From Supreme Court cases to wrongful termination suits, modern higher education operates in a climate of legal risks. As fiduciaries, governing boards may bear legal responsibility for institutional affairs. But where is the line between the board and its members drawn?
In this climate, board members are often named in lawsuits challenging board decisions. What protection does a trustee have?
In his recent publication, Top 10 Campus Legal Issues for Boards, Larry White outlines three of the most common protections against individual legal liability.
- Indemnification: Typically contained in an institution’s charter or bylaws, indemnification is the legally enforceable assurance that institutions offer a volunteer board member that he or she is secure against liability for actions taken in a trusteeship capacity.
- Insurance: Purchased by the institution, insurance often contains an “errors and omissions” policy that protects the institution as an entity, the trustees individually, and all salaried employees from liability claims up to a certain sum.
- Immunity: In many states, statues provide immunity for volunteer board members against personal liability for consequences resulting from board decision or policies.
Though not a catch-all, these practices offer insulation for volunteers acting in their roles as board members. So long as board members behave honestly, act in good faith, and exercise a reasonable amount of diligence in decision-making, they should find reassurance in these protections.