Insurance

For those of you who can’t wait: the answer is YES! A committee can be set up to approve construction project-related decisions between regular meetings of a public library’s full board.

BUT how this authority is set up is critical, so please keep reading.

A public library board’s ability to delegate this type of authority varies based on the type of library, as well as what is in the library’s charter, bylaws, and policies. For construction projects funded by grants and conditional donations, it is possible that grant terms may also impact how authorizations flow, too.

So how does a library set up a committee to get the efficiency described the member’s question?

Let’s break all that down in a fun and literary way.

While day-to-day coordination with a contractor may be assigned to the library’s director (or, at a larger library, a facilities manager[1]) a major construction[2] project requires extra capacity.[3] Even on a smallish project,[4] a library will need people keeping an eye on the overall picture, or things can go askew quickly. We’ll call this the “Dune Factor.”[5]

Another key element in a major construction project is maintaining a tight and trusting relationship with the architect. We’ll call that the “Fountainhead Factor.”[6]

A huge element is that no matter how great a contractor might be, it is vital to keep an eye on them. While a client’s instinct may be “we’re going to trust they are doing it right and give them their space,” that is NOT how to do it… instead, at regular intervals, the work must be inspected for conformity with plans and specs. This can be done by an “owner’s rep,” a “clerk of the works,” or even a properly experienced trustee.[7] We’ll call this is the “le Carré Factor.”[8]

Short note on timing: it is important to consider these factors, plan for them, and budget for them, BEFORE the job is bid out.

Why is that? Because how these roles become part of the toolbox that the library board (and any committee or person with delegated authority) will use to address issues requiring quick action (by the full board, or a special committee).

Here are common construction issues that may require quick action:

• Change orders (for example, the specified door model isn’t available, and the next best thing is $5,000 dollars more);[9]
• Design changes, which also lead to change orders (for example, if the tie-in to an addition needs to change because the old building is deteriorating);
• Discovery of unforeseen conditions (for example, it is discovered that a load-bearing wall is slated for demolition as part of an open floor plan);[10]
• Environmental concerns (for example, uncovering friable asbestos);[11]
• Onsite injury (for example, a worker is injured);[12]
• Negative public relations (for example, if the contractor’s crew is smoking on the library’s property during a break);[13] and
• Bees![14]

For all of this, a library is wise to do exactly as the member describes and designate a committee or person to make decisions.

Here is where things get tricky. Because all public libraries[15] are subject to the Open Meetings Law, the meetings of a committee empowered to take action need to be publicized and open to the public. However, many of the scenarios depicted above will provide little to no time for advance notice, and some actions may require executive sessions due to confidentiality (for example, matters that could be in litigation).

To keep things more streamlined, some libraries will hire an “owner’s rep” who will be at the project (Dune Factor), chum up with the architect (Fountainhead Factor), keep an eye on things (le Carré Factor), and have a certain amount of delegated authority to issue change orders that are within the bounds of a pre-approved budget. The best owner’s reps will have serious experience with similar projects and owe 100% of their loyalty to the library.[16]

For economy, some libraries will have the library director fill this “owner’s rep” role. Many library directors, being detail-oriented folks who are passionate about what’s best for their libraries, are well suited to it, particularly if they have already lived through a construction project or two. However, if a library is going to do this, they must plan for the library director not to be able to perform other functions at the same time; in fact, at least 30% of the library director’s time should be assumed as being spent on the project.

From the legal perspective, using the library director for this role is risky. This is because if something is missed, the liability for the mistake comes back on the library, rather than a contractor. The same concern applies if the library decides to use a trustee to play this role informally. So, whenever possible, budgeting for a contracted and professional “owner’s rep” is wise.

