Private Education Matters: May 2024

Private Education Matters

discipline students

Jury Finds That Private K-12 Schools In California Must Provide Fair Procedure Before Disciplining Students.

Two students at St. Francis High School, a Bay Area private school, were expelled for photos taken in 2017 that resurfaced in 2020 at the height of the Black Lives Matter movement. The pictures showed the students wearing acne facemasks, which were interpreted as “blackface.” The School told the students that they had to withdraw from school or face expulsion. The students were not offered a hearing and the School did not consider any evidence. The students sued and argued that the School did not give them fair procedure before expelling them. A jury agreed and awarded each student $500,000 and tuition reimbursement.

Last summer, the California Supreme Court defined “fair procedure” in a case involving a student at the University of California (USC). That case did not specifically address private K-12 schools. This St. Francis High School case establishes, for the first time, that private K-12 schools are also required to provide fair procedure before disciplining students.

Note:

For more information about this standard, please refer to LCW’s special bulletin on the USC case, which can be found here.

Court Finds University Policy To Engage In Fair Investigation Is Enforceable Under Contract Law.

John Doe and Jane Roe started attending the University of Denver as freshmen in the Fall of 2015. One night in March 2016, Roe consumed alcohol with friends. She was so intoxicated that she could not remember leaving the bar and returning to her dorm. Around the same time, Doe was in a friend’s room in the same dorm. Like Roe, Doe was intoxicated.

Roe brought Doe into her dorm room, and they engaged in consensual sexual contact. Doe’s and Roe’s account of the next morning varies. Roe alleges that she woke up to Doe engaging in non-consensual contact with her. Doe alleges that he woke up to Roe encouraging consensual contact with him.

Several weeks later, Roe filed a complaint with the University’s Office of Equal Opportunity (OEO).

Under the OEO Procedures, when a sexual-misconduct complaint alleging a violation of school policy is filed, the University makes an initial assessment. If that assessment determines that corrective action may be appropriate, the School initiates an investigation. The University must designate an investigator—either an employee or an outside person—to conduct any investigation. An investigator “must be impartial and free of any actual conflict of interest.” The Procedures provide that the investigation will be “thorough, impartial, and fair.”

The Procedures contain a precise investigation process, including that the investigator will conduct interviews, review documents, and any other relevant information; the parties may provide relevant information to the investigator, including names of witnesses and documents to review; the complainant and respondent will have an equal opportunity to be heard, to submit information, and to identify witnesses who may have relevant information. After the investigation has begun, the respondent will be notified in writing and invited to an informational meeting to review the process and resources available to them throughout the process. After the informational meeting, the Procedures require that the respondent is invited to an initial interview with the investigator. Finally, after the investigation, the investigator must prepare a written report that synthesizes the areas of agreement and disagreement between the parties. The parties must be given an opportunity to review a draft of the report and offer comments before the report is finalized. The final report requires the investigator to make a finding as to whether a violation of school policy occurred.

Doe was notified of the complaint and participated in an informal and, later, formal interview with the investigators. He asked the investigators to interview five individuals, who he believed had material information: two fellow students, his therapist, his legal counsel, and his mother. The investigators interviewed all 11 witnesses identified by Roe and not a single witness identified by Doe.

The investigators reviewed a partial sexual assault medical report submitted by Roe from after her encounter with Doe. Roe did not provide any corroborating evidence as to the injuries mentioned in the report, and the report did not include any medical analysis as to the possible cause or age of her injuries.

When the investigators provided a preliminary draft of their report for Doe and Roe to review, Doe asked again that the investigators interview his witnesses. This was also the first time that Doe received Roe’s specific allegations. The investigators only interviewed Doe’s therapist and declined to interview the remaining witnesses, even though the two students Doe identified had witnessed Doe and Roe in the hours leading up to the encounter and had seen Doe immediately after the encounter with Roe. Doe’s therapist submitted a letter that raised concerns about the investigation’s integrity, which the investigators omitted. The final report concluded that Doe engaged in nonconsensual sexual contact with Roe, and Doe was ultimately expelled.

Doe filed suit, alleging among other claims, breach of contract due to the University’s failure to conduct a “thorough, impartial, and fair” investigation as promised by the University’s policy. The trial court ruled that the University’s promise was a vague aspirational goal and unenforceable in contract. Doe appealed.

The Court of Appeals disagreed with the trial court. It concluded that the OEO Procedures did require a “thorough, impartial, and fair investigation,” and the Procedures listed very specific provisions to ensure this promise would be fulfilled. These requirements are not vague and aspirational.

Here, the Court of Appeals found four areas where the investigation was potentially not “through, impartial, or fair.”

First, the investigators interviewed all 11 witnesses identified by Roe, but only one of the five witnesses identified by Doe. The investigators initially failed to interview any of Doe’s witnesses, despite the two

students having relevant eyewitness accounts of what happened leading up to and after the encounter.

Second, only considering part of the sexual assault medical report was relevant. The investigators had requested that Roe provide the full report, but when she only provided portions, they did not ask for the rest of the report.

Third, the investigators failed to consider any improper motive Roe may have had in accusing Doe of sexual assault. For example, Roe waited several weeks to file her complaint and did so only after she became aware that Doe had told others about their encounter. Roe initially had not told her classmates that she thought Doe had engaged in nonconsensual contact; it was only after Roe witnessed Doe talking with another young woman at a party that she filed the complaint. While it is possible that Roe had no improper motives, the investigators did not even consider these motivations.

