Immunity Statutes §6.08
Key point 6-08. State and federal laws provide limited immunity to uncompensated officers and directors of churches and other charities. This means that they cannot be personally liable for their ordinary negligence. However, such laws contain some exceptions. For example, officers and directors may be personally liable for their gross negligence or their willful or wanton misconduct.
Most states have enacted laws limiting the liability of church officers and directors. In some states, these laws protect all church volunteers. In some cases, the statute may protect only officers and directors of churches that are incorporated under the state's general nonprofit corporation law. The most common type of statute immunizes uncompensated directors and officers from legal liability for their ordinary negligence committed within the scope of their official duties. These statutes generally provide no protection for "willful and wanton" conduct or "gross negligence."
"Compensation" ordinarily is defined to exclude reimbursement of travel expenses incurred while serving as a director or officer. Churches that compensate their directors and officers over and above the reimbursement of travel expenses should reconsider such a policy if they are located in a state that grants limited immunity to uncompensated officers and directors. Obviously, these statutes will not protect ministers who receive compensation from their church.
Tip. Churches should consider adopting an appropriate resolution clarifying that a minister's annual compensation package is for ministerial duties rendered to the church, and not for any duties on the church board. Like any other church officer or director, the minister serves without compensation. Such a provision, if adopted, might qualify the minister for protection under the legal immunity law. It is worth serious consideration.
Statutes immunizing the directors and officers of nonprofit organizations from liability do not prevent the organization itself from being sued on the basis of the negligence of an officer or director. The immunity statutes only protect the officers or directors themselves. Many of the immunity statutes apply only to the directors and officers of organizations exempt from federal income tax under section 501(c) of the Internal Revenue Code. Some of them appear to apply only to incorporated organizations.
Why have states enacted such laws? The primary reason is to encourage persons to serve as directors of nonprofit organizations. In the past, many qualified individuals have declined to serve as directors of such organizations out of a fear of legal liability. The immunity statutes respond directly to this concern by providing directors of nonprofit organizations with limited immunity from legal liability.
The Willful And Wanton Misconduct Exception
Example. Bob is a registered sex offender who previously was convicted of molesting a child. He served time in prison, but was released a few years ago. He has started attending a church, and the church board learns of his background. Some members of the board are concerned about having Bob attend the church, and they speak with him. Bob assures them that he was "rehabilitated" while in prison, and no longer poses a risk of harm to anyone. Nothing is done to monitor Bob. Several months later, Bob is charged with the molestation of a child on church property. The board is distressed by this development, but take comfort in the fact that they are immunized from personal liability by state law. They should not assume that they are protected against personal liability by a state law conferring limited immunity from liability on the acts of uncompensated church board members. Such laws do not apply to willful and wanton misconduct, and it is possible that a court would conclude that the board was guilty of such behavior by allowing Bob unrestricted and unsupervised access to church property despite its knowledge that he is a registered sex offender.
Case studies
- A federal court in Arizona ruled that the federal Volunteers Protection Act (see sidebar) prevented individual board members of a charity from being personally liable for unpaid wages claimed by a former officer. The officer claimed that the charity had violated the federal Fair Labor Standards Act. Since the charity had no assets, it was undisputed that the individual board members would be responsible for any damages. The board members argued that the Volunteer Protection Act protected them from any personal liability, and the court agreed. The court concluded that the Act was intended to protect all volunteers from tort liability, whether state or federal, and that "the broad, plain language of the Act indicates it covers all liability whether rooted in tort or contract."[218] Armendarez v. Glendale Youth Center, 265 F.Supp.2d 1136 (D. Ariz. 2003).
- A Colorado court ruled that a denominational agency could be sued by a woman with whom a minister had sexual contacts, and that a state statute providing limited immunity to uncompensated officers and directors of nonprofit corporations was not a defense.[219] Winkler v. Rocky Mouton Conference, 923 P.2d 152 (Colo. App. 1995). The statute specifies, "No member of the board of directors of a nonprofit corporation or nonprofit organization shall be held liable for actions taken or omissions made in the performance of his duties as a board member except for wanton and willful acts or omissions."[220] COLO. REV. STATS. § 13-21-116. The court concluded that this provision did not apply in this case, since there was no evidence that the agency "accomplished its work through unpaid volunteers."
