To quote directly from the legislation, "The purpose of [The Volunteer Protection Act] is to promote the interests of social service program(s)...by reforming the laws to provide certain protections from liability abuses related to volunteers serving nonprofit organizations...."

As 501 (c)3, non-profit, tax-exempt organizations, AACT theatre groups clearly fall under the protection of this new law.

How much liability protection, however, does the VPA actually provide?

We put this question to Executive Risk Management Associates, the underwriter for the Directors & Officers liability insurance available to AACT members.

It needs to be understood at the outset, that many questions will not be answered for several years. Since no federal agency was designated to interpret the new law, it will take this long for the courts to establish a body of precedents that will define the extent and limitations of the law's protection.

Meanwhile, the American Society of Association Executives (ASAE) has offered some preliminary answers in their Association Monthly article published in August.

According to the ASAE article, the VPA:

· is intended to exempt volunteers from liability if they were acting within the scope of their organization, but it does not eliminate all liability. Volunteers are not exempt if their misconduct constituted a crime, a sexual offense or a civil rights violation.

· is intended to prohibit punitive damage awards unless the harm was caused by willful, criminal misconduct or flagrant indifference to the rights and safety of others.

· does not prohibit lawsuits against volunteers, but it will provide a tool in the defense against such lawsuits. In this way, the law could deter potential claimants from bringing a lawsuit in the first place.

· preempts all inconsistent state laws and even allows states to increase protection from liability. However, it also allows states to enact laws holding volunteers liable (the exact opposite of the intent of the federal law) if the lawsuit is filed in that state's court as opposed to federal court. This is a narrow, but important potential loophole, so you should monitor your state legislature.

· allows individual states to opt out of the coverage under certain limited circumstances and allows the states to impose additional restrictions as long as they are not inconsistent with the federal law.

· is intended to provide immunity from personal (individual) liability. It does not grant immunity from organization (entity) liability. In other words, a court could dismiss a lawsuit against individual volunteers while leaving intact a lawsuit against the organization, itself.

· offers no protection for paid employees.

· does not provide for legal defense costs. Even if a judge dismisses a case against you because the VPA exempts you, you will still have to pay the legal costs involved in getting that dismissal.

Clearly, the Volunteer Protection Act offers some much needed protection for your volunteers. It would be foolish not to use all the protection this law offers. However, do not leave yourself exposed in crucial areas of liability because you mistakenly believe that the VPA gives you all the protection you need.

In an earlier article on volunteer liability [ Is There a D & O Policy in the Wings? June/96 ] I recommended a 3-step risk management strategy. EDUCATE. Make sure volunteers understand their duties and responsibilities and act accordingly. INDEMNIFY Make sure your bylaws protect volunteers against liability to the fullest extent allowed by law. INSURANCE. Give careful consideration to Directors & Officers liability insurance. What protection does this kind of insurance offer that the VPA does not?

PCI is an insurance agency. We are not lawyers. However, based on what current information we have been able to obtain about the new Volunteer Protection Act, our recommended risk management strategy stands.

For more information about this risk management strategy,
see the article, Is There a D&O Policy in the Wings? [JUN/96]

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