Legal Issues for Boards
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Serving on a board requires competence of both procedure and process in order to meet the letter of the law and instill a sense of trust and credibility. The section below describes several of the more significant aspects of serving on a board including Montana’s open meetings law, code of ethics, nepotism, discrimination, ex parte consultation, and liability.
By Paul Lachapelle
Montana’s “sunshine laws” are described as among the most stringent in the nation.10 These laws are outlined in Article II Section 8 (Right of participation) and Section 9 (Right to know) of the state’s constitution.11 In Title 2, Chapter 3, Public Participation in Governmental Operations, the Montana Code Annotated (MCA) describes provisions of the required “Notice and Opportunity to be Heard” in Part 1, and “Open Meetings” in Part 2. The open meetings law affords “reasonable opportunity to participate in the operation of governmental agencies prior to the final decision of the agency” (2-3-201). The open meetings laws apply to all advisory boards, commissions, committees, and districts.12
The language is clear in the MCA that any legal interpretation of the open meetings laws will be liberal. The language of the code is clear and unambiguous in 2-3-201: “Public boards, commissions, councils, and other public agencies in this state exist to aid in the conduct of the peoples’ business. It is the intent of this part that actions and deliberations of all public agencies shall be conducted openly. The people of the state do not wish to abdicate their sovereignty to the agencies which serve them. Toward these ends, the provisions of the part shall be liberally construed.”
There are four essential elements in the open meetings law:
- If a quorum, defined as the number members legally required to conduct business, is convened by either physical presence or by means of electronic equipment (2-3-202) and,
- Members will hear, discuss or act upon issues that it has jurisdiction over, (2-3-202), then,
- The meeting must be open to the public and the press must be permitted to record the meeting (2-3-211) and,
- Appropriate minutes of all meetings shall be kept and made available for the public (2-3-212).
The issue of whether the right to know and participate provisions apply to organizations such as a local chamber of commerce. The MCA contains language that references “organizations or agencies supported in whole or in part by public funds” (2-3-203). Additionally, the Montana Attorney General determined that, “The meetings of a local chamber of commerce or other organization recognized and acting as a nonprofit convention and visitors bureau which receives and spends bed tax funds must, as they pertain to the receipt and expenditure of bed tax monies, be open to the public in accordance with section 2-3-203, MCA.” (44 A.G. Op. 40 (1992)).
Each board must develop procedures and adopt rules to facilitate public participation in decisions that are of significant interest to the public (2-3-103). The procedures include a schedule of regular meeting times and agenda prepared and posted sufficiently in advance to provide notice of the topics to be discussed and actions to be considered. The public must also be afforded a reasonable opportunity to offer information and opinions, either orally or written, before final decisions are made. A matter of significant public interest is defined as one “involving any non-ministerial decision or action…which has meaning to, or affects a portion of the community.” 13 Discrepancies as to whether a meeting is of a significant public interest should always err on the side of transparency and opportunities for public participation. Regarding the amount of time required for noticing a meeting, the Attorney General has opined that, “Forty-eight hours is generally considered sufficient to notify the public of contemplated action. …The amount of notice given should increase with the relative significance of the decision to be made.” 14 It is critical to follow the established procedures and to make the procedures known to the public. There is no violation in the law by giving more notice or opportunity to be heard than is required. The agenda for a meeting, as defined in 2-3-202, must include an item allowing public comment on any public matter that is not on the agenda of the meeting and that is within the board’s jurisdiction. However, the board may not take action on any matter discussed unless specific notice of that matter is included on an agenda and public comment has been allowed on that matter. There are exception to the noticing statutes and include those that involve a decision that must be made to deal with an emergency situation affecting the public health, welfare, or safety or a decision involving no more than a ministerial act (2-3-112).
For municipalities, there is additional statutory language that states, “In any meeting required to be open to the public, the governing body, committee, board, authority, or entity shall adopt rules for conducting the meeting, affording citizens a reasonable opportunity to participate prior to the final decision” (7-1-4143). Cities and towns are required by statute to specify by resolution a public location for posting and provide a posting board. When notice is required, the document must be placed on the board and a copy made available at the municipal office (7-1-4135).
Board members should note that meetings can be statutorily different than hearings regarding the noticing requirements. See the specific statutes describing your board and the corresponding publication or mail requirements (for example, 7-1-2121 and 7-1-2122 for counties, and 7-1-4127, 7-1-4129 and 7-1-4131 for municipalities).