Regardless of the model chosen to address the Dune, Fountainhead, and le Carré factors, a library board committee empowered to call a special meeting to approve items over and above budgeted factors—or to amend contracts—can be formed to take quick action, so long as the library’s charter,[17] bylaws, and policies do not prohibit giving a committee such authority.[18]

Here is a model resolution for setting up such a committee, and it includes consideration of the Open Meetings Law requirements:

WHEREAS the Library is planning to undertake a project to [INSERT DESCRIPTION] (“the Project”);

WHEREAS the Project’s contracted cost is $[INSERT COST] (“Project Budget”);

WHEREAS the Library has authorized an amount of [INSERT PERCENT]% of the Project Budget, for a total of [INSERT AMOUNT], as a “Contingency Budget,” to address emergent project costs, such as change orders; and

WHEREAS the Library wishes to avoid costs and delays related to approving use of the Contingency Budget;

BE IT RESOLVED that [INSERT NAMES] are appointed as a “Project Committee” authorized to call special meetings to address the sudden need for change orders and to authorize via a unanimous vote contract changes for amounts not exceeding the Contingency Budget;

BE IT FURTHER RESOLVED that [INSERT NAME] shall have the authority to sign documents related to approvals granted by the Project Committee;

BE IT FURTHER RESOLVED that the Project Committee is also authorized to timely raise concerns related to construction and construction contracts with the Library’s contractors, insurance carriers, and attorney;

BE IT FURTHER RESOLVED that to ensure Open Meetings Law compliance, the Project Committee shall provide the public 48-hour notice of its meetings whenever possible but shall not delay immediate action to do so, shall maintain minutes of its proceedings together with copies of any change orders or expenditures authorized, and such minutes and documentation shall be reviewed and adopted into the record of the next regular board meeting;

BE IT FURTHER RESOLVED that if the Project Committee meets via videoconferencing as allowed by the Library Board’s policy, the information to attend the public meeting will be publicized on the Library’s webpage, if time allows;

BE IT FURTHER RESOLVED that the Project Committee has the authority to call a special meeting of the full board, if a matter of immediate concern requires approval in excess of its authority or of the authorized Contingency Budget; and

BE IT FURTHER RESOLVED that the Project Committee shall only be dissolved after the expiration of the warrantee period of the Project, which shall be [INSERT NUMBER] years after the issuance of the Certificate of Occupancy.

The reason to keep the committee operating after completion of the project is that if anything goes awry (like the new wing begins sinking six months after completion), the group is still empowered to take quick action (like calling an attorney and an engineer).

Hopefully, of course, every major construction project goes smoothly, and the committee’s work will be over as soon as the ribbon is cut on the new project!

Thank you for an important question.

What an interesting set-up! If I started a private club,[1] I would totally want it over a library. Or a museum. Either way, very cool.

While cool, the operation of my private club over a school district public library would not be without concerns, because all non-association libraries have to abide by a bar on inurement[2] (which applies to all “charitable” organizations) and Article VIII Section 1 of the New York State Constitution,[3] which bars use of public assets for private use.[4]

That means that my private club could not pay less than fair market value for occupancy, except under some very particular circumstances:

1. A person deeded the property to the library on the condition that my private club has a permanent right to use it.
2. The library has arranged an in-kind exchange that is demonstrably worth what it would otherwise have to charge for rent and utilities. For instance, if my private club provides lawn maintenance, etc. roughly equal to the fair market value of the rent.[5]
3. If the occupancy creates a library mission-related benefit to the public, such as the club running an ESL program or free computer skills clinic during library hours in the space, and the arrangement is confirmed with an agreement.[6] In that type of example, it helps if the private club is also a type of charity.[7]

In the absence of those factors, there is a strong chance the arrangement could run afoul of the law. But would it, as the member asks, create a danger of the library being regarded as mismanaging funds, or of losing its charter from the New York State Education Department (NYSED)?

That answer would depend on several factors, but I can say this: no attorney for the library, once learning of this, without one of the above-listed reasons to justify the arrangement, would feel comfortable saying (much less putting in writing), “Oh, sure, keep the club upstairs! No harm, no foul.”

