Private Education Matters: January 2024 by lcwlegal

January 2024

Private Education Matters

Table Of Contents EMPLOYEES

Title IX

Labor Relations

STUDENTS & PARENTS

Construction Corner

Arbitration Agreements

Benefits Corner

Student Misconduct

Did You Know?

Consortium Call Of The Month

Enrollment Agreements

LCW Best Practices Timeline

Contributors: Grace Chan Partner | San Francisco Hannah Dodge Associate | San Francisco

Patrick Skahan Senior Counsel | Los Angeles Stephanie J. Lowe Senior Counsel | San Diego

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Private Education Matters is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in Private Education Matters should not be acted on without professional advice. To contact us, please call 310.981.2000, 415.512.3000, 559.256.7800, 916.584.7000 or 619.481.5900 or e-mail info@lcwlegal.com.

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January 2024

e l t i T ix Arizona Court Concludes That Tax-Exempt Status Is Not Considered Federal Financial Assistance Under Title IX And The Rehabilitation Act. An Arizona statute provides that interscholastic or intramural athletic teams designed for females, women, or girls may not be open to students of the male sex. A group of students filed suit against several entities, including the Gregory School, a private school in Arizona that the students attend. The students alleged that the School violated Title IX, the Americans with Disabilities Act, and Section 504 of the Rehabilitation Act due to the School’s enforcement of this law. The School filed a motion to dismiss, arguing that Title IX and the Rehabilitation Act do not apply to them because they do not receive federal financial assistance. For the Title IX and Rehabilitation Act claims, the students argued that the School’s 501(c)(3) tax-exempt status constituted receipt of federal financial assistance, and therefore, the School was subject to these laws. In particular, the students argued that tax-exempt status is a subsidy that constitutes federal financial assistance under the “catchall” provision of the Department of Education’s Title IX regulations. The Court disagreed with the students. The Court reasoned that neither Title IX nor the Rehabilitation Act defines federal assistance, but the Department

of Education does define federal financial assistance for the purposes of Title IX. That definition does not include tax-exempt status as a form of federal financial assistance. The Court was not persuaded that the “catchall” provision extended to tax-exempt status. The categories listed in the Title IX regulations include affirmative grants of federal resources, such as funds, property, and personnel. In contrast, taxexempt status is a designation provided by the IRS to certain organizations that meet criteria outlined in the Tax Code. The Court reasoned that the benefit of not having to pay certain taxes was realized only after the tax-exempt organization earns income that would otherwise be taxed. An entity with 501(c)(3) status may or may not have taxable income. Although two trial courts recently have held that tax-exempt status does constitute federal financial assistance, this Court was not willing to make that leap. The Court granted the School’s motion to dismiss the Title IX and Rehabilitation Act claims. Note: Over the last few years, two courts (one California court and one Maryland court) have held that tax-exempt status constitutes federal financial assistance, obligating schools to follow Title IX and the Rehabilitation Act, among other statutes. This area of the law remains in flux and LCW will monitor these cases for further developments. Doe v. Horne, Mot. to Dismiss (D. Ariz. Dec. 11, 2023), No. CV-23-00185-TUC-JGZ.

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students & Parents

arbitration

Arbitration Agreement Found Unconscionable Due To Pressure To Sign And Confidentiality Requirement. Sally Ann Haydon, a 74 year-old with dementia, lived at the Elegance at Dublin, a residential care facility for elderly.

to Haydon’s daughter, the facility salesperson pushed to finalize Haydon’s admission before leaving the facility to take another job and made clear that if Haydon signed up with him, she would get a better rate. This was important because Haydon lived on a fixed income and had no retirement savings. Haydon’s daughter stated that no one at the facility explained the agreement, including the arbitration clause, to Haydon, and no one from the facility was with Haydon when she signed it.

Before moving to the facility, Haydon signed a Residence and Care Agreement that included an arbitration provision. The clause was in the middle of a document that was over 40 pages long, which included the agreement, several appendices and other materials. The arbitration clause was the last of over 20 unrelated “miscellaneous” provisions at the end of the agreement.

For an arbitration agreement to be unenforceable, it must be both procedurally and substantively unconscionable. Procedural unconscionability addresses the circumstances of contract negotiation and formation. Substantive unconscionability pertains to the fairness of an agreement’s actual terms to assess whether they are overly harsh or one-sided.

The clause had its own signature block, immediately followed by a signature block for the agreement as a whole. Neither signature block was clearly identified or set off from the surrounding text. Both signature blocks included multiple signature lines (for example, for two residents, a resident representative, and/or a facility representative).