10 Weaver, K. L. and P.R. Lachapelle. 2010. Governing Montana at the Grass Roots: Local Government Structure, Process and Politics (3rd ed.). Bozeman, MT: MSU Extension. 333 pages.
11 Article II, Section 8. Right of participation. The public has the right to expect governmental agencies to afford such reasonable opportunity for citizen participation in the operation of the agencies prior to the final decision as may be provided by law. Section 9. Right to know. No person shall be deprived of the right to examine documents or to observe the deliberations of all public bodies or agencies of state government and its subdivisions, except in cases in which the demand of individual privacy clearly exceeds the merits of public disclosure.
12 Opinions of the Attorney General. 2005. Montana Department of Justice, Legal Services Division. 51 Op. Att’y Gen. No. 12. The opinions carry the weight of law, unless they are overturned by a court or the legislature changes the law or laws involved. https://doj.mt.gov/wp-content/uploads/2005/01/51-012.pdf
The MCA states that appropriate minutes of all meetings shall be kept and be available for inspection by the public (2-3-212). The minutes must include the following:
- date, time, and place of the meeting;
- a list of the individual members of the public body, or agency in attendance;
- the substance of all matters proposed, discussed, or decided;
- and at the request of any member, a record by individual members of any votes taken.
In addition, public comment received at a meeting must be incorporated into the official minutes of the meeting (2-3-103). For municipalities, there is additional statutory language about “copying” that states, “Appropriate minutes shall be kept of all public meetings and shall be made available upon request to the public for inspection and copying” (7-1-4141).
The MCA also states that, “any time a presiding officer closes a public meeting pursuant to 2-3-203, the presiding officer shall ensure that minutes taken in compliance with subsection (2) are kept of the closed portion of the meeting. The minutes from the closed portion of the meeting may not be made available for inspection except pursuant to a court order” (2-3-212).
The MCA states that if an audio recording of a meeting is made and designated as official, the recording constitutes the official record of the meeting but a written record of the meeting must also be made available for inspection. A log or time stamp for each main agenda item is also required (2-3-212). There is no distinction in the MCA between draft minutes and approved minutes (those accepted by the body).
Boards should submit the minutes of its proceedings within 30 days after the minutes have been approved by that body for electronic storage and retention in accordance with the provisions of 2-6-12. More information about this provision is in 7-1-204 and 7-11-1030.
Below are some guidelines that are not part of the MCA but should be considered by every board:
- Minutes are the official record of the proceedings of a deliberative assembly, board, or committee; theyare also a historical document that will be accessible in perpetuity.
- The minutes should contain a record of what was done at a meeting, not what was said by the members;however, generally more detail is better than less.
- There should be a designated individual to take the minutes, be it the secretary or a staff member. Besure to be familiar with procedures in the case of an absence.
- There should be a method of approval of the minutes. For example, draft of minutes can be circulatedamong the members and interested parties for corrections and improvements before the next meetingand then a formal vote can take place at the subsequent meeting.
- The body of the minutes should contain a separate paragraph for each subject matter.
- Motions and decisions should be clearly stated (who made the motion, who seconded, and what is thefinal outcome).
- Note all actions to be taken and by whom and business left pending.
- Amendments or corrections should be done in red ink and not rewritten. Electronic minutes can usestrikethrough or Track Changes functions.
- The minute-taker should sit near chair or presiding officer so that they can hear clearly.
- Note late arrivals and early departures.
- Obtain copies of reports and include them with the minutes.
- Ensure that the minutes are impersonal and do not contain comments like “heated,” “lengthy,”“moving.”
- Write up or transcribe the draft minutes as soon as possible.
- The secretary or recorder should sign the minutes, particularly when they are approved minutes.Consider adding some of these details to your bylaws or rules of procedure (see section: Does our BoardNeed By-Laws?).
13 Opinions of the Attorney General. 1998. Montana Department of Justice, Legal Services Division. 47 Op. Att’y Gen. No. 13 https://doj.mt.gov/wp-content/uploads/1998/01/47-013.pdf.
