Private Education Matters: February 2023

Private Education Matters

Arbitration

Court Blocks State Legislature’s Ban On Mandatory Arbitration Agreements.

Under California’s Assembly Bill 51 (AB 51), an employer is barred from requiring an employee or applicant to enter into an agreement to arbitrate certain claims as a condition for being hired or for keeping a job, or from retaliating against an employee or applicant who refuses to agree to arbitration. AB 51 also bars employers from using an employment contract that requires the employee to take an affirmative step to opt out of an arbitration agreement. Under Section 433 of the California Labor Code, an employer who violates AB 51 has committed a misdemeanor.

The California legislature also included a provision in AB 51 ensuring that, if the parties chose to enter into an arbitration agreement, it would be enforceable. This created the potential for an employer to be subject to criminal prosecution for requiring an employee to enter into an arbitration agreement, while simultaneously allowing the employer to nevertheless enforce that agreement once it was executed. The California legislature took this approach to avoid conflict with Supreme Court precedent, which holds that a state rule that discriminates against arbitration is preempted by the Federal Arbitration Act (FAA). In other words, if the state law disfavors arbitration, the FAA will govern instead of state law, and the FAA is much more favorable to arbitration.

In December 2019, a collection of trade associations and business groups (collectively, the Chamber of Commerce) filed a complaint against various California officials (collectively, California), seeking a declaration that AB 51 was preempted by the FAA, a permanent injunction to prohibit California officials from enforcing AB 51, and a temporary restraining order. The trial court granted the motion for a temporary restraining order and the preliminary injunction. The trial court found that the Chamber of Commerce was likely to succeed on the merits of the preemption claim since AB 51 treats arbitration

agreements differently from other contracts, which conflicts with the purposes and objectives of the FAA. The trial court found that, once the case was decided on the merits, the FAA would likely preempt AB 51. California appealed.

To establish a case for a preliminary injunction, the moving party must establish (1) a likelihood of success on the merits, (2) a likelihood of irreparable harm, (3) that the balance of harm tips in the movant’s favor, and (4) that the injunction is in the public interest. California only challenged the first factor—the trial court’s holding that AB 51 is preempted by the FAA, and therefore that the Chamber of Commerce is likely to succeed on the merits of their claim.

The Court of Appeal stated that preemption can occur when a federal statute expressly provides that it preempts state law, when Congress has found that a federal law occupies a certain field exclusively, or when state law conflicts with federal statute. The Court of Appeal found that the FAA does not reflect a congressional intent to occupy the entire field of arbitration. However, the FAA was designed to promote arbitration and to give preference to arbitration provisions. A state rule interferes with these purposes if the state rule discriminates against arbitration on its face, or covertly discriminates against arbitration by disfavoring contracts that have the defining features of arbitration. The Court of Appeal found that precedent shows a congressional intent to place arbitration agreements on the same footing as other contracts.

California argued that the FAA only pertains to existing arbitration agreements, so once an arbitration agreement was entered into, it could be enforced. The Court of Appeal disagreed and found that the FAA’s preemptive scope applies to state rules that discriminate against the enforceability and the formation of arbitration agreements. If the Court of Appeal were to follow California’s suggested approach, it would remove the congressional intent to place arbitration agreements on the same footing as other contracts because it would disfavor entering into arbitration agreements.

The Court of Appeal concluded that, while AB 51 does not expressly bar arbitration agreements, it disfavors the formation of agreements that have the essential terms of an arbitration agreement and places a severe burden on forming arbitration agreements. AB 51 deters an employer entering into an arbitration agreement because it threatens civil and criminal liability on employers for entering into an arbitration agreement. The Court of Appeal found that this is antithetical to the FAA’s policy of favoring arbitration agreements. The Court of Appeal also found that that all of AB 51’s provisions work together, and therefore, the Court of Appeal declined to uphold certain parts of AB 51 while striking down other parts.

The Court of Appeal affirmed the trial court’s decision to grant a preliminary injunction and ruled that AB 51 is preempted by the FAA.

Chamber of Commerce of the United States of America v. Bonta (2023) --- F.4th ---- [2023 WL 2013326].

Note:

California may choose to appeal the ruling, in which case LCW will monitor the case for future developments.

Medical Center Waived Its Right To Arbitrate By Delaying And Actively Trying The Issues In NonArbitration Forum.

Desert Regional Medical Center (DRMC) employed three nurses (RNs) under a collective bargaining agreement (CBA). The CBA governed nurses’ rest breaks, meal periods, and payment of missed break premiums. The CBA also required grievance and arbitration procedures for disputes involving interpretation or application of the CBA. The CBA stated that individual nurses and DRMC may voluntarily agree to arbitrate “any dispute not otherwise arbitrable under the [CBA].” RNs also signed a DRMC employment document (Agreement) in which they agreed submit non-CBA covered claims or disputes to final and binding arbitration before the American Arbitration Association (AAA).

In March 2015, the nurses’ Union filed a meal and rest break grievance against DRMC. Thereafter, the RNs filed individual claims with the California Labor Commissioner (LC), alleging unpaid rest and meal period wages, and requesting waiting time penalties.

In February 2019, DRMC participated in the LC proceedings by filing a brief. The LC awarded each of the RNs thousands of dollars in unpaid wages in July 2019.

In August 2019, DRMC appealed the LC award to the trial court, alleging that the LC lacked jurisdiction because the CBA controlled. By October 2019, the Union and DRMC had begun the arbitration process on the Union’s meal and rest break grievance. In July 2020, DRMC filed a petition with the trial court to compel arbitration of the RNs’ wage claims. In August 2020, DRMC filed an amendment to its petition to compel arbitration, adding allegations that it did not waive its right to arbitrate and that furthermore, the RNs were prevented from arguing DRMC waived its right to arbitrate because the Union had already agreed to arbitrate the same issues. The trial court denied DRMC’s requests to arbitrate and amend the petition, and DRMC appealed.

The Court of Appeal upheld the trial court’s decision to deny DRMC’s petition to compel arbitration. First, Court noted that the California Arbitration Act requires the trial court to compel arbitration unless an exception applies. Here, the exception provides that state statutory wage and hour claims are generally not subject to arbitration, whether the arbitration clause is contained in the CBA or an individual agreement. The Agreement stated that RNs will submit claims to arbitration, except that “wage claims within the jurisdiction of a local or state labor commissioner…are not subject to [arbitration].” Therefore, RNs Agreement allowed them to “file such non-waivable statutory claims with the appropriate agency,” which they did when they filed with the LC.

Second, on the issue of waiver, the Court found that even if an agreement states that arbitrations must follow the procedural rules in the Federal Arbitration Act and American Arbitration Association, California law nevertheless requires the court to determine whether a waiver to arbitrate has occurred. Accordingly, the trial court had jurisdiction under state law to determine whether DRMC waived its right to arbitrate RNs claims.

