HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 573 Fiduciary Duty of Care for Appointed Public Officials and Executive Officers
SPONSOR(S): State Affairs Committee, Public Integrity & Elections Committee, Beltran and others
TIED BILLS: IDEN./SIM. BILLS: CS/SB 758
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Public Integrity & Elections Committee 13 Y, 1 N, As CS Rubottom Rubottom
2) State Administration & Technology 12 Y, 0 N Helpling Topp
Appropriations Subcommittee
3) State Affairs Committee 21 Y, 0 N, As CS Toliver Williamson
SUMMARY ANALYSIS
The Florida Business Corporation Act imposes certain duties on members and officers of corporate boards,
such as a duty to act in good faith and in a manner reasonably believed to be in the best interest of the
corporation. In discharging their duties, corporate board members are required to exercise the care that an
ordinary prudent person in a like position would reasonably believe appropriate under similar circumstances.
Florida’s Code of Ethics for Public Officers and Employees (Code) is intended to promote the public interest
and to maintain the respect of the people for their government. The Code is also intended to ensure that public
officials conduct themselves independently and impartially, not using their offices for private gain other than
compensation provided by law. The Code contains provisions that establish standards for the conduct of
elected and appointed officials and government employees and requires constitutional officers, elected
municipal officers, and community redevelopment agency commissioners to complete four hours of ethics
training on an annual basis.
The bill establishes fiduciary duty of care standards applicable to appointed public officials and executive
officers. The bill also requires certain appointed public officials and executive officers to complete a minimum
of five hours of board governance training within 180 days of appointment. The bill specifies content for the
required training and categories of authorized training providers.
The bill mandates the appointment of an executive officer or general counsel be subject to approval by a two-
thirds vote of the governing body of the governmental entity. The bill requires all legal counsel and lobbyists
employed by a governmental entity to represent the legal interest of the governmental entity’s governing board
and not the interest of any individual or employee.
The bill requires the governing body of a governmental entity to determine, on the record at a properly noticed
meeting, whether the entity should obtain an outside opinion for any measure that will require the entity to
make any of the following expenditures:
 An amount in excess of $1 million in any fiscal year;
 An amount in excess of $5 million in the aggregate; or
 An amount in excess of $250,000 in total annual compensation.
Lastly, the bill specifies that nothing in the bill can be construed to create a private cause of action against an
executive officer, appointed public official, or governmental entity.
The bill may have an indeterminate, but likely insignificant negative fiscal impact on state and local entities to
provide or contract for a board governance training program.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives .
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 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Fiduciary Duties Generally
A fiduciary is a person who is required to act for the benefit of another person on all matters within the
scope of their relationship or a person who exercises a high standard of care in managing another’s
money or property. The Florida Business Corporation Act (Act)1 imposes certain duties on members
and officers of corporate boards, such as a duty to act in good faith and in a manner reasonably
believed to be in the best interest of the corporation.2 In discharging their duties, the Act generally
requires corporate board members to exercise the care that an ordinary prudent person in a like
position would reasonably believe appropriate under similar circumstances.3 In taking such actions, the
Act allows corporate board members to rely on reliable and competent corporate employees, legal
counsel, or public accountants, or other persons retained by the corporation with relevant skills or
expertise, to supply information, opinions, reports, statements, or other financial data to assist their
decisionmaking.4 Among other duties, the Act imposes on corporate officers certain duties to the board,
such as the duty to inform of actual or material violations of law involving the board, material breaches
of duty to the corporation by an officer, employee, or agent, or other material information about
corporate affairs.5
In some cases, a corporate board member may be legally liable for a breach of their board duty.
Generally, the Act provides a board member is not personally liable for monetary damages to the
corporation or any other person for action or non-action as a board member, unless, among other
things, their breach or failure to perform their duties violates criminal laws, they derive an improper
personal benefit, or their behavior displays conscious disregard for the best interest of the corporation,
willful or intentional misconduct, recklessness, bad faith, malicious purpose, or wanton and willful
disregard of human rights, safety, or property.6 This standard is similar to a Florida law that shields
officers, employees, or agents of the state or any political subdivision from personal liability unless such
officer, employee, or agent acted in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property.7
Generally, a relationship in which one person is under a duty to act in accordance with the above, is
referred to as a fiduciary relationship,8 and the responsibility is referred to as a fiduciary duty.