The Montana Constitution (Art. II, §10) states, “the right of individual privacy is essential to the well-being of a free society and shall not be infringed without the showing of a compelling state interest.” While the open meetings law clearly provide for the right to know and right to participate, the presiding officer of any meeting may close a meeting during the time the discussion relates to a matter of individual privacy and then if and only if the presiding officer determines that the demands of individual privacy clearly exceed the merits of public disclosure (2-3-203). The right of individual privacy may be waived by the individual about whom the discussion pertains and, in that event, the meeting must be open.
The Montana courts employ a balancing test to determine whether individual privacy justifies closure of a meeting. The first part of the test is whether the individual has a subjective expectation of privacy; the second part is whether the expectation is one which society is willing to recognize. The question becomes whether protection of the private interest outweighs the merits of public disclosure.
Legal opinion has determined that certain personnel records could be closed, including matters related to family problems, health problems, employee evaluations, military records, IQ test results, prison records, drug and alcohol problems, and information “most individuals would not willingly disclose publicly.”15 Individual privacy does not extend to such issues as salary or compensation paid a public employee, to a decision on the award of a contract, or to any other expenditure of public funds or mistakes made in the course of performing official duties. For municipalities, there is additional statutory language that states, “Personal records, medical records, and other records which relate to matters in which the right to individual privacy exceeds the merits of public disclosure shall not be available to the public unless the person they concern requests they be made public.
Except as provided by law and as determined by a public officer, law enforcement records which relate to matters in which the right to individual privacy or law enforcement security exceeds the merits of public disclosure shall not be available to the public (2-6-1003, 44-5-103, 44-5-301).
Certain exceptions are detailed in 2-3-203 and also include whether the discussion relates to litigation when an open meeting would have a detrimental effect on the litigating position (this does not apply regarding litigation between two government agencies or bodies) or any judicial deliberations in an adversarial proceeding.
15 Montana Human Rights Division v. City of Billings, 199 Mont. 434, 649 P.2d 1283 (1982), Available at Montana Supreme Court: http://searchcourts.mt.gov/.
Montana’s Code of Ethics defines and prohibits conflict between public duty and private interest (2-2-101). In short, the statute establishes that board members cannot benefit personally or financially from their position stating, “The holding of public office or employment is a public trust, created by the confidence that the electorate reposes in the integrity of public officers, legislators, and public employees. A public officer, legislator, or public employee shall carry out the individual’s duties for the benefit of the people of the state” (2-2-103).
Specifically, there can be no “business” conflicts, (includes a corporation, partnership, trust, foundation, or any organization, whether or not operated for profit), financial compensation, or “gifts of substantial value,” generally defined as $50 or more or of substantial value or economic benefit that would tend improperly to influence a board member to depart from impartial discharge of duties (2-2-102). The statute does not apply to a gift that is not used and returned within three days, food and beverages consumed while participating in events related to board duties, educational materials related to board duties, or an award publicly presented in recognition of public service.
Board members may not disclose or use confidential information obtained through the board that would benefit them personally or financially (2-2-104). Rules of conduct also dictate that a public officer may not use public time, facilities, equipment, supplies, personnel, or funds for private business purposes or, to solicit support for or opposition to any political committee, the nomination or election of any person to public office, or the passage of a ballot issue. Board members may not use public time, facilities, equipment, supplies or funds to determine the impact of passage or failure of a ballot issue on state or local government operations (2-2-121). There is also a disclose clause in the MCA that states, “Public officer or public employee shall, prior to acting in a manner that may impinge on public duty, including the award of a permit, contract, or license, disclose the nature of the private interest that creates the conflict” (2-2-131).
Nepotism is defined as the bestowal of political patronage by reason of relationship rather than of merit (2-2-301). Board members may appoint to any position of trust or emolument any person related by “consanguinity within the fourth degree or by affinity within the second degree” (2-2-302). Relationship by affinity is defined as “the relation which one spouse has, by virtue of the marriage, to blood relatives of the other. Therefore, a person has the same relation by affinity to a spouse’s blood relatives as a spouse has to them by consanguinity and vice versa. Degrees of relationship by affinity are computed in the same manner as degrees of relationship by consanguinity” (1-1-219). Agreements to appoint relatives to office are unlawful and considered a misdemeanor with fines of $50 to $1,000 and imprisonment up to 6 months (2-2-304). There are exceptions depending on the county population and other specific criteria (2-2-302).