Finally, the Court determined that DRMC did waive its right to arbitrate through numerous actions. For example, DRMC delayed filing its petition to compel arbitration for over four years, including at least three years from when RNs filed their individual claims with the LC and one year after the LC issued its decision. Instead, DRMC actively participated in the LC proceedings, including participating in the hearing

and presenting evidence and arguments. Before filing a petition to compel arbitration, for example, DRMC filed motions to remove its case in order to appeal the LC decision to federal court, filed motions of related cases, requested reassignment and transfer of the case, filed objections to RNs written discovery, and requested discovery sanctions.

Desert Regional Medical Center v. Miller, 2022 WL 18142878.

Note:

As a general rule, if a school wants to preserve its right to arbitrate, it must promptly petition for arbitration and not actively participate in proceedings outside the arbitration forum.

Handbook similarly stated that any claim or dispute “arising out of” a student’s enrollment at the School would be settled by “biblically-based mediation, and, if mediation is not successful, legally binding arbitration.” The parents and the School agreed to these terms when both parties signed the enrollment agreement.

The trial court found that the parents’ claims did not arise out of Colin’s enrollment at the School. The School appealed.

Arbitration Provisions In Enrollment Agreement And Handbook Moved Case Into Arbitration.

School’s

Colin Happ, a student at Calvary Christian Academy, died by suicide following the School’s request that Colin withdraw for selling a vape pen to another student. Colin’s parents brought suit against the School, alleging claims for wrongful death and negligence, asserting that the School violated its own policies and procedures.

The parents argued that the School, “consistent with their policies and procedures,” owed a duty of care to assess the discipline imposed on students like Colin, to see if those students were in crisis, and to determine the specific care that was needed to address and minimize the risk of self-harm or suicide for those students. The parents also argued that the School was negligent for failing to conduct a full investigation and imposing a punishment on Colin that had no basis in the School’s policies and procedures. At least twenty of the allegations made by the parents referenced the School’s investigation of the incident and the appropriateness of the School’s disciplinary procedures.

The School moved to dismiss the complaint, or, alternatively, to compel arbitration pursuant to the School’s enrollment agreement, which the parents signed when Colin enrolled. The enrollment agreement had clear language that parents agreed to address any disagreement or legal claim against the School through “the process of conflict resolution, including Christian mediation and binding arbitration, as outlined in the Parent/Student Handbook.” The Parent/Student

The Court of Appeal found that the handbook’s arbitration clause specified that arbitration was the sole remedy for any controversy or claim “arising out of” a student’s enrollment. The Court of Appeal found that the parents’ complaint referenced the School’s policies and procedures when discussing the School’s alleged failure to properly investigate the incident, take appropriate disciplinary measures, and evaluate the student to determine the appropriate post-disciplinary support treatment. The parents relied on the School’s enrollment agreement and handbook to establish the School’s duty to the student, and the School’s alleged breach of the agreement is what formed the parents’ wrongful death action. Therefore, the Court of Appeal reversed the trial court’s order and determined that the dispute must be handled via arbitration.

Calvary Chapel Church, Inc. v. Happ (Fla. Dist. Ct. App., Jan. 4, 2023) 2023 WL 27926.

Note: The case is a reminder that the language and provisions in a private school’s handbook, policies and enrollment agreement may serve as the bases for claims made against the school. It is a best practice to periodically review and update these critical documents.

Board Governance

School’s Board Of Directors Could Not Remove Members’ Ability To Vote On Bylaws.

The Taipei American School is a college preparatory independent school that offers children, particularly those with parents who are United States citizens, an American-based education. The Taipei American Foundation is a nonprofit corporation incorporated in Delaware, which oversees the School and also assists in building, establishing, and maintaining and operating schools and educational institutions of all kinds in the United States and in foreign countries. The Foundation is a member-managed nonprofit corporation, meaning that, among other things, the members of the organization are responsible for electing the Board of Directors. In a series of amendments to the Foundation’s governing documents, the Board of Directors reserved the exclusive right to amend, alter, change, or repeal the Foundation bylaws, eliminating that right from the general members.

Randy Chen, one of the general members, sent a letter to the Board Chair addressing the amendments to the governing documents, and asserting that these changes contravened the will of the general members, disenfranchised general members, and were not consistent with Delaware corporate law. Chen requested that the Board restore the general members with the power to adopt, amend, or repeal bylaws. The Board refused.

Chen filed a complaint against the Foundation, arguing that the Board breached their fiduciary duties to their members. Chen argued that the divestment of general members’ power to vote on bylaws violates Delaware corporate law because the law states that, “in the case of a nonstock corporation, the power to adopt, amend or repeal bylaws shall be in its members entitled to vote.” The Foundation argued that this section of the law should be interpreted to read that only members entitled to vote may vote on the bylaws. In other words, that only the members that are also on the Board are entitled to vote.

The Court found that the statute was not ambiguous, and the plain language requires that all members have the right and power to vote on the corporation’s bylaws. The Court stated that if the Foundation had different classes of members for director members and general members, and general members were part of a non-voting class of members, the outcome of the case may be different. However, since the general members are voting members, and have the power to vote for Board members, they are entitled to vote on the bylaws.

Chen v. Taipei American School Foundation (Del. Ch. Jan. 27, 2023) 2023 WL 447692.

Note:

While this case is from Delaware and not binding in California, it shows how a court decided on board governance issues for a school organized as a member corporation.

School’s Termination Of Long-Time Teacher Following Indefinite Medical Leave Was Upheld.

Nancy Der Sarkisian was an English teacher at Austin Preparatory School, a private Catholic independent school in Reading, Massachusetts, for twenty-four years. In September 2019, Der Sarkisian underwent hip surgery and told the School she would be out for approximately four weeks. The School granted her request for leave and hired a substitute teacher to cover her classes.

Der Sarkisian intended to return to School in October 2019, but she then required a second surgery and so she informed the School she would need leave for the entire first semester. The School requested that Der Sarkisian’s doctor provide an updated Family Medical Leave Act (FMLA) Certification because the leave was going to be longer than initially represented. In the certification, Der Sarkisian’s doctor opined that Der Sarkisian would likely require 2-3 months to recover, and would not be able to return until January 5, 2020. The School gave Sarkisian information about the School’s longterm disability program at this time.

In November 2019, Der Sarkisian completed the long-term disability program application and notified the School that she required a third surgery and was unsure when she could return to school. Der Sarkisian told the School she required intravenous injections of antibiotics at home until at least February 7, 2020.

After Der Sarkisian told the School she would need additional time to rehabilitate following her three surgeries. At this point, Der Sarkisian had exhausted her available FMLA and sick leave, so the School asked her to have her doctor complete an accommodation form so the School could determine whether there was a reasonable accommodation that would allow Der Sarkisian to perform the essential functions of her job. Der Sarkisian’s doctor indicated that her impairment would last three to six months, that it affected a number of her major life activities, and that she would have difficulty performing all of her job functions. Der Sarkisian’s doctor did not suggest

any accommodations aside from total temporary disability.

