insurance policies for business interruption, workers compensation, discrimination in employment, negligence and the like.  Litigation is pending, and further expected, in many, if not all, jurisdictions, over insurance policy coverage for claims by employees and others who sue a business/corporation/employer for damages due to medical expenses, termination, reinstatement to employment, and even death. 

I am not yet aware of courts in ALPI’s jurisdictions that have rendered decisions that immediately affect you.  So far, the decisions I am aware of are in other federal district courts, which would have to be appealed to other federal circuit courts of appeal, or from other states.  Those courts who have rendered decisions, have very closely read and considered the exact wording of each insurance policy and all of its implications, as matters of contract and insurance law.

On the legislative front, the federal and many state legislatures are considering proposed laws to limit or completely insulate businesses from any liability for damages in COVID-19 related claims.  Those proposed laws, will be considered and decided upon in the coming months.

Florida Sunshine Law During Covid-19 Emergency Measures

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Florida’s Governor requested and obtained an Advisory Opinion of the Florida Attorney General (AG) about the applicability of the Sunshine Law during these emergency conditions.� ALPI’s Board is annually provided information and documentation of the applicability and requirements of the Sunshine Law in the January – February orientation/training sessions.� The AG’s guidance is that the Law still applies. Therefore, ALPI must continue to publicize its meetings as before, and the meetings are still public.� Note that the Bylaws require 15 days notice to local media, which has been provided for the upcoming April Board Meeting. The AG further stated that the meeting must be accessible via electronic means and the notice to the public must include that information. So, we must all govern ourselves accordingly.

2019 FL Statutes, General Standards for Directors and Conflicts of Interest

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In previous entries during 2019, I summarized the legal duties of Directors and applicable State law on conflicts of interest. At those times, the Florida Legislature was considering the major overhaul and updating of the corporation laws. Since then, the Florida Business Corporation Act, Chapter 607, was enacted and is now effective. The Florida Corporation Not For Profit Act, Chapter 617, was amended only in limited ways.

The actual legal duties of Directors, as stated in Section 617.0830, General Standards For Directors, should be read by you from time to time in your capacity as ALPl’s Board. This Section was left unchanged by the 2019 Legislature.  

Also left unchanged was Section 617.0832, of the Florida Not For Profit Corporation Act, on Conflicts of Interest.  This Section suggests that a contract may be entered into between a corporation and another entity, in which a Director may have some financial interest. The contract is nevertheless not void or voidable, so long as the terms of the contract are fair and reasonable to the corporation. If the Board votes to approve the contract, then procedures are detailed in the statute for disclosing those financial interests, for voting, and for the required quorum. This Section of the Florida Statutes should be read by you whenever you might have a financial interest in an entity which contracts with ALPI.

You may view a copy of the statute by clicking here.

Conflicts of Interest

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My previous installment on Attorney Thiele’s Corner was on the duties imposed by the law upon the directors of a corporation.  Those duties apply whether you are a director of a nonprofit or for- profit corporation.   Recall that the very first duty I listed was the Duty of Loyalty to the corporate entity and its purposes.  DUTY OF LOYALTY – you place the corp.’s interest highest when acting or deciding, rather than personal or other interests. This duty of course needs further explanation and it has been codified and developed in the Florida Statutes as detailed below.  Statutes are the law enacted by a legislative body, in this case the Florida Legislature in Tallahassee, then signed into law by the Governor of the State of Florida.

Section 617.0832, Florida Statutes, entitled Director Conflicts of Interest, explains and establishes that:  No contract or transaction is void or voidable because a director has a financial interest in the contract or transaction, so long as (1) that relationship is disclosed or already made known to the board, and, (2) the contract or transaction is fair and reasonable to the corporation, and, (3) a quorum of the board members (without the vote of the member with the financial interest) is established and those members vote to approve  the contract or transaction.

The Board Administrator newsletter, which ALPI receives and distributes to you as Board Members in “the packet” for each of your meetings, in the March, 2019 edition, at p. 608, published a Board Member Code of Ethics.  It was a proposal for all Community Action Agencies and nonprofits to consider or to adopt as their own.   I attach it here as Exhibit A for you to read again because it is simple, concise and to-the-point.  When it comes to potential or actual conflicts of interest and whether you have a “financial interest” in a contract or transaction, these resources are helpful in dealing with that.  

By the way, the statutes governing all Florida corporations were amended in Florida in a major overhaul in the Spring of 2019 by adopting in all or most respects a Model Corporations Act drafted by recognized experts in the subject and which had already been adopted by many other states. The newest edition of Florida’s laws on corporations will become effective in the Fall of 2019.  If the new statute becomes effective as planned, then I may address this subject again with any changes to what is written here.

Duties of Directors

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Now, based upon my previous entry on Corporations 101, you need to know more, especially about the legal duties upon you as a Member of the Board of Directors of ALPI. Recall your oath of office to which you swore or affirmed when you were sworn in as a Director.

The law imposes certain duties upon each Director of the Board of Directors of a corporation, whether profit or non-profit, in exchange for the shield against personal liability for any activity of yours on behalf of the corporation.

1. DUTY OF LOYALTY:  you place the corporation’s interests highest when acting or deciding, rather than personal or other interests.

2. DUTY OF CARE:   you make decisions based upon study, research, common sense and logic, not bias or emotion or irrelevant matters.

3. DUTY OF OBEDIENCE:   you act and decide in compliance with the mission, purpose, known goals, and settled decisions of the corporation.

You should keep these duties in mind and refer to them in written form if possible and regularly, as you:

1. Represent ALPI in your community.

2. Receive and read the materials prior to each meeting.

3. Meet with the Executive Committee, Board of Directors, members of Committees of the Board, and if you attend Policy and Advisory Council meetings, which is when you register you vote on any motion and participate in discussion on any agenda item.

Corporate Office

phone: (863) 956-3491
fax: (863) 956-3357

mailing address:
P.O. Box 3126
Winter Haven, Florida 33885

street address:
300 Lynchburg Road
Lake Alfred, Florida 33850

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