Instead, the attorney would be nervous because while the threat of charter revocation would be remote (there are usually warnings and time to correct the situation before a charter is revoked by NYSED[8]), these items are of immediate concern:

1. Violation of bar on inurement (which could be called “financial mismanagement,” among other things).
2. Violation of the State Constitution’s bar on use of public property for private purposes without payment of fair market value (which could also be called “financial mismanagement,” among other things).
3. Risk of denial of insurance coverage if tenant causes fire or other property damage.
4. Risk of denial of insurance coverage if tenant member causes personal injury.
5. Possible zoning issue.[9]

A willful failure to resolve the above-listed problems, if not remedied, could eventually lead to the type of trouble that could jeopardize a charter.[10]

So, what would I do with a situation like this? It is clear that the matter calls for some homework; if there is any reason that justifies the occupancy, there is still a strong motivation to ensure that the proper insurance coverage and indemnification arrangements are in place. At the same time, there is a “human factor;” if the club has been there forever, and everyone is cool with it (even though it’s not legally cool), making things right without causing a fracas will take research, careful planning, and diplomacy.

The most likely resolution to the research, planning, and diplomacy process would be a lease agreement.

Thank you for a great question!

There is a large array of insurance coverage a not-for-profit organization might be required to have, and another, equally large array of coverage this is "optional" but may be advised as wise.

Most of the "required" coverages are due to having employees.

Since most (all?) Friends groups in New York State do not have employees, we'll skip over those (unemployment, disability, paid family leave, worker's compensation, etc.), and focus on the other types of required coverage first.

With employees out of the picture, what other coverage is required?

If the Friends own a vehicle (also not too likely), automobile insurance is required.

If the Friends lease space, certain coverage (usually "general commercial liability") may be required by their lease.

If the Friends have accepted a grant or performance contract conditioned on certain coverages, those coverages must be in place.  For example, a grant to create a public mural at the Library may come with a requirement for proof of general liability insurance; a contract or MOU with the Library with which the Friends are affiliated might have a similar requirement.

If none of the above-listed "required" conditions apply, is any coverage required of a "Friends" group?

No.

This brings us to the "optional" coverage I mentioned; coverage that is not "required" but is "advised as wise."

For a Friends group that hosts many fund-raising events, some type of general liability coverage is wise (and just like under a lease or grant, may be "required" by contracts for certain event venues).

The scope of such coverage (as in, what types of claims it will kick in for) can change from policy to policy, but the basic function of such coverage is to ensure that the financial risks of conducting the events is mitigated in the event of a worst-case scenario.

What type of activities could a "Friends" group host, that merit such coverage?  As a hypothetical example, let's consider a Friends group that hosts four very popular routine fund-raising events per year: 

Event 1: A Fall "Bookride," a kids-focused event where children ride a horse-drawn carriage filled with books (instead of the more traditional hay.).

Event 2: A Winter "Library Tango", where participants buy tickets to dance the night away, with micro-events like a "Silent Book Auction,” with all proceeds for special programs at the Library.

Event 3: A Spring "Seedlings for Seniors," a tree/plant sale to ensure extra programming for senior members of the community.

Event 4: A "Summer Water Fest," an event where participants pay by the pint to douse local celebrities with water.

Each of these events have a certain—albeit small—amount of physical risk for participants.[1]  In addition, every event will take place at a location where the property owner could face some type of claim for negligent management of the property, leading to injury.

Whether it's getting kicked by a horse at the Bookride or a latex balloon allergy at the Water Fest, the way to mitigate the risk of a person sustaining an injury and bringing a legal action that could jeopardize the finances of the Friends is to either a) have insurance that covers a possible claim; or b) ensure all the risk as assumed by another entity that has insurance, and who has indemnified the Friends; and/or c) use waivers to mitigate the ability of participants to bring a claim.

As seasoned event planners know all too well, the trouble is, each of these mitigation methods bring its own complications. 

As the member points out, insurance coverage costs money, which many Friends groups would rather see go to support their library. 

Meanwhile, asking another organization (like a co-sponsor) to take on all the risk and/or supply the insurance is not always a feasible option.[2]

And using waivers, while effective if properly drafted, can be a real bummer.[3]

This is where a good insurance agent or lawyer can come in.  Either can help a group of Friends assess their actual "exposures" (what risks they face), after which the right type and amount of coverage can be selected.

If almost all the risk can be mitigated (for instance, if the only event is an annual book sale, conducted at the library, which has insurance, and agrees to accept the risk) an informed business decision to accept a small amount of risk, and not get coverage, can be made.  On the flip side, for an active Friends group with a wide array of physical events, it can be decided that ongoing coverage is worth the money.