After reviewing the accommodation form on December 26, 2019, the School terminated Der Sarkisian’s employment, stating that they had a growing need to fill her position and could not provide an extended and continuing leave of absence with no set end date. Der Sarkisian sued the School for discrimination under the Americans with Disabilities Act and related Massachusetts law.

To establish a prima facie claim for discrimination, Der Sarkisian must show that she had a disability under the ADA; that she was nonetheless qualified to perform the essential functions of the job, with or without reasonable accommodation; and that, despite the foregoing, the School discharged her. If Der Sarkisian can establish a prima facie case for discrimination, the burden shifts to the School to show a legitimate reason for the adverse employment action. Then, if the School shows a legitimate, nondiscriminatory reason for terminating Der Sarkisian’s employment, she must demonstrate that the action was pretext, and taken because of her disability, not because of the reason offered by the School.

The School did not contest that Der Sarkisian was disabled under the meaning of the ADA, but did contend that she could not establish her case for disability discrimination because she was not a qualified individual. The School argued that it provided her an initial accommodation, but she did not specifically request any other reasonable accommodation. Finally, the School stated that even if she could meet these requirements, she could not demonstrate pretext or discriminatory animus. In response, Der Sarkisian argued that the School failed to engage in the interactive process to determine a reasonable accommodation.

The Court found that to be a qualified individual, the employee must meet the job-related requirements for the position, and be able to perform the essential functions of the position, with or without reasonable accommodation. Der Sarkisian never taught students remotely or via video, and when not teaching, her job required that she be on-call for substitute teaching and class coverage. She was expected to attend various School events and to meet with people

at the School, making regular attendance an essential function of her position. The Court found that while Der Sarkisian possessed the skills necessary to perform her job, by being unable to attend school in person, she could not fulfill the essential functions of her position.

The Court noted that if Der Sarkisian could show that she could perform the essential functions of her position when given a reasonable accommodation, then she would have a claim.

When Der Sarkisian made a request to extend her leave of absence due to her third surgery, she made a request for accommodation, which triggered the School’s duty to engage in the interactive process. The School upheld its obligation by explicitly asking Der Sarkisian’s doctor to fill out the accommodation form. The doctor only indicated that Der Sarkisian needed to be on total temporary disability and offered no reasonable accommodations. The Court noted that the School did not have an obligation to accommodate an employee by exempting her from an essential job function, in this case, exempting her from in-person attendance. The Court determined that Der Sarkisian did not set out a prima facie case of disability discrimination and granted summary judgment for the School.

Sarkisian v. Austin Preparatory School (D. Mass. Dec. 6, 2022) 2022 WL 17683765.

Note:

This opinion is from a federal trial court in Massachusetts, so it is not precedential in California. Nevertheless, the case does provide some insight as to how one trial court interpreted a school’s decision to terminate a long-time employee on indefinite medical leave.

School Prevailed On Age Discrimination Claim Where Decision To Terminate Employee Was Based On Legitimate Business Need.

Julie Regina began working at the Weiss Gifted and Talented School in 2004. During her time at the School, she worked in a variety of roles, and was promoted to Assistant Head of School in 2013.

The Weiss Gifted and Talented School is a private, non-profit school in Florida accredited by the Florida Council of Independent Schools (FCIS). As part of

FCIS’s routine reaccreditation process, FCIS performed a comprehensive review and evaluation of the School. Following this evaluation, FCIS issued a report noting concerns about the School’s asset-to-liability ratio (i.e., how much debt the school owned compared to its assets), as the School’s ratio fell below the FCIS standards. The report advised the School that it must bring up the ratio to be in compliance with the FCIS standard.

Shortly after the report was issued, the School’s thenHead of School announced her resignation. A new Head of School was hired, and in a sworn declaration, the new Head of School said her top priority was to increase the asset-to-liability ratio for the School to meet accrediting standards. The new Head of School had the authority to make hiring and firing decisions, and shortly after taking over, she made several staffing changes. Among these changes was the decision not to renew Regina’s contract for the following school year. Regina was 56 years old at the time.

Regina filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). After receiving a right-to-sue notice from the EEOC, Regina sued the School. The trial court granted summary judgment in favor of the School and Regina appealed.

Under the Age Discrimination in Employment Act (ADEA), private employers are prohibited from firing an employee who is at least 40 years of age because of the employee’s age. To prevail on a claim under the ADEA, an employee must prove that age was the cause of the employer’s adverse action, and the employee has the initial burden of establishing a case of age discrimination. Once the employee establishes the case, the burden shifts to the employer to articulate a legitimate, nondiscriminatory reason for the employment action. If the employer does so, the employee must show that the reason was pretext for discrimination, by showing the reason was false and that discrimination was the real reason.

The Court of Appeal assumed that Regina established a case of age discrimination. The Court of Appeal then concluded that the School did present a legitimate, nondiscriminatory reason for terminating Regina’s employment—to improve the School’s financial position. The new Head of School said her chief goal was to bring the School’s asset-to-liability ratio into compliance with FCIS standards, and she made adjustments to the School’s staff to ensure each employee was fully scheduled. She also determined what job responsibilities

she could take on and what positions could be eliminated. The Court of Appeal found that the School’s budgetary concerns and compliance issues were reasons to motivate a reasonable employer to make the decision to eliminate Regina’s position.

The Court of Appeal found that Regina did not rebut the School’s legitimate, nondiscriminatory reason. Regina did not dispute that the School was experiencing financial difficulty and did not dispute that the School needed to reduce its asset-to-liability ratio. Regina argued that there were alternative ways to reduce the School’s expenditures without terminating her employment, and that the new Head of School’s decisions were not successful in reducing the ratio. The Court of Appeal said that these decisions do not demonstrate pretext, and the Court will not second-guess the business judgment of employers. The Court of Appeal highlighted that the School can make hiring and firing decisions for any host of reasons, good or bad, so long as the action is not for a discriminatory reason. Regina provided no evidence that there was a discriminatory motivation to removing her position, and provided no evidence that her age was the real reason she was fired. The Court of Appeal granted summary judgment for the School.

Regina v. Weiss Gifted and Talented School, Inc. (11th Cir. 2023) 2023 WL 116652.

Note:

This case is from the United States Court of Appeals for the Eleventh Circuit and is therefore not binding in California. However, it does show how one federal appellate court interpreted the ADEA regarding a private school’s decision to terminate a long-time administrator. When taking any action to separate employment, it is important that a school is able

to demonstrate legitimate, nondiscriminatory business reasons for its decision.

Former Employee Could Not Rely On Her Own Declaration To Prove Discriminatory Pretext.