The trial court found that the arbitration agreement was unconscionable, due to the length of the agreement, the pressure to sign it, and the difficult-to-understand drafting and formatting. The trial court reasoned that the arbitration clause was a small 8- or 10-point singlespaced text and the multiple signature blocks were confusing. The facility appealed.

The arbitration clause stated that the person signing agreed to resolve all claims and disputes by arbitration, required the parties to bear their own costs and fees, and required confidentiality. Residents could withdraw from the clause by providing 30 days written notice.

On appeal, the facility argued that the agreement was not procedurally unconscionable, because there was no oppression (i.e., no lack of negotiation and meaningful choice) and no surprise (i.e., the provision was not hidden).

In March 2023, Haydon sued the facility under the Elder Abuse Act for negligence, assault, and battery, alleging that she was assaulted by a caregiver and that the facility failed to provide for her safety.

The Court of Appeals disagreed with the facility. The Court of Appeals found there was oppression based on the explanation from Haydon’s daughter that her mother was under enormous pressure to sign due to her declining condition, her limited financial resources, and the facility’s contingent discount. The Court of Appeals found there was surprise due to the long, dense agreement, interspersed with several confusing signature blocks, some of which Haydon filled out incorrectly. The Court took issue that the arbitration provision was not presented in a separate document or even separate section.

The facility moved to compel arbitration. Haydon, in opposition, claimed she lacked capacity to agree to arbitration and that the provision was unconscionable. Haydon’s daughter explained that she communicated with the facility on her mother’s behalf throughout the admission process and gave notice in October 2022 that her mother had a cognitive disorder and aphasia (a loss of ability to understand or express speech). According

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The facility further argued that the arbitration agreement was not procedurally unconscionable because signing was not a condition of admission and there was a 30-day opt-out provision. The Court of Appeals concluded that Haydon did not have an authentically informed choice to reject the arbitration clause given its confusing presentation, the failure of anyone at the facility to explain the opt-out procedure to her, and the temporal and financial pressure she experienced in her vulnerable state. The facility argued that the clause was not substantively unconscionable, which arises when a contract imposes unduly harsh or one-sided results. In determining whether the clause is substantively unconscionable, courts often look to whether the agreement meets a minimum level of fairness. Here, the Court of Appeals determined the confidentiality provision was not fair because it would restrict Haydon from gathering information to resolve the dispute and it would discourage other individuals from bringing similar claims. The Court of Appeals also found that the provision requiring the parties to bear their own costs and fees was unconscionable because it was unaffordable for Haydon, creating a deterrent effect to bringing a claim. The Court of Appeals upheld the trial court’s ruling and found the agreement was unconscionable. Note: This case is critical for two reasons. First, it shows that those signing arbitration agreements should not be pressured into signing and should be given ample time to consider and understand the terms of the agreement. Second, it establishes that confidentiality provisions in arbitration agreements may be struck down if it discourages potential plaintiffs from bringing cases. Haydon v. Elegance at Dublin (2023) ___Cal.App.5th___ [2023 Cal. App. LEXIS 971].)

January 2024

agreements Former Students Are Subject To Arbitration Agreement Parents Signed. Saint Mary’s Hall is a private school located in San Antonio, Texas. Jonathan Eades was the Head of School at Saint Mary’s when Jane Doe 1, a former student, filed suit against the School and Eades for intentional infliction of emotional distress, negligence, gross negligence, and conspiracy. Doe 1 alleged a host of claims including harassment, assault, fraud, and breach of contract. Shortly thereafter, Jane Doe 2 and John Doe 2 joined the suit. The School and Eades answered the lawsuit and argued, among other things, that the venue should be in Bexar County because the enrollment contracts contained arbitration clauses that provided for mandatory arbitration in San Antonio, Texas. The case was ultimately transferred to Bexar County in January 2022. In June 2022, the trial court denied the School’s and Eades’ motion to compel arbitration, but the trial court did not specify a reason for the denial. The School and Eades appealed. A party seeking to compel arbitration must establish two elements: (1) the existence of a valid and enforceable arbitration agreement; and (2) that the disputed claims fall within the scope of the agreement. The Students did not dispute that there is a binding and enforceable arbitration agreement, nor do they dispute that the claims fall within the scope of the agreement. However, the Students argued that they could not be compelled to arbitration because they did not sign the arbitration agreement, their parents did. The Court concluded that arbitration agreements may be enforced against third party beneficiaries if the parties to the contract intended to secure a benefit to that third party and the parties entered the contract directly for the third party’s benefit. Here, the enrollment agreement was entered into by the parents on behalf of their children, to secure them the benefit of an education. The Court