Finally, Doe was deprived an equal opportunity to be heard, submit information, and identify witnesses. The Court of Appeals found the investigators seemingly gave a greater weight of evidence to Roe’s witnesses and selfselected portions of the medical report, as compared to Doe’s witnesses and his concerns about Roe’s potentially improper motivations.

In light of these findings, the Court of Appeals reversed the trial court’s ruling on the breach of contract claim. Note: This case emphasizes that schools must follow the procedures outlined in their policies. If a school has detailed and specific requirements for investigating misconduct, failure to follow them may result in a breach of contract claim.

Univ. of Denv. v. Doe, 2024 CO 27.

Workplace Violence Prevention Plan

July 1 Deadline Approaching!

With the enactment of Senate Bill 553, the legislature amended Labor Code section 6401.7 and added Labor Code section 6401.9, requiring employers to adopt and implement a Workplace Violence Prevention Plan (WVPP) and corresponding training for their employees by July 1, 2024. As the effective date for these statutory requirements rapidly approaches, LCW has developed a number of resources to help employers develop a WVPP for their worksites and training for their employees in order to comply with these new obligations. (See here for additional information about LCW offerings and here for a special bulletin on the same topic).

Option 1:

Comprehensive package including LCW’s model WVPP and template training materials along with instructions with valuable insight and explanation as to how to customize the WVPP for your unique workplace specific issues as well as how to implement and maintain an effective WVPP moving forward. This training will also provide detailed guidance regarding the customization of LCW’s training materials to effectively train your employees on issues specific to your workplace(s).

Option 1 Purchase Includes:

• Model Workplace Violence Prevention Plan (with notes on how to customize for your organization)*.

• Checklist of plan/training requirements.

• Slides you can customize and use to train your workforce.

• Three-month access to the two hour webinar recording which provides instructions on how to customize both the Plan and the training (recording length: two hours).

Option 2:

Model Workplace Violence Prevention Plan annotated on how to update for your agency.

Option 2 Purchase Includes:

• Model Workplace Violence Prevention Plan (with notes on how to customize for your organization)*.

The Department of Industrial Relations (DIR) has recently updated their guidance on these requirements. LCW’s WVPP complies with these guidelines.

fiduciary

Court Finds Evidence That Board And Head Of School Breached Fiduciary Duties, Subjecting Them To Potentially Millions In Damages.

Science, Language, and Arts International School (SLA) was founded in 2013 by Jennifer Wilkin. SLA was an independent elementary school offering French and Mandarin language immersion education.

On January 13, 2022, SLA filed for Chapter 7 bankruptcy. Soon thereafter, Richard McCord was appointed as the Chapter 7 Trustee. In that role, Mr. McCord investigated and pursued claims and causes of actions on behalf of SLA’s bankruptcy estate.

On August 31, 2022, the Chapter 7 Trustee filed a complaint against several board members of SLA, including Wilkin (as SLA’s executive director and board chair) for breach of fiduciary duty, gross negligence and/ or reckless conduct, breach of duty of care, breach of duty of loyalty and obedience, and corporate waste. In the complaint, the Chapter 7 Trustee alleged the following pattern of conduct by the Board Defendants and Wilkin, which he believed violates the fiduciary duties each member owed to SLA:

• Wilkin breached her fiduciary duty as an officer, executive director, and board chair of SLA by borrowing $200,000 from SLA in the form of an interest-free loan to purchase a summer camp in her name. Wilkin signed the joint written consent for the loan as both the executive director and board chair, in violation of New York non-profit law and Internal Revenue (IRS) regulations. Wilkin did not fully repay the loan and did not pay rent to SLA.

• Wilkin let the SLA lease expire by not paying rent, while committing SLA to new lease obligations beyond its ability to pay. The result was SLA was

sued by its landlord for approximately $24.6 million plus interest. In that case, the Court granted the landlord summary judgment for $6.1 million plus 10 percent interest.

• Despite SLA’s landlord having already terminated the lease, Wilkin advised parents that SLA would reopen for the next year and that rumors to the contrary were false. In the process, Wilkin collected almost $900,000 in tuition fees. Deposits were not returned to parents when the School went out of business in August 2022.

• The Board Defendants failed to ensure that SLA was making payroll withholding taxes and unemployment taxes to the IRS on behalf of SLA, resulting in a claim from the IRS against SLA for more than $700,000 and by the New York State Department of Taxation and Finance against SLA for more than $100,000.

• The Board Defendants made financial decisions or allowed Wilkin to make financial decisions, knowing that neither Wilkin nor the Board had accurate data, was relying on faulty financial projections, and which omitted obligations such as repayment of a loan, tax obligations, and never had audits performed on an annual basis. Board Defendants and Wilkin did not comply with SLA’s bylaws, by failing to hold annual elections, failing to file required annual reports, and failing to fill certain required officer positions.

• The Board Defendants and Wilkin did not manage SLA in a prudent manner, breaching their duty of obedience to the School’s mission of maintaining an independent elementary school, and instead permitted the School to be run into the ground by exercising no oversight or due diligence with respect to the reckless and grossly negligent conduct of Wilkin.

duties

The Chapter 7 Trustee asserted claims for relief against the Board Defendants and Wilkin, seeking $27 million in damages arising from their alleged breach of fiduciary duties and gross negligent and/or reckless conduct.

The Board Defendants and Wilkin moved to dismiss the complaints against them.

Among their arguments, the Board Defendants and Wilkin contended that they were protected by the business judgment rule. The business judgment rule protects good faith conduct in the honest exercise of business judgment by members of a board of directors, absent claims of fraud, self-dealing, unconscionability, or other misconduct.