Joan Opara, a 62-year old woman of Nigerian national origin, worked as a Revenue Officer at the Internal Revenue Service (IRS). Opara was investigated for several alleged Unauthorized Access of Taxpayer Data (UNAX) offenses. Pending the investigation, she was reassigned to administrative work, which included, among other tasks, washing the office’s government vehicle and cleaning cubicles.

After the investigation, Opara received an opportunity to respond to the charges at a meeting before Paul Alvarado, who was the hearing official. Seven years prior, Opara had successfully brought an EEO complaint against Alvarado’s mentee Rosanna Savala because Savala allegedly quoted Alvarado with phrases such as “if anyone is too old to do this job, she should quit” and “the job was better with young people.” Opara alleged that her superiors exaggerated the nature and severity of her several UNAX offenses. The IRS terminated Opara’s employment.

After unsuccessfully pursuing an EEO complaint, Opara sued the Treasury Secretary in the U.S. District Court alleging that her termination was based on her age and national origin in violation of the Age Discrimination in Employment Act (ADEA), and Title VII, respectively. The district court granted summary judgment to the Treasury Secretary on the grounds

that Opara: 1) failed to establish a prima facie case of age discrimination; and 2) failed to show that the IRS’s proffered reasons for her termination were a pretext for age or national origin discrimination.

On appeal, the Ninth Circuit applied the McDonnell Douglas burdenshifting framework, which first requires the employee to establish a prima facie case of discrimination. Upon doing so, the burden then shifts to the employer to produce a legitimate, non-discriminatory reason for the adverse action. If the employer can do so, the burden shifts back to the employee to show that the employer’s proffered reason is a pretext for discrimination.

An employee may offer direct or circumstantial evidence to establish her prima facie case. Here, Opara offered circumstantial evidence: her uncorroborated testimony about the decision maker’s allegedly biased statements; the alleged exaggeration of the severity of Opara’s UNAX offenses; and the alleged “draconian” punishment of cleaning cubicles and cars.

The Ninth Circuit held that very little evidence of discriminatory animus is necessary to establish a prima facie case of age discrimination on a motion for summary judgment. Opara’s three pieces of evidence were enough to establish a prima facie case. However, once the employer provides sufficient evidence for its actions and the burden of proof shifts back to the employee, the employee’s own, uncorroborated allegations alone are not enough to raise a genuine issue as to pretext.

The Ninth Circuit held that the IRS had met its burden of proving legitimate, non-discriminatory reasons for its decisions. First, once a Revenue Officer is under investigation

for a UNAX offense, the Officer cannot access the computer system necessary to perform her usual duties. Second, the assignment to cleaning duties, including cleaning the office and a vehicle, were undisputedly the type of duties that were performed by secretarial staff. Third, the supervisor’s manual stated that termination was the appropriate penalty for a first time UNAX violation.

The Ninth Circuit held that Opara failed to meet her burden to show that the IRS’s reasons for her termination were a pretext for age discrimination. At the pretext stage, Opara could not rely on her testimony about the age-biased statements the decision-maker allegedly made to prove that the IRS’s proffered reasons for Opara’s termination were pre-textual. The Ninth Circuit stated that at the pretext stage on a motion for summary judgment, the court has “refused to find a ‘genuine issue’ where the only evidence presented is ‘uncorroborated and self-serving’ testimony.” Similarly, the Ninth Circuit assumed that even if Opara could establish a prima facie case of national origin discrimination, she would not succeed in using her own testimony to create a genuine issue as to whether the proffered reasons for her termination were “false” or whether her termination was due in whole or in part to her national origin.

Because Opara had no evidence other than her uncorroborated statements to support her claim of pretext, the Ninth Circuit affirmed the summary judgment against her.

Opara v. Yellen, 57 F.4th 709 (9th Cir. 2023).

Note: This case highlights how powerful a motion for summary judgement can be in a discrimination case. Schools can avoid a costly trial if the person suing has not produced any corroboration of her allegations of discriminatory animus.

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Court Determines Certain NLRB Election Rules Were Enacted Without Required Public Participation.

In 2014, a series of revisions were implemented to the National Labor Relations Board’s (NLRB) election rules. These rules shortened the timeline for elections and were enacted with notice and comment. In 2019, the NLRB undid several of the 2014 changes, among other changes, easing election deadlines and requiring that certain disputes be resolved prior to voting, rather than after. In 2019, the NLRB acted without notice and comment and acknowledged that the changes would result in longer waits for elections and the benefits that flow from union representation.

In March 2020, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of unions in the United States, sued the NLRB in Washington, D.C.’s federal trial court, alleging that the rule changes unlawfully altered rights guaranteed to workers by the National Labor Relations Act (NLRA). The lawsuit also alleged that the NLRB violated the Administrative Procedure Act (APA) when it adopted the rule changes without soliciting public feedback via the notice and comment rulemaking process. The trial court agreed with the AFL-CIO and blocked five of the rule changes from going into effect.

The NLRB appealed the trial court’s decision to block the rule changes, and AFL-CIO cross-appealed, claiming the 2019 changes as a whole were arbitrary and capricious.

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When considering the trial court’s decision to block the 2019 rule changes, the Court of Appeal considered two topics that are important in labor relations: the protection of employees’ rights to elect representatives of their choice, and the prevention of unfair labor practices. The Court of Appeal highlighted that the APA is committed to public participation in rulemaking, and the APA only provides for limited exceptions to the notice and comment requirements. The procedural exception allows for rules to be enacted without notice and comment, but is a limited carveout that must be narrowly construed. It is intended for “internal housekeeping measures organizing agency activities,” and covers agency actions that do not alter the rights or interests of the parties.

Relations

Using this framework, the Court of Appeal held that two of the five rules were procedural rules and could be enacted without notice and comment, reversing the trial court’s decision with respect to two of the rules. Those two rules were the rules that: (1) delayed elections in which employers raise voter eligibility and other challenges; and (2) lengthened the timeline for holding elections. The Court of Appeal found that these two rules are primarily directed toward internal agency operations and each govern the timing of when the Regional Director will resolve election-related disputes prior to an election. Therefore, notice and comment was not required.

The Court of Appeal found that the remaining three rules all alter the rights or interests of parties and therefore do not qualify for the procedural exception. The remaining three were the rules that: (1) eased

the deadline for employers to turn over workers’ contact information;

(2) delayed certification of election results when employers challenge officials’ decisions to hold elections; and (3) limited whom unions may designate as their election watchdog. These rules are substantive changes that require the NLRB to solicit public feedback before issuing them. Therefore, the Court of Appeal upheld the trial court’s decision to block these three rules.

The Court of Appeal remanded the case to the lower court to address the AFL-CIO’s arguments alleging parts of the 2019 rule violate the Administrative Procedure Act and the National Labor Relations Act.