- An Illinois court ruled that board members could be personally liable for the molestation of a child on a school bus, despite a state law conferring limited immunity from liability, because their behavior in failing to adequately protect the victim was willful and wanton. Illinois law grants limited immunity from liability to school board members, meaning they cannot be personally liable for their acts unless they are guilty of "willful or wanton" misconduct. The victim alleged that the board members were guilty of willful and wanton misconduct because they failed to ensure that a school bus attendant was present on the bus while he was a passenger. A state appeals court ruled that the victim alleged sufficient proof of willful and wanton misconduct by the board to let the case go to a jury. It observed: "Plaintiff has properly pled knowledge on the part of the board that the attacker was likely to commit a sexual assault on the passengers and that an attendant was required."[221] Doe v. Chicago Board of Education, 791 N.E.2d 1283 (Ill. App. 2003). Accord Doe v. DeSoto Parish School Board, 907 So.2d 275 (La. App. 2005).
- The Minnesota Supreme Court rejected the argument that a state limited immunity statute only protected board members when acting collectively as a board.[222] Rehn v. Fischley, 557 N.W.2d 328 (Minn. 1997). It acknowledged that "it is a longstanding tenet of corporation law that a member of the board has no authority to act individually unless specifically authorized by the corporate bylaws or articles of incorporation." However, the court noted that the statute protects more than directors. It also protects officers, trustees, members, and agents, and these individuals (unlike directors) can act individually rather than collectively. The court concluded that "a director acting outside the specific scope of his or her duty as a member of the board will receive the statute's protection so long as the director is acting on behalf of the nonprofit corporation."
- A New York court ruled that a "charitable immunity" law granting limited legal immunity to the uncompensated directors of a nonprofit organization did not protect a church's trustees from liability for the sexual misconduct of their minister.[223] Karen S. v. Streitferdt, 568 N.Y.S.2d 946 (A.D. 1 Dept. 1991). See also Kamchi v. Weissman, 1 N.Y.S.3d 169 (N.Y. App. 2014).
Gross Negligence
Church leaders should be familiar with the concept of gross negligence, for the following three reasons:
(1) Punitive damages. Courts can award "punitive damages" for conduct that amounts to gross negligence. Punitive damages are damages awarded by a jury "in addition to compensation for a loss sustained, in order to punish, and make an example of, the wrongdoer." They are awarded when a person's conduct is particularly reprehensible and outrageous. This does not necessarily mean intentional misconduct. Punitive damages often are associated with reckless conduct or conduct creating a high risk of harm. To illustrate, in one case a punitive damage award was based on the fact that church officials repeatedly and knowingly placed a priest in situations where he could sexually abuse boys and then failed to supervise him and disclose his sexual problem. Clearly, church officials did not intend for the priest to molest anyone. But, under the circumstances, the jury concluded that the church's actions were sufficiently reckless to justify an award of punitive damages. Church leaders must understand that reckless inattention to risks can lead to punitive damages, and that such damages may not be covered by the church's liability insurance policy. It is critical to note that many church insurance policies exclude punitive damages. This means that a jury award of punitive damages represents a potentially uninsured risk. Accordingly, it is critical for church leaders to understand the basis for punitive damages, and to avoid behavior which might be viewed as grossly negligent.
(2) Loss of limited immunity under state law. State and federal laws provide uncompensated officers and directors of nonprofit corporations (including churches) with immunity from legal liability for their ordinary negligence. This is an important protection. However, such laws do not protect officers and directors from liability for their gross negligence.
(3) Personal liability. Church leaders who are guilty of gross negligence are more likely to be sued personally than if their behavior is merely negligent. Indifference by church leaders to information that clearly demonstrates improper behavior by a staff member or volunteer worker can be viewed by a court as gross negligence, and this will make it more likely that the church leaders will be sued personally.
Volunteer Protection Act
In 1997 Congress enacted the Volunteer Protection Act (42 U.S.C. § 14501) based on the following findings: (1) the willingness of volunteers to offer their services is deterred by the potential for liability actions against them; (2) as a result, many nonprofit organizations have been adversely affected by the withdrawal of volunteers from boards of directors and service in other capacities; and (3) due to high liability costs and unwarranted litigation costs, volunteers and nonprofit organizations face higher costs in purchasing insurance, through interstate insurance markets, to cover their activities.