Issues associated with ex parte communications are prompting increased discussion and scrutiny in Montana. Ex parte consultations are regarded as a private, one-sided communication between a decision maker and a party or person concerning issues before the decision maker. While Ex parte communications are described in the Montana Administrative Procedures Act (MAPA) prohibiting agencies that make quasi-judicial decisions from receiving or engaging in ex parte consultations “except upon notice and opportunity for all parties to participate” (2-4-613), the MAPA does not apply to “units of local government” (2-4-102(2)(b)). More legal clarification pertaining to local governments and boards is likely forthcoming but in the meantime, these types are communications should be of particular concern for those serving in a quasi-judicial capacity.
For those board members serving in a quasi-judicial capacity, they should be sensitive to the types of private discussions they participate in and in particular, receipt of information or evidence. Legal counsel will advise the best course of action regarding if the information should be disclosed at a public meeting and for public record.
The MCA (2-6-1003) guarantees “every person” the right to examine and obtain a copy of any public information of this state. No person may be deprived of the opportunity to examine documents except when “the demand of individual privacy clearly exceeds the merits of public disclosure” (2-3-203).
Public record is defined as public information that is “fixed in any medium and is retrievable in usable form for future reference; and designated for retention by the state records committee, judicial branch, legislative branch, or local government records committee” (2-6-1002). The MCA states that “upon receiving a request for public information, a public agency shall respond in a timely manner,” records are available under the act for copying as well as inspection, and that a fee can be charged, again using the reasonable criteria (2-6-1006, see also 7-4-2631, and 7-4-4502).
While there is no general language requiring filing of reports for boards under county jurisdiction or special districts, there is additional statutory language for municipalities that states, “All departments, boards, and authorities shall file an annual report with the chief executive, who shall compile the reports and present them to the governing body” (7-1-4146). The chief executive may specify the “form, content, and deadline for filing reports” (7-1-4146(2)).
by Paul Lachapelle
Board members acting in good faith cannot be held personally liable if they are within the course and scope of their authority, act within the law and within established rules even if the law or rules are later determined to be unlawful (2-9-103). The state and other governmental entities (such as boards) are immune from being sued for exemplary or punitive damages (2-9-105) if they are within the course and scope of their positions. A board is not liable in a State tort action for more than $750,000 a claim per person or $1.5 million for each occurrence. Insurance policies are also not liable beyond this dollar limit unless the policy specifically provides coverage beyond this amount (2-9-108).
A board or board member enjoys immunity when carrying out a law, rule or policy created by a legislative body. In addition, the board is not liable for the lack or omission of a law or policy. This immunity does not include any tort committed by the use of a motor vehicle, aircraft, or other means of transportation. This immunity also does not include either personal or property damage caused by contamination to surface or ground water (2-9-111). Since all county officers and employees must be bonded, board members must have either an individual or blanket bond for the faithful performance of their duties. The bond should be provided by the county (2-9-701, 2-9-703).
In municipal settings, individuals who are elected or appointed officials (or volunteers under direct control of the municipality) and are acting on behalf of the municipality, typically maintain liability coverage when serving on committees, boards, commissions or special districts.
The MCA also contains specific text regarding the indemnification of “public officers and employees.” Specifically, these individuals cannot be “civilly sued for their actions taken within the course and scope of their employment” since, “in any noncriminal action brought against any employee of a state, county, city, town, or other governmental entity for a negligent act, error, or omission... committed while acting within the course and scope of the employee’s office or employment, the governmental entity employer... shall defend the action on behalf of the employee and indemnify the employee” (2-9-305).
It is important to note that committee, board, commission or special district members must be acting within the course and scope of their position and must be acting on behalf of the municipality. It is useful to have job descriptions for these positions to assist in identifying and/or clarifying course and scope.
by Betsy Webb
Board members should also be aware of the various civil rights, discrimination and wrongful discharge laws pertaining to their involvement on the board. These statutes are detailed in the Montana Human Rights Act in MCA Title 49 and more specifically, in the Montana Governmental Code of Fair Practices (49-3-101).
The United States Equal Employment Opportunity Commission (EEOC) and the Montana Human Rights Act provides guidance regarding discrimination. It is unlawful to discriminate in credit, education, employment, financing, housing, insurance, public accommodations, and state and local governmental services and employment. It is unlawful to discriminate because of age, marital status, national origin, physical or mental disability, race or color, religion or creed, sex (including pregnancy, maternity and sexual harassment), gender identification, sexual orientation, familial status (housing only) and political beliefs or ideas (public employees).