American Federation of Labor and Congress of Industrial Organizations v. National Labor Relations Board, 57 F.4th 1023 (D.C. Cir. 2023).

Note:

This is an important decision for schools with unionized employees to watch, because it may impact the election rules for unions. However, the decision may not have an immediate impact on how the NLRB conducts union elections, as the case was remanded for further review, and the NLRB is analyzing the Court of Appeal’s decision to determine the appropriate next steps. LCW will be closely monitoring this case for further updates.

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waivers students

Student Athlete’s Claim For Negligence Against School

Dismissed Due To School’s Waiver.

Concordia University, a private university in Nebraska, recruited Konrad Sinu to play for the University’s intercollegiate men’s soccer team. The University provided Sinu with soccer and academic scholarships. Before Sinu moved to Nebraska from his home in England, he signed an “Assumption of Risk and Waiver of Liability Release.” Because Sinu was 18 years old and the age of majority in Nebraska is 19 years old, his mother also signed the release.

During a mandatory circuit-training workout at the university, Sinu injured his eyes while performing an exercise with a resistance band. Sinu and his mother sued the University for negligence. The University raised a number of defenses, including that the claim was barred by the release signed by Sinu and his mother.

The trial court found in favor of the University and dismissed the complaint. The trial court rejected arguments that the release was unconscionable, that it did not release the University from liability from its own negligence, and that the release did not amount to an assumption of risk. Sinu and his mother appealed, alleging that the release did not contain express or clear and unequivocal language that the parties intended to release the University from its own negligence.

The Court of Appeal found that, although the release did not use the words “negligence” or “fault,” the intended effect of the release was clear and the language clearly demonstrated an intent to eliminate the University’s liability.

The Court of Appeal also found that the language was not ambiguous. The language plainly stated that Sinu released the University “from and against any and all claims, demands, injuries, actions, or cause of actions, for costs, expenses or damages to personal property, or personal injury, or death, which may result from my

presence at or participation in any such [u]niversity activities.” The Court of Appeal found that the language covered “any” claim for ordinary negligence, including a claim caused by the University’s ordinary negligence, and, therefore, was not ambiguous.

Finally, the Court of Appeal found that the contract was not unconscionable nor against public policy. The Court of Appeal noted that the release’s first sentence informed Sinu to speak with an attorney before signing if he had any concerns. As a minor, Sinu’s mother also had to agree to the terms and sign the release. Sinu and his mother had a month prior to moving to Nebraska to consider and agree to the terms. The Court of Appeal found that as a private university, offering a recreational activity, the release did not relate to public or essential services, and Sinu and his mother signed voluntarily. The Court of Appeal upheld the trial court’s decision to dismiss the case.

Note:

The court dismissed this case because the university followed the proper procedures when warning studentathletes of the risks of recreational activities, and had a well-written release that protected the university against claims of ordinary negligence. This is a good reminder for schools to check their recreation, activity, and field-trip waivers for release language that will adequately protect the school in case of injury due to ordinary negligence, and that schools should give families enough notice and opportunity to consider the risks before signing.

Sinu v. Concordia University (Neb. Jan. 13, 2023) 983 N.W.2d 511.

student misconduct

Mother Of Student Failed To Bring Complaint Against School After Student Turned 18.

Porter-Gaud School is an independent coeducational college preparatory day school in Charleston, South Carolina. In December 2018, then fifteen-year-old student John Doe engaged in a consensual sexual encounter with his classmate and neighbor, Catherine Roe. Thereafter, the two minors engaged in multiple sexual encounters with each other on separate occasions. Five months after the initial encounter, Catherine Roe told her parents that the initial encounter was nonconsensual rape, though the remainder of the sexual interactions were mutually consensual. John Doe denied coercion on any occasion. Initially, both sets of parents decided that the matter was settled, and that the teens should just stay apart.

Catherine Roe, however, told the School administrators and counselors that John Doe had raped her. The School followed mandatory reporting procedures and called the police to investigate the allegations of rape. The police did not prosecute John Doe because there was no evidence of Doe’s guilt and the police considered it a “he said/she said case,” with corroborating witnesses supporting Doe’s account of the evening and not Roe’s account. The police ended the investigation with no action taken against John Doe. Unhappy with this outcome, Roe physically assaulted Doe at the School on two occasions and loudly called him a rapist in front of many students, faculty and parents.

The School brought in outside investigators, and Doe’s family hired counsel and provided the investigator with witness information. Eventually, the investigators stopped the investigation and the School informed Doe that there was no policy violation on his part and he was free to return as a student in good standing. The School

refused to notify the other witnesses and students that they found Doe had engaged in no wrongdoing.

Mary Doe, John Doe’s mother, and John Doe (now 18 years old) sued the School for slander, libel, defamation, negligence, malicious prosecution (i.e., wrongfully subjecting someone to the prosecutorial process), violation of John Doe’s constitutional rights and Title IX, as a result of the School’s investigation. The Does alleged that the investigation took a toll on John Doe and the family emotionally, and took a toll on the family financially because they had to hire counsel.

The School filed a motion to dismiss the complaints, arguing that Mary Doe had not pled facts that support a cause of action for individual damages to herself, nor had the Does pled facts that amounted to malicious prosecution. Mary Doe argued that since she paid tuition to the School, and the School accepted that payment, the School had a contractual duty that they breached when they treated John Doe inequitably compared to Catherine Roe. The School argued that the Does failed to state any facts that provided Mary Doe with a claim for relief, since all the facts support injuries solely suffered by John Doe.

The Court found that Mary Doe did not allege any facts that supported a claim for defamation to Mary Doe. The complaint did not allege that the School spoke or wrote any statements about Mary Doe, much less any defamatory statements. The Court also found that Mary Doe did not provide any bases for her negligence claim in the complaint. She did not provide any facts that showed the School owed a duty of care to her as John Doe’s mother, and paying tuition alone was not enough to create an implied contract between the School and Mary Doe. The Court further found that Mary Doe did not allege any facts that supported a claim of malicious prosecution, because Mary Doe was never prosecuted. Similarly, the Court found that the School did not

prosecute John Doe because they did not charge John Doe with a crime or arrest him, so his claim for malicious prosecution was also dismissed. The Court dismissed all causes of action brought by Mary Doe and determined that the remaining claims brought by John Doe could move forward, with John Doe as the sole plaintiff.

Doe v. Porter-Gaud School (D.S.C., Jan. 6, 2023) 2023 WL 122028.

Note:

While this case is from South Carolina and not binding in California, it does provide insight in how a court would handle a case when a student turns 18 between the incident and the lawsuit. The Court in this case noted that a contractual relationship was not created between the mother and the School by merely paying tuition, however, schools should be aware that signing an enrollment agreement does create a contractual relationship between schools and parents, so the outcome of a similar case could be different for many schools.

titleix

Court Upheld Policy To Allow Transgender Students To Compete Based On Gender Identity.