The same goes for a final type of "optional" coverage: Director's and Officer's coverage, or "D&O," which covers certain claims (contract violation, defamation, advertising injury, theft, copyright claims) that can be made against the leadership of a corporation. 

Just like with other coverages, there is no "one" type of D&O. This means that any policy under consideration should be carefully reviewed, because some policies exclude the more common types of claims, making insured entities wonder: "Why did we pay for this in the first place?"[4]

For a Friends group without employees or many business transactions, extensive D&O might not be needed, but if the Friends are active on social media and in politics (for instance, fighting the good fight for intellectual freedom, increased budgets, and/or capital campaigns), some coverage for "advertising injury" and alleged defamation is wise.

So, what are the important take-aways, here?

First, without employees, it may be that a Friends group is not "required" to have any type of insurance coverage.

Second, a decision to obtain discretionary insurance coverage should be made based on the activities of the group, ideally with advice from a licensed insurance agent or advisor.

Third, such a decision should be revisited from time-to-time, and weighed by the full board, to ensure there is a good match between the coverage (or lack thereof) and the group's activities.

Thank you for an important question!

Before answering this question, I have to point to the extraordinary care the member has put into formulating it.

Prior to considering insurance coverage as a question of budget, this member library has:

• Passed policies to promote safety;
• Taken action to monitor its environment and protect itself, its employees, and visitors from unsubstantiated claims of molestation and abuse; and
• Addressed insurance considerations head-on.

This is the exact order of operations: only once an institution has done all it can to prevent a risk of molestation or abuse, should it then consider questions of adequate insurance and budget.

That said, because it can impact the financial viability of a library, right after assurance of safety, it is critical—as this library is doing—to consider questions of adequate insurance and budget.

Why is this important?

No volunteer board member likes to consider the possibility that their library may need coverage for “Abuse and Molestation,” but there are many scenarios where even a library with the best policies and safest practices can have a credible accusation. For example:

• If a library has a room that it allows community groups to use, the library may be named in a case against the group (if the alleged incident took place at the library);
• If an employee engages in abuse without warning, but an injured party claims the library knew the employee posed a threat; or
• If the alleged incident truly didn’t happen, but the library or named employee still needs to be represented in court until it is dismissed (hopefully in the early phases of litigation).

In other words, there are many scenarios where even a library that has taken the best precautions—and which truly is not at fault in any way—can be named in costly legal proceedings. If there is no insurance coverage when that happens, the library will have to pay.[1]

Further, if innocent trustees, employees and/or volunteers are personally named in such proceedings, the library may also want to defend these people (and in some cases, may owe them a defense[2]).

All that said, as the member points out, there may be a point where coverage is so costly, a small library must decide it simply isn’t affordable.

Which brings us to the member’s question: Is deciding to go without “SAM coverage” truly an option?

There is no legal requirement to have SAM coverage. Unlike automobile insurance and some of the other types of coverage listed by the member, such coverage is not required by law (this might have something to do with its lack of affordability).

However, while not required, it is important for library trustees to remember that the bills for a claim of sexual abuse or molestation can easily be in the tens of thousands—and that’s just to get an unfounded case knocked out in the initial phases of litigation. Therefore, a library with a high degree of confidence that such a claim is highly unlikely to occur, OR, if it does occur, highly likely to be defensible, can take the following steps to be ready, without securing SAM insurance:

Step 1: Ensure that the library has a policy barring trustees, employees, or volunteers from any physical abuse of any person in connection with the library. Importantly, this policy should also state that “In the event the library determines that this policy has been broken, termination will be immediate, and the library will not indemnify or defend the violating trustee, employee, or volunteer.”

Step 2: Conduct a criminal background check[3] prior to hiring employees or accepting volunteers and conduct an annual search of the New York State sexual offender registry to verify that no trustees, volunteers, or employees are on the list (if they are, consult a lawyer regarding next steps).[4]

Step 3: Double-check that every use of library space by outside groups is per a written contract that ensure such users are: a) covered by SAM insurance[5] and b) have agreed to “hold harmless and indemnify” the library, its employees, trustees, and volunteers from any claims.[6]

Step 4: Have a “zero tolerance” policy for any abuse or threats of abuse and enforce the policy “without fear or favor” so the library cannot be accused of being on notice of retaining personnel with abusive tendencies (which can support a claim of “negligent hiring” or “negligent retention”).