Here, the Board Defendants and Wilkin argued that they exerted poor judgment in trusting professionals hired to manage the School’s finances, but that this was nothing worse than ordinary negligence. In response, the Chapter 7 Trustee argued that the business judgment rule requires that a plaintiff show that an officer or director acted fraudulently or in bad faith, lacked disinterested independence, or at least closed their eyes to the corporation’s affairs and completely failed to act. Here, the Chapter 7 Trustee argued, the Board and Wilkin, at the very least, closed their eyes to SLA’s problems and failed to act.

The Court agreed with the Chapter 7 Trustee and found that there was enough evidence alleged by the Chapter 7 Trustee to conclude that the Board Defendants and Wilkin did not act in good faith when discharging their duties. The Court considered four factors in coming to this conclusion: (1) disinterestedness, (2) due care, (3) good faith, and (4) no abuse of discretion or waste of corporate assets.

The Court found that there was enough evidence to support that the Board and Wilkin were not disinterested. As one example, a board member’s law

firm represented Wilkin in purchasing the summer camp. The Board and Wilkin also did not exert due care—for example, there was no treasurer or vice president on the Board and SLA did not timely file taxes or keep accurate financial data entries. The Board and Wilkin also did not act in good faith—for example, improperly borrowing $200,000 from SLA for purchasing the summer camp; agreeing to a noninterest loan in violation of New York law and IRS regulations; the lack of policies to ensure that financial obligations were paid; and wildly inaccurate budget projections. Finally, the Court found that there was enough evidence to suggest Wilkin’s and the Board’s actions amounted to an abuse of discretion. For example, Wilkin and the Board failed to ensure that SLA was paying payroll withholding taxes and failed to ensure that IRS Form 990s were filed, causing SLA to lose its tax-exempt status.

In light of these findings, the Court denied the Board’s and Wilkin’s motions to dismiss.

Note:

This case is an important reminder for trustees and heads of school that their failure to uphold their fiduciary duties can result in personal liability.

McCord v. Margaret (In re Sci., Language, & Arts Int'l Sch.) (Bankr. E.D.N.Y. May 7, 2024) 2024 Bankr. LEXIS 1074.

McCord v. Wilkin (In re Sci., Language, & Arts Int'l Sch.) (Bankr. E.D.N.Y. May 7, 2024) 2024 Bankr. LEXIS 1075.

wage&Hour

California Supreme Court Rules

That An Employer’s Good Faith Belief That A Wage Statement Is Accurate Is A Valid Defense.

Spectrum Security Services, Inc. transports guards, prisoners, and detainees who require outside medical attention or have appointments outside custodial facilities. Gustavo Naranjo worked as a guard for Spectrum. Naranjo was suspended and later fired after leaving his post to take a meal break, in violation of a Spectrum policy that required custodial employees to remain on duty during all meal breaks.

Naranjo filed a class action lawsuit on behalf of Spectrum employees, alleging, among other claims, that Spectrum violated state regulations governing meal breaks. The complaint sought an additional hour of pay (known as premium pay) for each day on which Spectrum failed to provide employees with a legally compliant meal break. The complaint also alleged: (1) that Spectrum did not timely pay employees owed meal break premiums as wages once they were discharged or resigned, in violation of Labor Code sections 201, 202, and 203; and (2) that Spectrum failed to report the premium pay it owed as wages on employees’ wage statements, in violation of Labor Code section 226.

The trial court ruled that Spectrum’s failure to timely pay meal period premium wages was not willful, and therefore Spectrum was not subject to penalties under the Labor Code section 203. On appeal, the Court of Appeals ruled that the trial court erred in finding that Spectrum’s failure to report meal premium pay on employees’ wage statements was knowing and

intentional under Labor Code section 226. The Court of Appeals reasoned that the “willfulness” requirement under Labor Code section 203 was substantially identical to the “knowing and intentional” requirement under Labor Code section 226. The Court of Appeals ruled, therefore, that penalties should be precluded. The Court of Appeals also noted that there was a good faith dispute about whether premium pay was owed, and if premium pay constituted wages that must be reported on the wage statements.

Under Labor Code section 226, employers must meet detailed requirements for the content of wage statements, including requirements to report an employee’s hours worked, wages earned, hourly rates, and employer- and employee-identifying information. A knowing and intentional violation of Labor Code section 226 is a misdemeanor offense and can result in fines and imprisonment penalties. However, the statute does not define “knowing and intentional.”

Naranjo argued that “knowing and intentional” is based on an employer’s awareness of the underlying facts giving rise to the violation of section 226, and that the violation was not the product of a clerical error or inadvertent mistake. Spectrum argued that “knowing and intentional” requires a showing that the employer knew that it was required to include certain information in wage statements—here, unpaid premium pay for missed meal breaks—and nevertheless intentionally omitted that information from the wage statements it provided.

The California Supreme Court concluded that “knowing,” “intentional,” and “willful” can be used interchangeably. The Supreme Court also concluded

that Labor Code section 226’s penalty provision speaks to the knowing and intentional failure to comply with the law. The Court reasoned that employers should not be penalized if they reasonably and in good faith dispute that it is required to report certain amounts as wages or otherwise disputes its obligation to craft its wage statements in a particular matter.

Practically, the Court considered that employees so often bring claims for violations of both section 203 and 226, and the provisions should be read in harmony.

Thus, the Court held that an employer’s objectively reasonable, good faith belief that it has provided employees with adequate wage statements precludes an award of penalties under Labor Code section 226. An employer that believes reasonably and in good faith, albeit mistakenly, that it has complied with the wage statement requirements does not fail to comply with those requirements knowingly and intentionally.