Since 2013, the Connecticut Interscholastic Athletic Conference (CIAC) and its member high schools have followed the Transgender Participation Policy (Policy), which permits high school students to compete on gender-specific athletic teams consistent with their gender identity if that is different than the gender listed on their official birth certificates. Four female cisgender athletes (Athletes) attended CIAC member high schools and competed in CIAC-sponsored girls’ track events against female athletes who are transgender. The Athletes sued the CIAC and member high schools, alleging that the Policy violated Title IX of the Education Amendments of 1972 because the participation of transgender females in girls’ high school athletic events resulted in students who are born female having materially fewer opportunities for victory, public recognition, athletic scholarships, and future employment than students who are born male. The Athletes also alleged that the Policy impacted their individual achievements by depriving them of certain

The Athletes requested damages and two injunctions, one to stop future enforcement of the Policy and one to alter the records of certain prior CIAC-sponsored girls’ track events to remove the records achieved by two transgender girls.

The trial court dismissed the claims on the grounds that stopping future enforcement of the Policy was moot, the Athletes lacked standing to assert a claim for an injunction to change the record books, and the Athletes’ claim for monetary damages were barred under prior case law. The Athletes appealed. The Athletes argued that they had standing because the Policy deprived them of a “chance to be champions,” and that the CIAC’s current records perpetuate past injury because the records fail to appropriately credit female achievements, causing the athletes to feel “erased.” The Athletes also argued that the current records affect future employment opportunities and correcting the records would redress this harm.

To establish standing, plaintiffs must show that (1) they suffered an injury in fact; (2) the injury is fairly traceable

state championship titles and opportunities to advance to higher levels of statewide competition.

to the challenged action of the defendant; and (3) it is likely that the injury will be redressed by a favorable decision. The Court of Appeals found that the Athletes lacked standing because the Athletes did not suffer an injury in fact and any harm could not be redressed.

The Court of Appeals stated that the Athletes were not deprived of a chance to be champions due to the CIAC current records, nor were they deprived of future employment opportunities. The Athletes all had the opportunity to compete at state track championships as high school athletes, and had the opportunity to compete for state titles in different events. The Athletes were champions, finishing first in various events, even sometimes when competing against transgender athletes. The Court of Appeals also found that altering the records would not redress any harm because the races were run in conformity with the rules in effect at that time.

The Athletes argued that the records “could” affect their prospects at future employment, which the Court of Appeal determined was not sufficient to establish an injury. Further, rewriting the high school athletics records would not necessarily change the Athletes’ employment prospects.

In order for the Athletes to succeed on their claim for damages, the CIAC and member high schools must

Did You Know?

have had notice that they could be liable under Title IX because of the Policy. The Court of Appeals looked to guidance from the Department of Education's Office of Civil Rights (OCR), the agency responsible for Title IX's enforcement, and to relevant decisions from the Courts of Appeal and the Supreme Court. OCR’s position with regard to transgender students’ participation in athletics has fluctuated with the changes in presidential administrations in 2016 and 2020. However, even with these fluctuations, OCR never clearly provided that allowing transgender students to participate on athletic teams consistent with their gender identity violated Title IX. The Court of Appeal also considered a recent Supreme Court case, which said it is unlawful to discriminate against people based on their gender identity or sexual orientation in the workplace. As such, the Athletes’ claims for monetary damages were barred.

The Court of Appeals affirmed the trial court’s decision dismissing the complaint.

Soule by Stanescu v. Connecticut Association of Schools, Inc. (2d Cir. 2022) 57 F.4th 43.

Note:

This case is from the United States Court of Appeals for the Second Circuit. This case shows how one federal appellate court interpreted a plaintiff’s Title IX claim in regard to transgender athletics, a topic that is coming up more frequently for schools.

• On January 31, 2023, the U.S. Department of Education’s Office for Civil Rights (OCR) released a fact sheet, Diversity & Inclusion Activities Under Title VI, that explains how diversity, equity, and inclusion training and similar activities in most factual circumstances are consistent with Title VI of the Civil Rights Act of 1964. The following activities are not categorically prohibited under Title VI: diversity, equity, and inclusion training; instruction in or training on the impact of racism or system racism; cultural competency training; efforts to assess or improve school climate; student assemblies or programs focused on anti-harassment or anti-bullying; investigations and reports on the causes of racial disparities within a school; and use of specific words in school policies, programs, or activities. Note: Title VI applies to many private colleges and universities, and to certain private and independent K-12 schools that accept certain federal financial assistance.

• On February 3, 2023, the permanent General Industry Safety Orders (Permanent Standards) concerning COVID-19-related workplace health and safety requirements took effect. The Permanent Standards, which replace the Emergency Temporary Standards (ETS) will remain in effect for two (2) years, unless the Occupational Safety and Health Standards Board repeals or extends the regulations. LCW published a Special Bulletin that addresses the most significant differences between the ETS and the Permanent Standards. The substantive changes include changes to the following subjects:

• Definitions for certain terms, such as “close contact” and “infectious period”;

• Training and instruction regarding COVID-19;

• Investigating COVID-19 illnesses in the workplace; and

• Reporting and recordkeeping

lcw best timeline

JANUARY -

FEBRUARY

Review and revise/update annual employment contracts.

Conduct audits of current and vacant positions to determine whether positions are correctly designated as exempt/non-exempt under federal and state laws.

FEBRUARY- EARLY MARCH

Issue enrollment/tuition agreements for the following school year.

Review field trip forms and agreements for any spring/ summer field trips.

Tax documents must be filed if School conducts raffles:

• Schools must require winners of prizes to complete a Form W-9 for all prizes $600 and above. The School must also complete Form W-2G and provide it to the recipient at the event. The School should provide the recipient of the prize copies B, C, and 2 of Form W-2G; the School retains the rest of the copies. The School must then submit Copy A of Form W2-G and Form 1096 to the IRS by February 28th of the year after the raffle prize is awarded.

Planning for Spring Fundraising Event.

Summer Program.

• Consider whether summer program will be offered by the school and if so, identify the nature of the program and anticipated staffing and other requirements.

• Review, revise, and update summer program enrollment agreements based on changes to the law and best practice recommendations.

MARCH- END OF APRIL

The budget for next school year should be approved by the Board.

Issue contracts to existing staff for the next school year.

Issue letters to current staff who the School is not inviting to come back the following year.

Assess vacancies in relation to enrollment.

Post job announcements and conduct recruiting.

• Resumes should be carefully screened to ensure that applicant has necessary core skills and criminal, background and credit checks should be done, along with multiple reference checks.

Summer Program.

• Advise staff of summer program and opportunity to apply to work in the summer, and that hiring decisions will be made after final enrollment numbers are determined in the end of May.

• Distribute information on summer program to parents and set deadline for registration by end of April.