The Act clarifies that it "preempts the laws of any state to the extent that such laws are inconsistent with this [Act] except that this [Act] shall not preempt any state law that provides additional protection from liability relating to volunteers or to any category of volunteers in the performance of services for a nonprofit organization or governmental entity."
Here is a summary of the Act's main provisions:
- No volunteer of a nonprofit organization shall be liable for harm caused by an act or omission of the volunteer on behalf of the organization or entity if—(1) the volunteer was acting within the scope of the volunteer's responsibilities in the nonprofit organization or governmental entity at the time of the act or omission; (2) if appropriate or required, the volunteer was properly licensed, certified, or authorized by the appropriate authorities for the activities or practice in the state in which the harm occurred, where the activities were or practice was undertaken within the scope of the volunteer's responsibilities in the non-profit organization or governmental entity; (3) the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed by the volunteer; and (4) the harm was not caused by the volunteer operating a motor vehicle, vessel, aircraft, or other vehicle for which the state requires the operator or the owner of the vehicle, craft, or vessel to possess an operator's license or obtain insurance.
- The Act provides no protection to nonprofit organizations themselves.
- Punitive damages may not be awarded against a volunteer unless the victim proves by clear and convincing evidence that the harm was caused by the volunteer's willful or "criminal misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed."
Table of Contents
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1Definitions and Status
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§ 1.01Distinctions Between the Terms Pastor, Clergy, Minister
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§ 1.02Definition of the Terms Pastor, Clergy, Minister — In General
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§ 1.03Status—Employee or Self Employed
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§ 1.03.01Social Security
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§ 1.03.02Income Taxes
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§ 1.03.03Retirement Plans
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§ 1.03.04Legal Liability
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§ 1.03.05Miscellaneous Federal and State Statutes
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§ 1.04Status—Ordained, Commissioned, or Licensed
2The Pastor-Church Relationship
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§ 2.01Initiating the Relationship—In General
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§ 2.01.01Congregational Churches
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§ 2.01.02Hierarchical Churches
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§ 2.01.03Compliance with a Church's Governing Instrument in the Selection of a Minister
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§ 2.01.04Civil Court Review of Clergy Selection Disputes—the General Rule of Non-Intervention
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§ 2.01.05Civil Court Review of Clergy Selection Disputes—Limited Exceptions to the General Rule
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§ 2.01.06Negligent Selection
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§ 2.02The Contract
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§ 2.03Compensation
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§ 2.04Termination
3Authority, Rights, and Privileges
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§ 3.01General Scope of a Minister's Authority
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§ 3.02Officer of the Church Corporation
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§ 3.03Property Matters
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§ 3.04Performance of Marriage Ceremonies
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§ 3.05Exemption from Military Duty
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§ 3.06Exemption From Jury Duty
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§ 3.07The Clergy-Penitent Privilege—In General
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§ 3.07.01A "Communication"
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§ 3.07.02Made in Confidence
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§ 3.07.03To a Minister
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§ 3.07.04Acting in a Professional Capacity as a Spiritual Adviser
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§ 3.07.05In the Course of Discipline
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§ 3.08The Clergy-Penitent Privilege—Miscellaneous Issues
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§ 3.08.01Clergy-Parishioner Relationship
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§ 3.08.02Marriage Counseling
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§ 3.08.03Who May Assert the Privilege
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§ 3.08.04When to Assert the Privilege
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§ 3.08.05Waiver of the Privilege
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§ 3.08.06The Privilege in Federal Courts
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§ 3.08.07Constitutionality of the Privilege
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§ 3.08.08Child Abuse Reporting
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§ 3.08.09Confidentiality
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§ 3.08.10Disclosure to Civil Authorities
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§ 3.08.11Church Records
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§ 3.08.12Death of the Counselee
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§ 3.09Visiting Privileges at Penal Institutions
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§ 3.10Immigration of Alien Ministers, Religious Vocations, and Religious Occupations
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§ 3.11Miscellaneous Benefits
4Liabilities, Limitations, and Restrictions
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§ 4.01Negligence
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§ 4.02Defamation—In General
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§ 4.02.01Pastors Who Are Sued for Making Defamatory Statements
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§ 4.02.02Pastors Who Are Victims of Defamation
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§ 4.02.03Defenses
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§ 4.03Undue Influence
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§ 4.04Invasion of Privacy
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§ 4.05Clergy Malpractice
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§ 4.06Contract Liability
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§ 4.07Securities Law Violations
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§ 4.08Failure to Report Child Abuse
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§ 4.09Diversion of Church Funds