The California Supreme Court upheld the Court of Appeals ruling because Spectrum disputed its liability reasonably and in good faith, so could not be held liable for penalties under section 226. Spectrum had some uncertainty about whether California wage laws and orders applied to their officers since they are federal security contractors. Further, section 226 did not include missed-break premium pay among the categories of information that must be included in wage statements.

Note:

Penalties for wage statement violations can only be recovered for “knowing and intentional” violations. With this decision, if employers can demonstrate a good faith belief in the accuracy of their wage statements, they may be able to argue that there was not a failure to comply with the Labor Code, and therefore a penalty should not apply.

Naranjo v. Spectrum Security Services, Inc. (May 6, 2024) ___Cal.5th___ [2024 Cal. LEXIS 2438].

LCW In The News

To view these articles and the most recent attorney-authored articles, please visit: www.lcwlegal.com/news

• Featured in both The Recorder and Bloomberg Law, LCW Partner Alexander Volberding and Senior Counsel Brett Overby discuss California's new workplace violence prevention law, highlighting its role in setting a national standard for worker safety. Mandating comprehensive prevention plans, employee training, incident logging, and compliance records by July 1, 2024, the law urges swift action from employers. Inspired by a tragic mass shooting, it will be enforced by the Division of Occupational Safety and Health (DOSH) without a grace period. Volberding and Overby emphasize the need for customized plans, hazard assessments, and thorough training, advising employers to use templates, consult professionals, and leverage available resources to ensure effective compliance.

accommodations

Court Upholds School’s Decision To Deny Teacher’s Religious Accommodation

To Pronoun Policy.

Brownsburg Community School Corporation, a public school in Indiana, determined that if a student, the student’s parents, and a health care provider requested that the student be called by a preferred name, that name would be entered in PowerSchool, the School’s official student database. Teachers were then required to call the student by that name.

A music and orchestra teacher, John Kluge, identifies as a Christian and is a member of Clearnote Church, which is part of Evangel Presbytery. Kluge serves as head of his church’s youth group ministries, head of a discipleship program for children, and leader of a worship group. Kluge believes that God created mankind as either male or female, and that gender is fixed at the moment of conception and cannot be changed. He also believes that he cannot affirm as true ideas and concepts that he deems untrue and sinful. As a result, Kluge believes it is sinful to promote gender dysphoria or to be transgender. Based on these beliefs, it is sinful for Kluge to encourage students in transgenderism.

Kluge objected to the School’s name policy on religious grounds, and requested an accommodation so that he could refer to all students by last name only. The School initially granted the accommodation. Kluge agreed not to use honorifics, such as “Mr.” or “Mrs.” to refer to any students, and if a student asked why he was using last names only, he would respond that he views the orchestra like a sports team and was trying to foster a sense of community. Kluge also understood he would not be required to distribute gender-specific orchestra uniforms to students.

The School received complaints from teachers and students about this policy. In particular, a teacher relayed a complaint from two transgender students that using last names only was insulting and disrespectful, and students were feeling harmed by the last name only policy. Multiple students said that Kluge would occasionally use honorifics or gendered pronouns when talking to nontransgender students.

The School initially granted the accommodation, but withdrew it for the next school year, finding that the practice was detrimental not only to transgender students’ well-being, but also to the learning environment for other students and faculty. The School felt that the burden undermined their business of fostering a safe and inclusive learning environment for all students. Kluge was told he would have to follow the name policy to continue his employment, otherwise he would have to resign or be terminated.

Kluge submitted his resignation on April 30, 2018. In the resignation letter, Kluge said he was resigning because of the name policy, the School’s decision to no longer provide him an accommodation, and Kluge’s Christian beliefs not allowing him to call transgender students by their preferred names and pronouns. Kluge attempted to revoke his resignation, but the School ultimately declined that revocation and accepted his resignation.

Kluge filed suit, asserting that the School failed to accommodate his religious beliefs in violation of Title VII. The trial court ruled in favor of the School. Kluge appealed, and the Court of Appeals affirmed. In the interim, the U.S. Supreme Court decided Groff v. DeJoy, which clarified the standard for a party to claim an undue hardship defense in Title VII religious accommodation cases.

Formerly, it was an undue hardship to require an employer to accommodate an employee’s religion if it resulted in anything beyond a “de minimis cost.” After Groff, the standard was clarified; now, it is an undue hardship if granting the accommodation would result in “substantial increased costs in relation to the conduct of its particular business.”

In light of the findings in Groff, courts must now consider all relevant factors, including the accommodations at issue and their practical impact in light of the nature, size, and operating cost of an employer. Certain kinds of costs are irrelevant in evaluating undue hardship, including non-economic costs.

Here, the Court considered that schools are not for-profit corporations, meaning their costs differ from a traditional employer. The Court considered the School’s arguments that their mission is to foster a safe and inclusive learning

environment, which is rooted in Indiana state law. Indiana state law requires public school teachers to receive training on social emotional learning classroom practices that are supportive to students. The Court also considered the substantial student harm that resulted from the accommodation. Students and teachers alike complained that Kluge’s behavior was offensive, and his classroom environment was uncomfortable and unwelcoming, and was disruptive to the student’s learning environment.

On the other hand, Kluge argued that a few complaints did not arise to the level of undue hardship under Groff. The Court disagreed. The School received reports from students, parents, and teachers that students were uncomfortable in the class and bringing those conversations that occurred in his class to other classrooms. The Court considered that students dreaded going to class, and one student quit orchestra entirely. The Court found this was evidence that the last name only accommodation burdened the School’s ability to provide a supportive environment for its students. Kluge argued that the School failed to identify alternative solutions. The Court did not find this persuasive because

students must be addressed by some name, and it was clear that Kluge would agree to nothing short of using only last names.

