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The Top 5 Reasons Associations Get Sued

Sandra Pfau Englund

#5 Release of Records

State laws generally require that nonprofit corporations keep and make available for inspection by any member certain corporate records, such as minutes of membership, board and committee meetings, and the names and addresses of all voting members. Failure to make these records available upon request may result in legal action against the association.

#4 Torts/Negligence

Associations may be held liable for injuries to individuals using the association's facilities and/or attending the organization's meetings. For example, an individual could sue if he/she trips and falls over signage at an association's meeting. Associations also have been found liable for providing inadequate security at meetings which result in injuries or theft. To limit or avoid such claims, associations should carefully review liability and indemnification clauses in meeting contracts, and also should have appropriate insurance coverage to cover claims that do occur.

#3 Discrimination claims

Associations may be liable for a wide variety of discrimination claims related to employment, volunteers and programs. To prevent such claims, associations should have and follow standardized procedures for recruiting, hiring and terminating employees and volunteers. In addition, the more an association treats all individuals alike, the less likely a discrimination claim will arise.

#2 Contract claims

Unfortunately, the first time many contracts are carefully scrutinized is when someone threatens a lawsuit. Key provisions in most contractual agreements include the term or length of the agreement, when and how the agreement may be earlier terminated, the precise specifications for the work to be performed, payment terms, including penalties for delays and bonuses for early completion. Before executing an agreement, you should read and understand all of its provisions. Surprising to some is the extent to which even "form" contracts may be negotiated.

#1 Employment claims

Employment-related claims constitute by far the greatest number of lawsuits against associations. These claims include discriminatory hiring, wrongful termination, breach of contract, and employee benefits claims. To avoid employment-related lawsuits, associations should, among other precautions, have in place and carefully follow set procedures for hiring and firing staff, train staff who interview applicants, have its job descriptions and employment applications reviewed periodically by legal counsel, carefully draft, review and abide by all employment contracts, and know and understand the provisions of its benefits programs.

Courtesy of
Pfau Englund Nonprofit Law, P.C.
1451 Juliana Place, Alexandria, VA 22304-1516
Voice: 703/751-8203 Fax: 703/823-8692
Email: spfau@nonprofitlaw.com
website: www.nonprofitlaw.com