• Enter into Facilities Use Agreement for Summer Program, if not operating summer program.

Transportation Agreements.

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.

• Assess transportation needs for summer/next year.

• Update/renew relevant contracts.

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:

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

- 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 natural 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 by to benefit the school or provide support for beneficial or charitable purposes.

• 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.

- E.g., 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.

construction corner

LCW represents and advises private schools and colleges in various business, construction, and facilities matters, including all aspects of construction projects from contract drafting and negotiations to course of construction issues. Through this Construction Corner, LCW will be giving private schools and colleges monthly helpful tips on a variety of topics applicable to campus construction projects. LCW attorneys are available should you have any questions or need assistance with any construction projects no matter what phase you may be in currently.

LEED Green Construction – What Is It and Is It Right For Your School?

By: Brett A. Overby

As schools plan for new construction or renovation projects on campus, or for upgrades to existing air, energy, water, or other systems in school buildings, one thing schools should consider is whether LEED (Leadership in Energy and Environmental Design) Certification is right for them. LEED, which was developed by the U.S. Green Building Council (USGBC), is the most extensively used green building rating system in the world. Since USGBC created the 1.0 version of LEED in 1998, thousands of K-12 schools across the country have become LEED green schools.

So what is a LEED green school? Well, a LEED green school is one that has earned a LEED Certification. There are two options for LEED Certification for K-12 schools, including:

1. LEED for Building Design and Construction: Schools’ construction or renovation of buildings dedicated to K-12 learning

2. LEED for Operations and Maintenance: Schools’ day-to-day operation of existing buildings dedicated to K-12 learning

To achieve LEED Certification in one of these areas, a K-12 school, in consultation with its project team, first assesses its energy, efficiency, and sustainability goals and then develops and applies strategies to achieve those goals in the following LEED categories:

• Integrative Thinking: Promotes reaching across disciplines to incorporate diverse team members during the pre-design period

• Energy: Focuses on reducing energy demand through efficiency, then rewards renewable energy

• Water: Addresses indoor use, outdoor use, specialized uses and whole-building-level water metering

• Materials and Waste: Encourages using sustainable building materials and reducing waste and includes a special focus on usage, life-cycle and transparency

• Location and Transportation: Includes an emphasis on advanced performance metrics to reward projects within relatively dense areas, near diverse uses, with access to a variety of transportation options, or on sites with development constraints

• Sustainable Sites: Rewards decisions about the environment surrounding the building, and emphasizes the vital relationships among buildings, ecosystems and ecosystem services

• Health and Human Experience: Focuses on providing high-quality indoor environments that enhance productivity, decrease absenteeism and improve the building’s value

• Innovation: Recognizes innovative building features and sustainable building practices and strategies

• Regional Impacts: Encourages project teams to focus on their local environmental priorities

Applying strategies in the above LEED categories earns the project points, and the number of points the project earns determines whether the project achieves LEED Certification and, if so, the LEED Certification rating level (i.e., Platinum, Gold, Silver, or Certified).

The USGBC, USGBC’s Center for Green Schools, and many other organizations and agencies promote the many benefits of being a LEED green school, including:

• Reducing environmental impacts and associated costs;

• Improving indoor air quality, including reducing allergens and respiratory irritants that can cause asthma and respiratory allergies;

• Using fewer resources and minimizing waste;

• Reducing energy and water use, which reduces utility costs;

• Reducing operating costs;

• Promoting environmental and sustainability education and literacy for students;

• Obtaining third party verification that a project will truly save the school energy, water, and other resources;

• Increasing daylight into indoor spaces, which can lead to increased productivity among students and employees;

• Eliminating the use of harmful chemicals in paints and other finishings;

• Reducing pollution and harmful emissions and improving outdoor air quality;

• Engaging in construction, renovation, and/or upgrades in a manner consistent with the school’s mission, philosophy, and core values;

• Sending a message to the community that the school is dedicated to sustainability and reducing harmful environmental impacts, which can promote positive public relations; and

• Potentially qualifying for tax or other incentives related to various green elements that may be included in the project.

Possible drawbacks of LEED Certification include that it may lengthen the planning stages and cost of the project, and there are fees associated with just the LEED registration and certification alone.

Another consideration for California private schools that are analyzing whether LEED is right for them is that California has its own green building standards code that applies to the construction of new buildings or portions of new buildings and additions and alterations to existing buildings in the state. This green building standards code, commonly referred to as “CalGreen” (Part 11 of Title 24 of the California Code of Regulations), has similar goals and benefits to those of LEED, including reducing greenhouse gas emissions from buildings, promoting environmentally responsible, cost-effective, and healthier places to live and work, and reducing energy and water consumption.

California private schools, therefore, should consider whether their sustainability, environmental, energy, and other green building goals can be met through CalGreen alone, or whether the additional step of LEED Certification is right for them. The benefits of being a LEED green school can be significant, and carefully considering whether this step is right for your school is recommended whenever construction, renovation, or system upgrades are on the horizon.

LCW Partner, Christopher Fallon, is a LEED Green Associate, meaning he has been accredited by Green Business Certification Inc. (GBCI) as a professional with extensive knowledge of green building practices, construction, and operations. Chris is available to provide advice and counsel to schools contemplating LEED Certification.

benefits Corner

The New Deadline To Furnish Form 1095-C To Employees Is March 2, 2023.

By: Stephanie J. Lowe

The IRS finalized regulations extending the deadline for employers to furnish Form 1095-C to employees. (See 87 Fed. Reg. 76569, December 15, 2022.) Beginning January 1, 2023, the deadline is permanently extended 30 days from January 31 to March 2 of the year following the calendar year to which the statement relates. For minimum essential coverage provided in 2022, the deadline to furnish statements to employees is March 2, 2023. Since the extension is automatic, the regulations removed the option for employers to submit a written request for an extension for good cause and the IRS’s discretion to prescribe any other automatic extension.

Applicable large employers are required to file information returns and furnish written statements with respect to the health insurance, if any, that the employer offers to full-time employees. The IRS uses the information returns to administer the employer shared responsibility provisions of the Affordable Care Act. The IRS has generally designated Form 1095-C to meet the requirement that applicable large employers furnish individual employees with a written statement identifying the offer of employer-sponsored minimum essential coverage.

While the due date to furnish Forms 1095-C has been permanently extended to March 2, applicable large employers are still required to file Forms 1094-C and 1095-C with the IRS on or before February 28th , if filing on paper, or March 31st, if filing electronically. Notably, employers filing 250 or more returns are required to file electronically. Employers that would like an automatic 30-day extension to file Forms 1094-C and 1095-C must submit Form 8809 on or before the due date of the returns.

Employers who fail furnish or file statements by the deadlines are subject to penalties unless the failure is due to reasonable cause and not to willful neglect.