The Court also considered a separate argument from the School that continuing this accommodation would expose the School to potential liability—that is, condoning a teacher’s refusal to call students by their first names because they are transgender could amount to gender discrimination. The Court found that the name accommodation did place the School at risk of litigation and the potential to lose their Title IX funding.

The Court granted the School’s motion for summary judgment under Groff.

Note:

This case applied the Supreme Court’s recent decision on religious accommodations to the school environment. It also illustrates the tensions that can arise between a student’s rights to be free from gender discrimination and an employee’s freedom of religion rights.

Kluge v. Brownsburg Cmty. Sch. Corp. (S.D. Ind. Apr. 30, 2024) 2024 U.S.Dist. LEXIS 78340.

ON-DEMAND TRAINING

misconduct

Court Upholds Catholic School’s Decision To Terminate Gay Teacher’s Employment.

Charlotte Catholic High School is part of the Roman Catholic Diocese of Charlotte. The School offers secular and religious classes, but religion infuses daily life at the School. For example, the School’s mission statement describes the School as a community centered in the Roman Catholic faith and the School’s statement of beliefs states that individuals should model and integrate the teachings of Jesus in all areas of conduct. The Diocese’s mission includes language that the people are called to grow into a community of praise, worship, and witness. Teachers play a critical role in pursuing those missions—the School expects teachers to begin class with a short prayer, teachers are expected to accompany students to all-school mass, and teachers are evaluated on the “catholicity” of their classroom environment and their ability to teach their subjects in a manner agreeable with Catholic thought.

Although employees are not required to be Catholic, employees are expected to conform to Catholic teachings, which includes a prohibition on engaging in or advocating for conduct contrary to the moral tenets of Catholic faith, including the Catholic Church’s rejection of same-sex marriage.

Lonnie Billard began working at the School in 2001 and held a variety of roles, including a substitute teacher, an English teacher, and a drama teacher. In his role, Billard took intentional steps to incorporate religion into his teaching.

Billard is also gay. He met his now-husband in 2000, and in 2014, shortly after same-sex marriage was legalized in North Carolina, he posted on Facebook that he and his partner were engaged to be married. When the School learned of Billard’s engagement, it opted not to invite him back as a teacher, reasoning that Billard’s plan to marry a same-sex partner violated Diocese policy against engaging in conduct contrary to the moral teachings of the Catholic faith.

Billard sued under Title VII’s prohibition against sex discrimination in employment. Both parties filed motions for summary judgment. The trial court granted Billard’s motion for summary judgment and denied the School’s motion for summary judgment. The trial court found that Billard was fired because of his plans to marry his same-sex partner—not, as the School argued, solely because Billard was advocating for views that went against the Catholic Church’s beliefs. The trial court concluded that this case amounted to classic sex discrimination.

The trial court rejected the School’s multiple affirmative defenses. Among these defenses was the ministerial exception, which is rooted in the First Amendment, and bars the government from interfering with ministerial employment decisions. The trial court found that Billard was primarily a substitute teacher of English and drama, which were purely secular subjects, and he was not required to be Catholic to be a substitute teacher. Additionally, the trial court found that Billard did not have to undergo religious training and did not hold himself to be a minister of the Church. Therefore, Billard was not a ministerial employee.

The School appealed and argued that the ministerial exception should apply. The Court of Appeals agreed and concluded that the School entrusted Billard with vital religious duties, making him a messenger of faith and placing him within the ministerial exception.

The Court of Appeals considered the School’s educational mission, centered on the Roman Catholic faith, and its statement of beliefs calling on all community members to model and integrate the teachings of Jesus in all areas of conduct. Billard’s employment was evaluated based on the degree to which he integrated faith throughout his classes, and Billard went out of his way to meet those expectations, coordinating with religion teachers in setting his curriculum. Even though Billard was not tasked with regular religious instruction as an English and drama teacher, his duties still included conforming his instruction to Christian thought and providing a classroom consistent with Catholicism. There were also

rare occasions where Billard substitute taught in religion classes. Finally, the Court of Appeals considered Billard’s role as a teacher. Educating young people in their faith and training them to live their faith are responsibilities at the core of religious schools.

The Court of Appeals determined that Billard was subject to the ministerial exception and reversed the trial court’s ruling.

Note:

LCW reported on this case previously. The Court of Appeal’s decision to reverse the trial court’s ruling in this case highlights the fact-specific analysis that courts will undertake in determining whether the ministerial exception applies to an employee.

Billard v. Charlotte Catholic High Sch. (4th Cir. 2024) 2024 U.S. App. LEXIS 11224.

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hostile Work environment

Disability-Based Hostile Work Environment Claims Are Viable Under The ADA And RA.

Dr. Andrew Mattioda began working at NASA in 2000. He has a degenerative defect in his hips and a disease of the spine, which causes uneven vertebrae growth and scoliosis. These physical disabilities required Mattioda to purchase premium-class airline tickets for longer flights so he could frequently change positions and stretch.

By 2011, Mattioda had informed NASA about his disabilities and limitations. From 2011-2018, Mattioda alleged he was discriminated against through: his supervisors’ derogatory comments; denial of work opportunities; unwarranted negative job reviews; and resistance to his requests for disability-based accommodations.

In 2011, one supervisor allegedly responded to Mattioda’s request for a premium-class upgrade and asked why Mattioda could not “just tough it out or suck it up and travel coach.” That supervisor allegedly told Mattioda that he felt another scientist was doing all of Mattioda’s work and that he did not respect Mattioda. The supervisor told Mattioda at a NASA holiday party that Mattioda need not get his hopes up for a promotion.