A number of particular provisions of Florida law impose a fiduciary duty on certain appointees to public
boards. Most of those provisions apply to individuals responsible for the administration of public
employee retirement or pension plans and those who sit on specific boards that have the authority to
spend large amounts of public money. For example, the ‘Florida Protection of Public Employee
Retirement Benefits Act’ requires a fiduciary to discharge his or her duties with respect to a plan solely
1 See s. 607.0101(1), F.S.
2 Ss. 607.0830(1) and 607.08411(1), F.S.
3 S. 607.0830(2), F.S.
4 S. 607.0830(3) – (5), F.S.
5 S. 607.08411(3), F.S.
6 S. 607.0831(1), F.S.
7 See s. 768.28(9)(a), F.S.
8 A “fiduciary relationship” is a relationship in which one person is under a duty to act for the benefit of another on matters
within the scope of the relationship. Fiduciary relationships – such as trustee-beneficiary, guardian–ward, principal–agent,
and attorney-client – require an unusually high degree of care. Blacks Law Dictionary, 1098 (9th ed. abr. 2010).
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 in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to
participants and their beneficiaries and defraying reasonable expenses of administering the plan.9
Another example of a fiduciary relationship is between the Board of Governors (BOG) and state
universities. Florida law requires the BOG to develop and annually deliver a training program for
members of each state university board of trustees that addresses the role of such boards in governing
institutional resources and protecting the public interest and, among other things, must include
information on trustee responsibilities relating to meeting the statutory, regulatory, and fiduciary
obligations of the board.10 Additionally, statutes impose on members of other boards including Triumph
Gulf Coast11 and Florida Is For Veterans,12 a fiduciary duty either to the board or to the people of
Florida.
However, there does not appear to be a provision of Florida law that imposes a fiduciary duty of care
on appointed board members or executive officers as a class.
Ethical Standards Applicable to Board Appointees and Executive Officers
Florida’s Code of Ethics for Public Officers and Employees (Code) is set forth in part III, chapter
112, F.S. Foremost among the goals of the Code is to promote the public interest and maintain
the respect of the people for their government. The Code is also intended to ensure that public
officials conduct themselves independently and impartially, not using their offices for private
gain other than compensation provided by law.13
The Code contains provisions that establish standards for the conduct of elected and appointed
officials and government employees including, but not limited to, the following:
 Prohibited actions or conduct – including prohibitions on the solicitation or acceptance of
gifts, unauthorized compensation, misuse of public position, disclosure or use of certain
information, and solicitation or acceptance of honoraria;
 Prohibited employment and business relationships – including prohibitions on dual public
employment, doing business with one’s agency, as well as conflicting employment or
contractual relationships;
 Misuse of public position;
 Anti-nepotism;
 Post-office holding/post-employment restrictions;
 Voting conflicts of interest;
 Financial disclosure; and
 Ethics training.
With respect to ethics training, the Code requires constitutional officers,14 elected municipal officers,
and community redevelopment agency commissioners to complete four hours of ethics training on an
annual basis.15 The required ethics training must include instruction on s. 8, Art. II of the Florida
Constitution, the Code of Ethics for Public Officers and Employees, and the public records and public
9 S. 112.656, F.S.
10 S. 1001.706(3)(j), F.S. The statute does not specify what actual fiduciary obligations exist. This may be an example of
moral training rather than imposing any legal obligation.
11 S. 288.8014(6), F.S.
12 S. 295.21(4)(f), F.S.
13 S. 112.311(1), F.S.
14 The term “constitutional officer” means the Governor, the Lieutenant Governor, the Attorney General, the Chief
Financial Officer, the Commissioner of Agriculture, state attorneys, public defenders, sheriffs, tax collectors, property
appraisers, supervisors of elections, clerks of the circuit court, county commissioners, district school board members, and
superintendents of schools. Section 112.3142(1), F.S.