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§ 4.10State Regulation of Psychologists and Counselors
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§ 4.11Sexual Misconduct
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§ 4.11.01Theories of Liability
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§ 4.11.02Defenses to Liability
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5Definitions
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§ 5.01Tax Legislation—Federal
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§ 5.01.01Churches
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§ 5.01.02Mail Order Churches
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§ 5.01.03Other Religious Organizations
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§ 5.01.04Tax Legislation—State
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§ 5.02Zoning Law
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§ 5.02.01Churches
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§ 5.02.02Accessory Uses
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6Organization and Administration
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§ 6.01Unincorporated Associations
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§ 6.01.01Characteristics
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§ 6.01.02Personal Liability of Members
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§ 6.01.03Creation and Administration
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§ 6.02Corporations
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§ 6.02.01The Incorporation Process
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§ 6.02.02Charters, Constitutions, Bylaws, and Resolutions
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§ 6.03Church Records
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§ 6.03.01Inspection
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§ 6.03.02“Accountings” of Church Funds
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§ 6.03.03Public Inspection of Tax-Exemption Applications
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§ 6.03.04Government Inspection of Donor and Membership Lists
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§ 6.03.05The Church Audit Procedures Act
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§ 6.03.06Who Owns a Church’s Accounting Records?
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§ 6.04Reporting Requirements
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§ 6.04.01State Law
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§ 6.04.02Federal Law
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§ 6.05Church Names
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§ 6.06Officers, Directors, and Trustees—In General
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§ 6.06.01Election or Appointment
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§ 6.06.02Authority
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§ 6.06.03Meetings
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§ 6.06.04Removal
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§ 6.07Officers, Directors, and Trustees—Personal Liability
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§ 6.07.01Tort Liability
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§ 6.07.02Contract Liability
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§ 6.07.03Breach of the Fiduciary Duty of Care
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§ 6.07.04Breach of the Fiduciary Duty of Loyalty
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§ 6.07.05Violation of Trust Terms
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§ 6.07.06Securities Law
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§ 6.07.07Wrongful Discharge of an Employee
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§ 6.07.08Willful Failure to Withhold Taxes
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§ 6.07.09Exceeding the Authority of the Board
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§ 6.07.10Loans to Directors
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§ 6.08Immunity Statutes
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§ 6.08.01Directors and Officers Insurance
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§ 6.09Members—In General
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§ 6.09.01Selection and Qualifications
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§ 6.09.02Authority
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§ 6.10Members—Discipline and Dismissal
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§ 6.10.01Judicial Nonintervention
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§ 6.10.02“Marginal” Civil Court Review
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§ 6.10.03Preconditions to Civil Court Review
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§ 6.10.04Remedies for Improper Discipline or Dismissal
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§ 6.11Members—Personal Liability
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§ 6.12Meetings of Members
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§ 6.12.01Procedural Requirements
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§ 6.12.02Minutes
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§ 6.12.03Parliamentary Procedure
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§ 6.12.04Effect of Procedural Irregularities
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§ 6.12.05Judicial Supervision of Church Elections
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§ 6.12.06Who May Attend
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§ 6.13Powers of a Local Church
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§ 6.14Merger and Consolidation
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§ 6.15Dissolution
7Church Property
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§ 7.01Church Property Disputes—In General
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§ 7.02Church Property Disputes—Supreme Court Rulings
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§ 7.03State and Lower Federal Court Rulings
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§ 7.04Church Property Disputes—Dispute Resolution Procedures
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§ 7.05Transferring Church Property
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§ 7.06Zoning Law
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§ 7.07Restricting Certain Activities Near Church Property
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§ 7.08Building Codes
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§ 7.08.01Lead Paint on Church Property
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§ 7.09Nuisance
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§ 7.10Landmarking
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§ 7.11Eminent Domain
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§ 7.12Defacing Church Property
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§ 7.13Restrictive Covenants
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§ 7.14Reversion of Church Property to the Prior Owner
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§ 7.15Materialmen’s Liens