Mattioda alleged that the supervisor expressed those same negative sentiments to other employees, including telling one of Mattioda’s coworkers that he felt Mattioda was lazy and was “using his medical disability issues to avoid work.”

The disparaging comments were so pervasive that some colleagues told Mattioda they viewed the comments as “background noise.”

A supervisor allegedly inhibited Mattioda’s work opportunities by: declining to support Mattioda’s nomination for a promotion while supporting other candidates; failing to authorize a spot for postdoctoral program candidate to support Mattioda’s work; lying to

Mattioda that he could not virtually present at a conference; declining to involve Mattioda in projects; and requiring only Mattioda, and none of his other colleagues, to submit an itemized travel request.

Another supervisor allegedly told Mattioda that he would have to use his own grant money to pay for premium-flight ticket upgrades and warned him that he could lose his job if he kept requesting such accommodations. The supervisor also: expressed concerns on Mattioda’s performance reviews that his disability-related travel limitations would impact his career; lowered one of his ratings on that basis; and criticized him for not traveling to the point of questioning whether he was “still committed to being a high-profile scientist at NASA.

Mattioda sued in the federal district court, alleging a hostile work environment claim under the Americans With Disabilities Act (ADA). The district court dismissed the hostile work environment claim, finding that Mattioda had not established a causal link between the alleged harassment and his disabilities.

The Ninth Circuit Court of Appeals held that Mattioda had alleged a sufficient link to warrant a trial. The Court explained that the threat of losing his job if he kept requesting premium-flight tickets as an accommodation was relevant to the hostile work environment claim. The Court also noted that the district court failed to acknowledge that the alleged series of harassing conduct had occurred after Mattioda’s supervisors were informed of his disabilities. As a result, Mattioda sufficiently established a causal link between the harassing conduct and his disabilities.

Finally, the Court rejected NASA’s argument that the harassment was not sufficiently severe or pervasive to establish a hostile work environment, explaining that Mattioda alleged his supervisors inhibited his work opportunities, repeatedly made harassing and derogatory comments over a period of years, vaguely threated his job, and made insulting comments about his reasonableaccommodation requests and job performance. Taken

together, Mattioda’s claims were enough to maintain a plausible hostile work environment claim.

Note:

The Court held that employees may bring disability-based hostile work environment claims under the ADA and the Rehabilitation Act (RA). With this decision, the Ninth Circuit joined other circuit courts that have considered the issue.

Mattioda v. Nelson, (9th Cir. 2024) 2024 US App. Lexis 9641.

cases we are watching

• On May 7, 2024, in Pasadena, the U.S. Court of Appeals for the Ninth Circuit heard oral arguments in the case of Loffman v. California Department of Education. In this case, Orthodox Jewish parents filed suit against the state for the state’s implementation of the Individuals with Disabilities Act (IDEA), a federal law that provides federal funding to states for special education programs in public schools. In circumstances where public schools cannot meet the needs of students with disabilities, federal and state law allow that funding to be used at private schools that can provide support. In California, however, the private schools must be nonreligious. In August 2023, the trial court ruled against the religious parents and schools, and in October 2023, the religious parents and schools appealed. LCW will monitor this case for the Ninth Circuit’s ruling.

• In January, the North Carolina State Court of Appeals unanimously ruled that a School’s decision to expel students due to their parent’s conduct was upheld due to the language in the enrollment agreement about the parent-school partnership. LCW covered this case in the January edition of Private Education Matters Subsequently, the Court of Appeals agreed to pull the decision. The new decision still upheld the trial court’s ruling favoring the School but was no longer unanimous. The new opinion split judges 2-1 and produced three separate opinions. The concurring judge wrote separately to highlight concerns about the opinion undermining the fundamental right to freely contract in North Carolina. The dissenting opinion found that it was premature to conclude that the parents’ conduct made it impossible to create a positive and collaborative working relationship, and therefore the School perhaps was not justified in expelling the students. This new opinion signals that this case may be appealed to the Supreme Court of North Carolina.

• A group of Jewish advocacy organizations sued the University of California, Berkeley and its law school for the University’s alleged toleration of antisemitism on campus. This lawsuit stems from recent campus protests and riots, including an allegedly anti-Semitic campaign against the law school’s dean, Erwin Chemerinsky. The lawsuit alleges that Jewish students were physically assaulted by rioters in February, and harassed, sat upon, and subjected to religious slurs by protestors that have occupied the campus. In particular, a blind student was allegedly forced to take a detour as a result of student protest blockades, blockades which allegedly violate the University’s restrictions on time, place, and manner for protests. The plaintiffs argue that the University has not taken action against the students responsible for the blockades and has not protected students from harassment when passing through.

workplace Safety

Cal/OSHA Likely To Adopt New Fed OSHA Rule Regarding Employee Representative Participation At Workplace Inspections.

On April 1, 2024, the federal Occupational Safety and Health Administration (OSHA) issued a rule that made two changes to the procedures a Compliance Safety and Health Officers must follow when conducting a workplace inspection. First, the rule clarifies that the employee representatives who are present and participating during an OSHA inspection may either be an employee or a third party (e.g., union representative). Second, the rule clarifies that a third-party representative need not have skills in industrial hygiene or safety engineering, but may have a variety of other skills, knowledge, or experience which give the compliance officer good cause to believe the representative could aid in the federal OSHA inspection. Those other skills could include experience with particular workplace hazards or language / communication skills.