15 S. 112.3142, F.S.
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 meetings laws. This requirement may be met by attending a continuing legal education class or other
continuing professional education class, seminar, or presentation if the required subjects are covered.
As a class of officers, the Code does not require appointed public officers or executive officers to
receive annual ethics training; however, Florida law does not preclude such individuals from receiving
ethics training from the board’s or governmental entity’s legal counsel.
Government Legal Representation
Florida law authorizes the state and local governments to provide legal representation for officers and
employees. Specifically, s. 111.07, F.S., authorizes any agency of the state, or any county,
municipality, or political subdivision of the state, to provide an attorney to defend any civil action arising
from a complaint for damages or injury suffered as a result of any act or omission of action of any of its
officers, employees, or agents for an act or omission arising out of and in the scope of his or her
employment or function, unless, in the case of a tort action, the officer, employee, or agent acted in bad
faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights,
safety, or property.
Effect of Proposed Changes
The bill establishes fiduciary duty of care standards applicable to executive officers16 and appointed
public officials of governmental entities.17 Pursuant to the bill, the term, “appointed public official”
includes certain local officers and state officers that must file a Statement of Financial Interest,
otherwise known as a FORM 1 under the Code, excepting certain local boards and commissions18 that
do not spend significant funds and pension and retirement boards19 already under significant fiduciary
duties. Specifically, an appointed public official would include any of the following individuals:
 Local Officers:20
o Any appointed member of any of the following boards, councils, commissions,
authorities, or other bodies of any county, municipality, school district, independent
special district, or other political subdivision of the state:
 The governing body of the political subdivision, if appointed;
 A community college or junior college district board of trustees;
 A board having the power to enforce local code provisions;
 A planning or zoning board, board of adjustment, board of appeals, community
redevelopment agency board, or other board having the power to recommend,
create, or modify land planning or zoning within the political subdivision, except
for citizen advisory committees, technical coordinating committees, and such
16 The bill defines the term “executive officer” to mean the chief executive officer of a governmental entity.
17 The bill defines the term “governmental entity” to mean the entity, or a board, a council, a commission, an authority, or
other body thereof, to which an appointed public official or an executive officer is appointed or hired
18 S. 112.3145(1)(a)2.c.-d., F.S.
19 S. 112.3145(1)(a)2.e., F.S.
20 Approximately 15,195 individuals are included in this category.
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 other groups who only have the power to make recommendations to planning or
zoning boards;
 A pension board or retirement board having the power to invest pension or
retirement funds or the power to make a binding determination of one’s
entitlement to or amount of a pension or other retirement benefit; or
 Any other appointed member of a local government board who is required to file
a statement of financial interests by the appointing authority or the enabling
legislation, ordinance, or resolution creating the board.
 State Officer:21
o An appointed member of each board, commission, authority, or council having statewide
jurisdiction, excluding a member of an advisory body.
o A member of the Board of Governors of the State University System or a state university
board of trustees, the Chancellor and Vice Chancellors of the State University System,
and the president of a state university.
The bill provides for the following six fiduciary duties:
 Acting in accordance with the laws, ordinances, rules, policies, and terms governing his or her
office or employment;
 Acting with the care, competence, and diligence normally exercised by private business
professionals in similar corporate and proprietary circumstances;
 Acting only within the scope of his or her authority;
 Refraining from conduct that is likely to damage the financial or economic interests of the
governmental entity;
 Using reasonable efforts to maintain public records in accordance with applicable laws;
 Maintaining reasonable oversight of any delegated authority and discharge his or her duties with
the care that a reasonably prudent person in a like private business position would believe
appropriate under the circumstances; and
 Obtaining sufficient information about decisionmaking functions, affairs, and performance of the
governmental entity’s officers, agents and employees.
The bill requires governmental entities to provide appointed public officials and executive officers the
opportunity to complete five hours of board governance training. The governmental entity must give
those individuals notice that the training is available with