Our column this issue is not about coaches. Instead, it is about directors, and we’ve chosen this topic because a good number of coaches also happen to be elected or appointed directors of sport organizations or clubs.
Wearing several hats is not uncommon in the sport realm, and remembering which hat you’re wearing can be confusing! However, having a clear view of your role is critically important when it comes to legal responsibilities and risk management.
The coach who is a director has responsibilities which go far beyond his or her responsibilities as a coach. The basic responsibility of a director is to represent the interests of the membership in directing the business and affairs of the organization, and to do so within the law. This legal duty is described in statutes, and has been expanded in the common law to be:
- A duty of diligence: that is acting reasonably, prudently, in good faith and with a view to the best interests of the organization,
- A duty of loyalty: that is, not using one’s position as a director to further private interests, and
- A duty of obedience: that is, acting within the governing bylaws of the organization and within the laws and rules that apply to the organization
As well, it is now clear that the duties of directors of non-profit organizations are no different from the duties of directors of business corporations.
What do these duties mean in practical, personal terms? Can directors be held personally responsible for actions of the organization, which is itself a legal entity? The answer is yes. Directors may be held personally liable (in their capacity as directors) for unpaid salaries, severance pay, and government remittances including Employment Insurance payments, Canada Pension Plan payments and taxes. Directors may also be held personally responsible (in their individual capacities) for certain acts which are outside the scope of their duties such as fraudulent, dishonest or illegal activities.
The directors of the Flying Fins Swim Club of Moose Jaw found out about personal liability the hard way when Revenue Canada deemed their coach to be an employee and not an independent contractor, as they had believed him to be. The directors ended up being personally responsible for EI, CPP and outstanding tax payments, the penalties which had accrued over time, and the legal costs of unsuccessfully fighting their case to the Federal Court of Appeal (Moose Jaw Kinsmen Flying Fins Inc. v. Minister of National Revenue  88 DTC 6099).
The directors and coach (who was also a director) of the Yukon Weightlifting Association also learned about personal liability the hard way when they seriously erred on a selection issue involving a young athlete. When the athlete rightfully requested an appeal of the directors’ decision to remove her from the team, the directors compounded their error by suspending the athlete, a decision which they were not empowered to make under their bylaws. In this case the directors had clearly breached their duty by acting outside the scope of their authority. In the end, court costs were assessed against the directors and coach in their personal capacities (Lassen v. Yukon Weightlifting Association et. al.  Unreported Decision, Yukon S.C.).
Directors used to be able to look to a number of defenses when the organization found itself in legal trouble – “I didn’t know!” (Ignorance is no defense, you should have known), “I wasn’t there!” (the actions of the entire board are what’s important, and it can vote in your absence; in other words, you should have been there), or “I resigned!” (by the time you know to resign, it’s probably too late).
So what should the coach/director do for his or her own protection? In general, as a director you should support your board in its efforts to ensure proper financial management, encourage open and fair decision-making, and follow established policies, procedures and rules. Here are some personal risk management measures for the coach/director:
- Clarify your motives for becoming a director, and being certain you have both the time and interest to do the job well
- Educate yourself about your duties and possible liabilities as a director
- Look at the composition of the entire board to satisfy yourself that it can provide competent direction to the administration or executive
- At board meetings, provide your information in the form of a written report
- Keep your own documentation of key, or controversial decisions
- If you suspect that something isn’t right, check it out
You should also confirm that your organization carries proper directors and officers liability insurance coverage.
Originally published: Coaches Report (1998) Vol. 5(1).