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§ 7.16Religious Discrimination in the Sale or Rental of Church Property
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§ 7.17Removing Disruptive Individuals
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§ 7.18Adverse Possession
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§ 7.19Accounting for Depreciation
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§ 7.20Premises Liability
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§ 7.20.01Liability Based on Status as Invitee, Licensee, or Trespasser
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§ 7.20.02Defenses to Premises Liability
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§ 7.20.03Use of Church Property by Outside Groups
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§ 7.20.04Assaults on Church Property
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§ 7.20.05Skate Ramps
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§ 7.20.06Sound Rooms
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§ 7.21Embezzlement
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§ 7.22Places of Public Accommodation
8Employment Law
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§ 8.01Introduction: Selection of Employees
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§ 8.02New Hire Reporting
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§ 8.03Employment Eligibility Verification
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§ 8.04Immigration
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§ 8.05Negligent Selection
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§ 8.06Introduction: Compensation and Benefits
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§ 8.07Workers Compensation
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§ 8.08Fair Labor Standards Act
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§ 8.08.01Enterprises
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§ 8.08.02Individual Coverage
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§ 8.08.03Federal Court Rulings
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§ 8.08.04Department of Labor Opinion Letters
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§ 8.08.05Exemptions
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§ 8.08.06Ministers
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§ 8.08.07State Laws
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§ 8.08.08Case Studies
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§ 8.09Introduction to Federal Employment and Civil Rights Laws—The “Commerce” Requirement
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§ 8.09.01Counting Employees
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§ 8.10The “Ministerial Exception” under State and Federal Employment Laws
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§ 8.11Procedure for Establishing a Discrimination Claim
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§ 8.12Title VII of the Civil Rights Act of 1964
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§ 8.12.01Application to Religious Organizations
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§ 8.12.02Application to Religious Educational Institutions
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§ 8.12.03Religion as a "Bona Fide Occupational Qualification"
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§ 8.12.04Discrimination Based on Religion or Morals
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§ 8.12.05Sexual Harassment
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§ 8.12.06The Catholic Bishop Case
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§ 8.12.07Failure to Accommodate Employees’ Religious Practices
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§ 8.12.08The Religious Freedom Restoration Act
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§ 8.12.09The Civil Rights Act of 1991
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§ 8.13The Age Discrimination in Employment Act
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§ 8.14The Americans with Disabilities Act
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§ 8.14.01Discrimination in Employment
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§ 8.14.02Discrimination in Public Accommodations
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§ 8.15Family and Medical Leave Act
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§ 8.16Employer “Retaliation” Against Victims of Discrimination
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§ 8.17Discrimination Based on Military Status
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§ 8.18Employee Polygraph Protection Act
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§ 8.19Occupational Safety and Health Act
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§ 8.20Display of Posters
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§ 8.21Discrimination under State Laws
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§ 8.22Termination of Employees
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§ 8.22.01Severance Agreements
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§ 8.23National Labor Relations Act
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§ 8.24Reference Letters
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§ 8.25Employee Evaluations
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§ 8.26Employment Interviews
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§ 8.27Arbitration
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§ 8.28Employee Handbooks
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§ 8.29Employee Privacy
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§ 8.30Insurance
9Government Regulation of Churches
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§ 9.01Introduction
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§ 9.02Regulation of Charitable Solicitations
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§ 9.03Limitations on Charitable Giving
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§ 9.04Federal and State Securities Law
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§ 9.05Copyright Law
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§ 9.05.01Copyright Ownership
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§ 9.05.02Works Made for Hire
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§ 9.05.03Exclusive Rights
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§ 9.05.04Infringement
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§ 9.05.05The "Religious Service" Exemption to Copyright Infringement
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§ 9.05.06Electronic Media
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§ 9.05.10Other Exceptions to Copyright Infringement
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§ 9.06Government Investigations
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§ 9.07Judicial Resolution of Church Disputes
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§ 9.08Political Activities by Churches and Other Religious Organizations
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§ 9.09Bankruptcy Law
10Church Legal Liability
