Legislature(1993 - 1994)
03/02/1994 01:40 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CHAIRMAN TAYLOR introduced SB 184 (VOLUNTEERS AND EMPLOYEES OF NONPROFITS) as the next order of business before the committee. SENATOR FRANK, Prime Sponsor, explained that SB 184 would limit the liability of nonprofit agency volunteers. He said that he is trying to promote volunteerism of nonprofit agencies; nonprofit volunteers should not be held liable for actions that are not grossly negligent, reckless, or intentional misconduct. SB 184 requires that in order for nonprofit agencies to be exempt, the agency would have to carry insurance, at least $200,000 per individual claim or $500,000 for all claims. He noted that a small nonprofit agency would not be required to carry insurance; small meaning administrative operating costs of less that $100,000 in the previous year and the nonprofit must be exempt from the Internal Revenue Code. SENATOR DONLEY pointed out that the Department of Law's memorandum is different than SB 184. The memorandum stated that the liability of the nonprofit agencies would not be effected. SENATOR FRANK was not sure that the April 28, 1993 memorandum was still applicable. Senator Frank noted that the scope of the bill had been limited due to concerns of the Labor & Commerce Committee. This memorandum could speak to a different bill. SENATOR DONLEY said that there are many types of nonprofit agencies; he was not sure that nonprofit agencies should be insulated. CHAIRMAN TAYLOR noted that SEAC, the Sierra Club, and Green Peace are nonprofit. Chairman Taylor expressed concern with insulating those groups. SENATOR DONLEY asked if the American Nazi Party was nonprofit. Senator Donley stated that he did not want to give unlimited liability to all nonprofit groups solely because they are nonprofit. SENATOR FRANK suggested that perhaps, a narrower definition of the envisioned nonprofit agencies could be used. He said that he was thinking of United Way type agencies. DON BUTLER, representing the Boy Scouts of America and the United Way, suggested setting the limits of liability required higher. CHAIRMAN TAYLOR discussed a pedophile case in Ketchikan, where the pedophile was a Boy Scout leader. He said that the Ketchikan case illustrates the importance to not shield against those activities. SENATOR FRANK reviewed the Labor & Commerce version of SB 184. He thought that they had removed employees and corporations. The focus of SB 184 was on the immunity of the volunteers. He assumed that the case Chairman Taylor cited should be considered intentional conduct. CHAIRMAN TAYLOR agreed that the case was criminal conduct, intentional. Number 358 DON BUTLER suggested that upping the limit of liability that nonprofit agencies should carry would be beneficial. He noted that they carry a $15 million blanket. SENATOR LITTLE noted that SB 184 exempts nonprofit agencies operating with less that $100,000 a year administrative costs. She said that most nonprofit agencies operate under $100,000. She inquired as to the reasoning behind that amount. SENATOR FRANK stated that the amount was a way to distinguish between larger and smaller nonprofit agencies. Senator Frank felt that most nonprofit agencies would be above that $100,000 amount. SENATOR FRANK inquired of the committee's thoughts regarding if the bill was only limited to volunteers with the standard as stated on page 2, line 11 subsection (d). SENATOR LITTLE thought that was a good approach, but she did not understand (b); would it apply only up to the amount of liability insurance carried by the entity. SENATOR FRANK explained that the original intent was that if you were going to allow for some immunity, limited liability, for volunteers or corporations, they should be required to carry some insurance. If they were a large nonprofit corporation, they would need insurance in which case their liability would be limited to the amount of the insurance. This would eliminate expensive claims that could bankrupt a nonprofit corporation. SENATOR DONLEY clarified that corporations can only be sued up to the amount of their insurance or gross. SENATOR FRANK agreed. SENATOR DONLEY noted that this only applies to nonprofit corporations carrying a minimum insurance of $200,000 per individual, which means they could be sued up to $200,000. SENATOR LITTLE asked if nonprofits are currently required to have liability insurance. SENATOR TAYLOR explained that they would be required to carry liability insurance if they are grantees of the state. The state requires an indemnification agreement. Nonprofits are defined under 501(c)(3) of the Internal Revenue Code. SENATOR TAYLOR said that he could envision many different situations. He used two nonprofits in Wrangell that are daycare centers with volunteers and salary workers as an example. If the daycare center was coloring eggs and one of the volunteers boiling water for the eggs tripped and spilled the boiling water on a couple of kids. He said that the employee would be immune and the nonprofit could not be sued because the situation would probably not be considered gross negligence. He pointed out the two different mindsets in the legislature: one view is concerned with people being individually accountable for their criminal activities, while another view is concerned with not making the individual accountable civilly. He expressed the need for more work on SB 184. SENATOR FRANK offered to work with the committee to meet the intent of the bill without causing any harm.
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