The laws also make it unlawful to retaliate against a person for opposing unlawful discriminatory practices or for participating in a human rights proceeding. Generally, complaints must be filed within 180 days of the date of the alleged discrimination under Montana law. More information about Montana’s Discrimination laws is available through the Montana Human Rights Bureau.16
Some boards may have individuals that are considered employees with specific responsibilities. The “supervisor” for a board employee should be detailed in the board resolution. Depending on the language in the statute or resolution for each board, the governing authority for board members will in many cases be the local government within which the board resides or will be outlined in an interlocal agreement between multiple local government bodies. The governing authority is responsible to ensure that board members are properly trained, supervised, evaluated and warned if not performing satisfactorily.
In Montana, an employee can be discharged only for good cause after completing the employer’s probationary period. Good cause is defined as reasonable, job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer’s operation, or other legitimate business reason. Board members should also be familiar with Montana’s Wrongful Discharge from Employment Act (39-2-901). Do not rush into the discipline or dismissal of any employee or board member. If a board member is elected, the voting process is used to remove the member from office. If a board member is appointed, the appointing body may remove a board member. However, competent legal counsel should always be consulted prior to taking any action.
For termination purposes, management must show that the employee violated a specific policy, rule, performance requirement, or standard of employment and that the employee knew about the policy, rule, performance requirement, or standard of employment. During an employee’s probationary period, employment may be terminated for any reason or no reason (but not for reason contrary to public policy such as discrimination).
Employers that have written personnel policies must follow those policies in making a discharge. An employee who wins a wrongful discharge suit may collect lost wages and fringe benefits for a period of up to four years from the date of discharge. Arbitration is encouraged to save the expense of lawsuits, and an employer may benefit if it offers arbitration to a discharged employee. An established grievance process can be an effective tool for minimizing claims of wrongful or constructive discharge/termination against Montana’s local governments. The grievance process should be part of the written Personnel Policy Manual and all employees and supervisors should be instructed in its use upon hire.
16 The Montana Department of Labor and Industry is the state agency which enforces Montana’s discrimination laws. The Human Rights Bureau of the Department receives and investigates complaints of discrimination. For more information, see: http://erd.dli.mt.gov/human-rights.
Before discussing confidential employee information, or releasing documents of a confidential nature, seek competent legal counsel. In Montana, each employee has a right to privacy of certain records.17 If you are unsure whether a document is confidential or accessible to the public, consult competent legal advice.
Sometimes you can provide a citizen with information he or she seeks without allowing him or her to look at confidential portions of records. You can do this by reading the record yourself and giving the person information verbally or by photocopying the record and blocking out confidential portions. Board members may not use knowledge gained through their service to achieve personal gain for themselves or anyone else. Board members cannot disclose or use confidential information concerning their board service to advance personal or private interest.
Montana Association of Counties web site addressing personnel matters: http://www.mtcounties.org/insurance/personnel-services
Montana Municipal Interlocal Authority web site addressing personnel matters: http://www.mmia.net/RiskManagement/tabid/226/Default.aspx
Montana State Human Resources Division: http://hr.mt.gov/newresourcesU.S. Equal Employment Opportunity Commission: https://www.eeoc.gov/
17 Montana Human Rights Division v. City of Billings, 199 Mont. 434, 649 P.2d 1283 (1982), Available at Montana Supreme Court: http://searchcourts.mt.gov/.
About the Authors
Jennifer Anderson is the Montana State University Extension Agent in Rosebud-Treasure County, Forsyth, Montana. She can be reached at (406) 346-7320, email@example.com.
Dan Clark is the Director of the Montana State University Extension Local Government Center. He can be reached at (406) 994-7756, firstname.lastname@example.org.
Tim Fine is the Montana State University Extension Agent in Richland County, Sidney, Montana. He can be reached at (406) 433-1206, email@example.com.
Ashley Kent is the Associate Director of the Montana State University Extension Local Government Center. She can be reached at (406) 994-6657, firstname.lastname@example.org
Paul Lachapelle is an Assistant Professor of Political Science at Montana State University. He can be reached at (406) 994-3620, email@example.com.