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§ 10.01Negligence as a Basis for Liability—In General
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§ 10.02Vicarious Liability (Respondeat Superior)
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§ 10.02.01The Requirement of Employee Status
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§ 10.02.02Negligent Conduct
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§ 10.02.03Course of Employment
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§ 10.02.04Inapplicability to Nonprofit Organizations
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§ 10.03Negligent Selection of Church Workers—In General
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§ 10.04Negligent Selection of Church Workers—Sexual Misconduct Cases Involving Minor Victims
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§ 10.05Negligent Selection of Church Workers—Sexual Misconduct Cases Involving Adult Victims
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§ 10.05.01Court Decisions Recognizing Negligent Selection Claims
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§ 10.05.02Court Decisions Rejecting Negligent Selection Claims
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§ 10.05.03Risk Management
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§ 10.06Negligent Selection of Church Workers—Other Cases
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§ 10.07Negligent Retention of Church Workers—In General
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§ 10.07.01Court Decisions Recognizing Negligent Retention Claims
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§ 10.07.02Court Decisions Rejecting Negligent Retention Claims
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§ 10.07.03Risk Management
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§ 10.08Negligent Supervision of Church Workers—In General
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§ 10.09Negligent Supervision of Church Workers—Sexual Misconduct Cases Involving Minor Victims
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§ 10.09.01Court Decisions Recognizing Negligent Supervision Claims
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§ 10.09.02Court Decisions Rejecting Negligent Supervision Claims
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§ 10.09.03Risk Management
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§ 10.10Negligent Supervision of Church Workers—Sexual Misconduct Cases Involving Adult Victims
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§ 10.10.01Court Decisions Recognizing Negligent Supervision Claims
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§ 10.10.02Court Decisions Rejecting Negligent Supervision Claims
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§ 10.10.03Risk Management
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§ 10.11Negligent Supervision of Church Workers—Other Cases
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§ 10.11.01Risk Management
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§ 10.12Counseling—In General
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§ 10.12.01Risk Management
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§ 10.13Breach of a Fiduciary Duty
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§ 10.13.01Court Decisions Recognizing Fiduciary Duty Claims
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§ 10.13.02Court Decisions Rejecting Fiduciary Duty Claims
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§ 10.13.03Risk Management
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§ 10.14Ratification
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§ 10.15Defamation
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§ 10.16Defenses to Liability
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§ 10.16.01Contributory and Comparative Negligence
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§ 10.16.02Assumption of Risk
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§ 10.16.03Intervening Cause
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§ 10.16.04Statutes of Limitations
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§ 10.16.05Charitable Immunity
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§ 10.16.06Release Forms
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§ 10.16.07Insurance
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§ 10.16.08Other Defenses
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§ 10.17Damages—In General
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§ 10.17.01Punitive Damages
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§ 10.17.02Duplicate Verdicts
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§ 10.18Denominational Liability—In General
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§ 10.18.01Court Decisions Recognizing Vicarious Liability
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§ 10.18.02Court Decisions Rejecting Vicarious Liability
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§ 10.18.03Defenses to Liability
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§ 10.18.04Risk Management
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§ 10.18.05The Legal Effect of a Group Exemption Ruling
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§ 10.19Risks Associated with Cell Phones
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§ 10.20Risks Associated with the Use of 15-Passenger Vans
12The Present Meaning of the First Amendment Religion Clauses
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§ 12.01The Establishment Clause
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§ 12.01.01The Lemon Test
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§ 12.02The Free Exercise Clause
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§ 12.02.01The Smith Case
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§ 12.02.02The Religious Freedom Restoration Act
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§ 12.02.03The City of Boerne Case
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§ 12.02.04Conclusions
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13Significant First Amendment Issues
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§ 13.01The Right to Witness
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§ 13.02Prayer on Public Property other than Schools
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§ 13.03Prayer During Public School Activities
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§ 13.04Display of Religious Symbols on Public Property
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§ 13.05Recurring Use of Public Property by Religious Congregations for Religious Services
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§ 13.06Nonrecurring Use of Public Property by Adults for Religious Events and Activities
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§ 13.07Use of Public School Property by Students for Religious Purposes
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§ 13.08Sunday Closing Laws
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§ 13.09The Right to Refuse Medical Treatment
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§ 13.10Definition of "Religion" and "Religious"
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