The federal OSHA directive also states that “State Plans” are required to adopt regulations that are identical to or at least as effective as this rule, unless the state can demonstrate that such changes are not necessary because their existing requirements are already at least as effective in protecting workers as the federal rule. If a state does not participate in the federal Occupational Safety and Health Administration program, that state can implement a separate state program that addresses workplace safety (State Plan). California is one of several states that has enacted its own State Plan.

California’s State Plan does not discuss the procedures for an OSHA workplace inspection. However, the Division of Occupational Safety and Health of California (DOSH) publishes a Policies and Procedures Manual (Manual) which contains guidelines for conducting a workplace inspection. The Manual indicates that if there is an authorized employee bargaining unit representative for the worksite, the compliance personnel “must make every effort to invite the representative to participate” in the workplace inspection. The Manual further states that if there is no authorized employee bargaining unit representative, the compliance personnel “must consult with a reasonable number of the employer’s employees concerning matters of workplace safety and health.”

The rules in the DOSH Manual do not address: 1) whether the employee’s representative in a workplace inspection can be a third party; or 2) what type of skills the third-party representative of the employee can have. Thus, California’s State Plan arguably does not have regulations that are similar to or “at least as effective” as the new OSHA rule.

Within six months of April 1, 2024, OSHA’s final rule (October 1, 2024), California is required to adopt a revised regulation that is identical to or at least as effective as the OSHA final rule. For California employers, this would likely mean that during DOSH-conducted workplace inspections, employees could be represented by an individual who does not work for the employer, such as a union representative.

business & facilities

Mechanics Liens Might Not Require Strict Statutory Compliance To Be Enforced.

If a person is not paid for work they provide on a property, they have the right to make a claim for unpaid amounts by filing a mechanics lien against that property. For a mechanics lien to be enforceable, the claimant must follow statutorily required notice and other requirements. In an unpublished case, however, a California court of appeal upheld a subcontractor’s mechanics lien claim even though the subcontractor failed to strictly follow those procedural requirements.

In Ram Concrete Construction, Inc. v. Montecito Realty Group L.P., Ram Concrete Construction (Ram) had a contract with a general contractor, Everspring, to perform concrete foundational work for a project on property owned by Montecito Realty Group (Montecito). Ram alleged that Everspring failed to pay it over half a million dollars for its work on the project, and filed a mechanics lien on the property. Ram proceeded to file a complaint to foreclose on that mechanics lien on Montecito’s property.

At trial, the court found that Everspring had breached the contract and Ram could foreclose on its mechanics lien, even though Ram had failed to serve the construction lender for the project with a preliminary notice of mechanics lien as required in the Civil Code.

On appeal, Montecito argued that Ram was required to strictly comply with the mechanics lien statutory requirements and that Ram could not foreclose on the mechanics because it did not serve the preliminary notice on the construction lender.

The court found that, although Ram did not strictly comply with the mechanics lien requirements, the project owner Montecito was not prejudiced by Ram’s failure to send the construction letter a preliminary notice. Strictly construing the mechanics lien notice requirements would require the court to invalidate an otherwise valid lien against an owner who did receive notice simply because a third party did not receive this notice.

This case is significant because the court upheld the mechanics lien even though the claimant failed to strictly comply with statutory requirements. Project owners may therefore lose legal support for arguments that a mechanics lien is invalid because the claimant failed to comply with the statutory filing and notice requirements.

Schools should take caution when engaging in construction projects to ensure their contractors act in a manner to avoid filing and foreclosures of mechanics liens on the school’s property. Ways to avoid mechanics liens include selecting trusted contractors, utilizing construction contracts with clear payment terms and schedules, and paying close attention to the project. If a claimant does file a mechanics lien, in addition to asking the contractor to have the lien released, schools should still confirm if the claimant complied with the statutory filing and notice requirements for mechanics’ liens, as other courts might still find that strict compliance is required.

Ram Concrete Construction, Inc. v. Montecito Realty Group L.P., 2024 WL 1879352 (Cal. Ct. Appeal).

did you know...?

• The Department of Justice (DOJ) recently settled a matter with Washington University in St. Louis after the DOJ determined that the University discriminated against a worker based on his citizenship status and then retaliated against him for complaining about the discrimination. In this case, the employee checked a box on his Form I-9 that indicated he was a non-citizen authorized to work and that his work authorization would not expire. The employee had been granted asylum by the federal government, but the University repeatedly confronted him about his immigration status, his documentation, and his right to work, despite having properly completed the Form I-9. Ultimately, the University terminated the employee’s employment for complaining about his discrimination. Under the terms of the settlement, the University will pay over $4 million in civil penalties and back pay to the employee. The settlement agreement requires the University to train its personnel on antidiscrimination requirements, revise its employment policies, and be subject to departmental monitoring and reporting requirements.

• The Department of Education’s Office of Civil Rights issued a Dear Colleague Letter this month to remind schools that receive federal financial assistance that they are obligated under Title VI of the Civil Rights Act to ensure nondiscrimination based on race, color, or national origin, which includes shared ancestry or ethnic characteristics. The letter includes several relevant examples of the way the Department of Education would apply these standards under Title VI.

• The Department of Labor recently issued guidance making clear that employers are responsible for compliance with federal laws, particularly wage and hour laws, when using artificial intelligence (AI) or other automated systems in the workplace. For example, when using AI to track working hours and set work schedules without human oversight, there is the potential that an employer is out of compliance with wage and hour laws. The guidance also raises concerns about using AI to certify and administer FMLA leave. For example, AI software may ask an employee to disclose more medical information to an employer than FMLA allows. The software may also improperly trigger penalties when an employee misses a certification deadline, which could violate the FMLA if the deadline should not have been imposed or the system failed to take into account circumstances that permit extra time for submission.