Step 5: Maintain a policy that upon notice of a potential SAM claim, the library retains legal counsel to immediately conduct a confidential investigation. [NOTE: it sounds almost silly to say this, but since a SAM claim is also a claim of illegal sexual harassment, this “immediate investigation” approach is already 90% met in a library’s state-mandated Sexual Harassment Policy; the difference is that the “immediate investigation” should be done by a lawyer so the results can be used to either defend the library AND/OR to take corrective action with regard to an offending trustee/employee/volunteer].

Step 6: Maintain a fund balance of at least $20,000.00 dollars[7] that can be readily accessible “for trustee, employee, and volunteer indemnification and library defense” upon a vote of the trustees.[8]

Step 7: Be ready to face a financial crisis at the library in the event of a worst-case scenario (a claim that—despite every possible protection—results in a finding of liability).

Step 8: Long-term, consider working with your cooperative library system or another group on an ongoing basis to explore finding SAM coverage for a group of similarly sized libraries. While libraries in New York can’t band together to jointly buy one insurance policy, entities in New York can loosely coordinate to shop for a good deal together and might be able to find a more favorable rate with a collaborative approach.[9]  

I wish I had better news for the thoughtful member library that submitted this question. But if SAM coverage is truly unaffordable, the additional mitigation steps in this RAQ can help with being ready to both deter and fight a claim of liability. What’s admirable is that rather than simply ducking the issue, you are considering what’s best for the library and community.

Thank you for a very important question.

There are many types of insurance, and many types of "exclusions" to risks covered by insurance.

Because of this, there is no one answer to this question.  A library can have "general commercial liability" and "D&O", and "E&O", and "professional liability" coverage...and could still not have coverage for a claim related to library content.

Because of this, rather than examine "types" of coverage, the questions for a board selecting or renewing coverage should be:

Our library is aware that in parts of the country, librarians are being threatened with criminal prosecution for providing access to content as part of their job. We want to indemnify and commit to defending any of our employees who are threatened for doing what their job and our policies require them to do. Does our policy cover costs incurred by the library for providing such an indemnification and defense?

and

Our library is aware that in parts of the country, librarians are being harassed and/or threatened by members of the public for providing access to content as part of their job.  Does the carrier provide resources or risk management support in the event such acts aimed against our employees and volunteers?

For library employees and volunteers, the questions are a bit different:

As the board is aware, librarians across the country are being threatened with criminal prosecution for providing access to content as part of their job. I would appreciate assurance that the library will commit to indemnifying and defending any of our employees who are threatened for doing what their job and our policies require them to do.  Can the board pass a resolution assuring us of that?

and

As the board is aware, librarians across the country are being harassed and/or threatened by members of the public for providing access to content as part of their job.  What resources or risk management support will the library provide employees and volunteers in the event such acts aimed against them?

An important take-away here is that not all risk can or should be mitigated only by insurance. 

Organizations facing expenses, disruption, and threats to employees as the result of protest and intimidation generally have an array of protections they can use to prepare for risk.  This array can include insurance, but can also include:

• Budgeting for contingent needs (such as PR assistance, legal, security, private investigators, and added security);
• Using policy and procedure to prepare for likely scenarios;
• Staff and volunteer training;
• Connecting with advocacy groups (locally and beyond);
• Planning with local law enforcement and the district attorney's offices.

While the question is about insurance (and the answer is: yes, you can get insurance that covers just about anything...just read the fine print to make sure what you think is covered is actually covered), it is really about protection.

Insurance can be great protection, and libraries should use the two questions above to confirm (in writing) that their current policies protect their trustees, employees, and volunteers for First Amendment-related contingencies.

But insurance is just one part of that protection.  When it comes to attacks based on library content, solid policies, a knowledgeable board, and a confirmed commitment by leadership to stand with employees when the going gets tough are just as important.

Thanks for a great question.