Lawsuit to Watch: David G. Williams v. Amazon.com Services, LLC

Senior software development engineer David G. Williams filed a lawsuit against his employer Amazon to recoup expenses he incurred while working from home. Under California Labor Code Section 2802, employers are required to indemnify employees for all necessary expenditures or losses incurred in direct consequence of the employee discharging his or her duties. Due to California’s Stay-at-Home orders in March 2020, Williams was sent to work from home and claims he incurred expenses for his home internet, equipment, electricity, and home office infrastructure by working remotely.

Williams filed the lawsuit as a proposed class action on behalf of himself and all other California residents who are or were employed by Amazon. Williams alleges that the typical amount of expenses owed is $50 to $100 per class member. There are at least 4,200 members in the proposed class, who worked 110,000 months in the aggregate. The amount in controversy is estimated to be $5,500,000 on the low end.

Amazon filed a motion to dismiss the lawsuit and raised three arguments about why it was not responsible for its employees’ work-from-home expenses. First, Amazon claimed that the government, and not Amazon, imposed the lockdown which necessitated that employees work from home. Amazon claimed that Williams was trying to capitalize on the pandemic by using Labor Code Section 2802 to seek reimbursement for his remote work expenses. The court held that it did not matter if Amazon itself was not the but-for cause for the shift to remote work. The court determined that Amazon expected Williams to continue to work from home after

the Stay-at-Home orders were imposed, which was sufficient for Williams’ Labor Code Section 2802 claim to continue.

Second, Amazon argued that employees had incurred no additional or incremental expenses by working from home. The court disagreed with Amazon and found that the duties of an engineer plausibly require the use of physical space, internet, and electricity.

Third, Amazon claimed that Williams did not take advantage of Amazon’s expense reimbursement policies. Amazon argued that Williams did not ever submit a single reimbursement request and there were no facts showing Amazon knew or had reason to know about the expenses. Amazon’s position was that an employer needs information about the expense before it can reimburse the expense. The court found that as a major tech company, Amazon surely knew or at the very least, had reason to know, that its engineers who worked from home were incurring basic costs related to their duties.

The court denied Amazon’s motion to dismiss, which allows Williams’ proposed class action to move forward.

Williams v. Amazon.com Services, LLC, 2022 WL 1769124 (N.D. Cal., Jun. 1, 2022).

Note:

Public agencies should monitor developments in this proposed class action lawsuit to see how the court interprets an employer’s obligations under Labor Code Section 2802 as it relates to work-from-home expenses.

Reminder: Increase to Health FSA Contribution Limit

The 2023 annual limit for employee salary reductions for contributions to health FSAs is $3,050 (up from $2,750 from 2022). For Section 125 cafeteria plans that permit carryover of unused funds, the maximum health FSA carryover is $610. The annual limit for employee salary reductions for contributions to dependent care assistance programs (DCAPs) remains at $5,000. For more information, see IRS Revenue Procedure 2022-38.

Reminder: The 2023 Standard Mileage Rate

The 2023 standard mileage rate is 65.5 cents per mile driven for business use. This rate is used to calculate the reimbursable and deductible costs of operating

a vehicle for business purposes. The rate applies to electric, hybrid, gasoline, and diesel-powered vehicles. Employers also have the alternative option of calculating the actual costs of using a vehicle rather than using the IRS’s standard mileage rate.

The 2023 standard mileage rate is 3 cents higher than the rate at the end of 2022. In the middle of 2022, the IRS enacted a mid-year increase to the standard mileage rate by 4 cents to account for the increase in fuel prices. LCW will continue to monitor any future changes to the standard mileage rate for this year.

ACA Compliance Question: Look Back Measurement Method Safe Harbor

Does your agency use a Look Back Measurement Method Safe Harbor (LBSH) to calculate who is a fulltime employee for ACA purposes? More importantly, does your agency have a written policy establishing the LBSH? Agencies that are applicable large employers (50 or more full-time equivalent employees) and use the LBSH should have a written policy establishing the terms of the LBSH. Let us know if we can help.

BENEFITS BEST PRACTICES TIMELINE

Each month, LCW will present a monthly benefits timeline of best practices. This timeline is intended to apply to agencies that are applicable large employers for Affordable Care Act (ACA) purposes. LCW encourages public agencies to use the timeline as a guideline.

February

• Forms 1094-C and 1095-C due February 28, 2023 if filing on paper (or March 31, 2023 if filing electronically). Employers filing 250 or more returns must file electronically.

• Prepare to furnish Form 1095-C to each full-time employee by March 2, 2023 for the 2022 calendar year.

March

• Furnish Form 1095-C to each full-time employee by March 2, 2023 for the 2022 calendar year.

• Forms 1094-C and 1095-C due March 31, 2023 if filing electronically (due earlier on February 28, 2023 if filing on paper).

If you would like to receive more information about our Consortium services or would like to join, please contact Jaja Hung at jhung@lcwlegal.com.

LCW has four private education consortiums across the State! Consortium members enjoy access to quality training throughout the year, discounts on other LCW products and events, and unlimited, complimentary telephone consultation with an LCW private education attorney on matters relating to employment and education law questions (including business & facilities questions and student issues!). We’ve outlined a recent consortium call and the provided answer below. Client confidentiality is paramount to us; we change and omit details in the ERC Call of the Month.

Question:

Governor Newsom recently signed a handful of holiday bills into law, including Genocide Remembrance Day, Juneteenth, Native American Day, and the Lunar New Year. The school asked if they should add these holidays to their list of observed holidays.

Answer:

The attorney advised that Juneteenth and the Lunar New Year are now recognized holidays for state employees, Native American Day is a recognized holiday for court employees in California, and Genocide Remembrance Day allows public schools and community colleges to close on that day. The attorney advised that, while private schools are welcome to observe these holidays, unless a school has agreed to recognize these holidays in their handbook, employment contracts, or otherwise taken formal action to recognize the holidays, there is no requirement to adopt these holidays. The fact that there is a statewide holiday is binding on the state agencies listed above, but not other entities such as private schools.

The attorney advised that there may be other reasons a school wants to adopt some or all of these holidays. For example, many private employers observe Juneteenth as a matter of policy and especially given the surge of awareness around racial justice issues and the significance of the holiday, but there is no legal requirement to do so. The school could also consider the school population. For example, if parents and employees are requesting the School close for the Lunar New Year so that they can observe that holiday, that could be a factor to considering in deciding whether to recognize the Lunar New Year as a school-observed holiday. Another factor to consider is that if the School only selects to observe some of these holidays and not others, parents and employees could feel the School prioritizes certain populations over others. Finally, schools often have several observed holidays and school closure periods, and schools may decide that they do not want to add any extra days off.

The attorney advised that if the School was interested in updating their list of holidays, the School would likely need to update their employee handbook and provide a communication to families and employees about the changes.

Liebert Cassidy Whitmore