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Consortium Call Of The Month

Members of Liebert Cassidy Whitmore’s consortiums are able to speak directly to an LCW attorney free of charge to answer direct questions not requiring in-depth research, document review, written opinions or ongoing legal matters. Consortium calls run the full gamut of topics, from leaves of absence to employment applications, student concerns to disability accommodations, construction and facilities issues and more. Each month, we will feature a Consortium Call of the Month in our newsletter, describing an interesting call and how the issue was resolved. All identifiable details will be changed or omitted.

Answer:

Question:

The Department of Labor recently announced new minimum salary thresholds for exempt employees. An HR administrator reached out to LCW to ask what impact the new federal laws have on private school administrators and teachers in California.

The attorney responded that in general, employers in California need to comply with both the federal Fair Labor Standards Act (FLSA) and state wage and hour laws. There are both federal and state laws regarding the minimum amount of salary an employee has to earn in order to be considered exempt from overtime laws. If either the federal or state law offers greater benefits to an employee, then the employer has to follow the law that is better for the employee.

In this case, the new federal salary test requires that a non-teaching school employee earn at least $58,656 per year to be considered exempt. That threshold amount under California law is currently $66,560 per year (i.e., two times the state minimum wage). Because California law is more favorable to employees, the School has to provide for the higher threshold amount in order for a non-teaching school employee to be exempt. What this means is that the new FLSA rules do not impact the minimum salary threshold requirement for administrators.

Teachers do not have a minimum salary under federal law. They are specifically excluded (see: https://www.dol.gov/agencies/whd/fact-sheets/17s-overtimeeducational-institutions). So, the new federal rules regarding the minimum threshold also do not impact teachers. Instead, the current California salary test applies for K-12 teachers at private schools. That minimum amount varies based on the location of each school in California.

lcw best timeline

MAY

Complete hiring of new employees for next school year.

Complete hiring for any summer programs.

If service agreements expire at the end of the school year, review service agreements to determine whether to change service providers (e.g., janitorial services, if applicable).

• Employees of a contracted entity are required to be fingerprinted pursuant to Education Code Section 33192, if they provide the following services:

ƒ School and classroom janitorial.

ƒ School site administrative.

ƒ School site grounds and landscape maintenance.

ƒ Pupil transportation.

ƒ School site food-related.

• A private school contracting with an entity for construction, reconstruction, rehabilitation, or repair of a school facilities where the employees of the entity will have contact, other than limited contact, with pupils, must ensure one of the following:

ƒ That there is a physical barrier at the worksite to limit contact with pupils.

ƒ That there is continual supervision and monitoring of all employees of that entity, which may include either:

ƒ Surveillance of employees of the entity by School personnel; or

ƒ Supervision by an employee of the entity who the Department of Justice has ascertained has not been convicted of a violent or serious felony, which may be done by fingerprinting pursuant to Education Code Section 33192. (See Education Code Section 33193).

If conducting end of school year fundraising:

Raffles:

• Qualified tax-exempt organizations, including nonprofit educational organizations, may conduct raffles under Penal Code Section 320.5.

• In order to comply with Penal Code Section 320.5, raffles must meet all of the following requirements:

ƒ Each ticket must be sold with a detachable coupon or stub, and both the ticket and its associated coupon must be marked with a unique and matching identifier.

ƒ Winners of the prizes must be determined by draw from among the coupons or stubs. The draw must be conducted in California under the supervision of a neutral person who is 18 years of age or older.

ƒ At least 90 percent of the gross receipts generated from the sale of raffle tickets for any given draw must be used to benefit the school or provide support for beneficial or charitable purposes.

practices

Each month, LCW presents a monthly timeline of best practices for private and independent schools. The timeline runs from the fall semester through the end of summer break. LCW encourages schools to use the timeline as a guideline throughout the school year.

• 50/50 raffles may only be conducted by major league sports nonprofits.

Auctions:

• The School must charge sales or use tax on merchandise or goods donated by a donor who paid sales or use tax at time of purchase.

ƒ Donations of gift cards, gift certificates, services, or cash donations are not subject to sales tax since there is not an exchange of merchandise or goods.

ƒ Items withdrawn from a seller’s inventory and donated directly to nonprofit schools located in California are not subject to use tax.

ƒ For example, if a business donates items that it sells directly to the School for the auction, the School does not have to charge sales or use taxes. However, if a parent goes out and purchases items to donate to an auction (unless those items are gift certificates, gift cards, or services), the School will need to charge sales or use taxes on those items.

JUNE

Conduct exit interviews:

• Conduct at the end of the school year for employees who are leaving (whether voluntarily or not). These interviews can be used to improve the organization and can help defend a lawsuit if a disgruntled employee decides to sue.

MID-JUNE THROUGH END OF JULY

Update Employee and Student/Parent Handbooks:

• The handbooks should be reviewed at the end of the school year to confirm that the policies are legally compliant, consistent with the employment agreements and enrollment agreements that were executed, and current with the latest best practice recommendations. The school should also add any new policies that it would like to implement upon reflection from the prior school year and to prepare for the upcoming school year.

Conduct review of the school’s Bylaws (does not necessarily need to be done every year).

Review of insurance benefit plans:

• Review the school’s insurance plans, in order to determine whether to change insurance carriers. Insurance plans expire throughout the year depending on your plan. We recommend starting the review process at least three months prior to the expiration of your insurance plan.

• Workers Compensation Insurance plans generally expire on July 1.

• Other insurance policies generally expire between July 1 and December 1.

Liebert Cassidy Whitmore