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ruled that the Students were bound by the arbitration agreements.

the original petition did not include the identities of students, meaning that the School could not produce the appropriate arbitration agreement and enrollment contract Alternatively, the Students argued that the School and until it could identify the students filing the lawsuit. As Eades waived their rights to arbitration by substantially another example, hearings were delayed due to the parties invoking the litigation process. agreeing to continuances and weather conditions such as snowstorms. To establish whether a party has substantially invoked the judicial process depends on a totality The Court of Appeals determined that the totality of the of circumstances, including considering a variety of circumstances showed that the School and Eades did not factors, including, but not limited to: whether the invoke the litigation process and therefore did not waive movant was a plaintiff (who chose to file in court) or a their rights to arbitration. The Court of Appeals reversed defendant (who merely responded); how long the party the trial court’s ruling denying arbitration. moving to compel arbitration waited to do so; and the Note: reasons for the movant's delay. The Students argued, among other things, that the School and Eades substantially invoked the judicial process because they waited 20 months to move to compel arbitration. The Court found that the School’s and Eades’ delay in filing for arbitration was due to the Students actions or delays created by the courts. For example,

This case established that arbitration agreements can bind former students into adulthood, even if parents signed the arbitration agreement on behalf of students when the students were minors. Though this case was decided in Texas, and therefore not binding in California, it can be helpful guidance on how these issues would be interpreted under the Federal Arbitration Act.

Eades v. Doe (Tex.Ct.App.2023) 2023 Tex. App. LEXIS 9689.

new to the Firm! Tevon F. Edwards is a Labor Relations Consultant in the San Francisco office of where he provides advise and counsel in employment and labor related matters. Tevon also serves as an experienced negotiator.

Allison Berquist is an Associate in the Los Angeles office of where she provides advice and counsel on a variety of issues.

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student misconduct

January 2024

Court Must Apply California’s New Fair Procedure Doctrine To Student Expulsion. The Career Development Institute, Inc. dismissed Ricardo Campbell from its vocational nursing program. The Institute’s student handbook and school catalog outline student discipline procedures. The handbook describes grounds for discipline and states students may appeal dismissals. The catalog describes appeal procedures. These procedures do not require a hearing or some other opportunity for students to be heard before the Institute dismisses them. On September 29, 2020, the Institute’s director of nursing wrote a two-page letter saying the Institute was dismissing Campbell following an incident during a clinical placement where three nurses said Campbell was rude. Campbell said he had merely tripped on a nurse’s foot. Campbell reported the incident to Human Resources at the clinic. The letter stated that the Institute requires students to report problems to their instructors, not to staff at clinics. Campbell’s actions allegedly placed the Institute’s continuation with the facility at risk. The Institute argued that it was not the first problem it had with Campbell, but the letter only gave this incident as the basis for the dismissal. Campbell filed an internal appeal of the dismissal, and the Institute ultimately upheld the dismissal. Campbell filed suit challenging his dismissal. The trial court denied the petition, finding that the Institute’s rules did not require a hearing to be held. The Court of Appeals reversed the trial court’s decision in light of the California Supreme Court’s recent ruling in Boermeester v. Carry, where the California Supreme Court, for the first time, applied administrative hearing requirements to a private university’s disciplinary decisions. In Boermeester, the California Supreme Court detailed the common law doctrine of fair procedure, which applies when exclusion from membership deprives a person of substantial educational, financial, and professional advantages. Under Boermeester, fair procedure requires a private organization to comply with its own procedural rules governing expulsion, and it permits courts to evaluate basic fairness for those rules when excluding or expelling an individual. Specifically, fair procedure requires adequate notice of the charges and a meaningful opportunity to be heard. The Court of Appeals remanded the decision to the trial court to determine whether the fair procedure doctrine applies to the Institute’s dismissal of Campbell. If it does apply, the trial court must determine whether the Institute was required to hold a hearing, and whether the Institute provided a sufficient hearing. Note: This case is one of the first cases that will apply the new standard for fair procedure at private schools. LCW covered the Boermeester case in a special bulletin, which can be found here. LCW will monitor this case for future developments. Campbell v. Career Development Institute, Inc. (2023) 97 Cal.App.5th 1109.

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enrollment agreements Decision To Expel Students For Parent Conduct Upheld Due To Enrollment Agreement Language. Doug and Nicole Turpin’s children O.T. and L.T. attended Charlotte Latin School, a private K-12 school in North Carolina, from the time they were in kindergarten through September 2021. The parents allege that, until the 2020-2021 school year, the education provided at the School was traditional and apolitical. However, in June 2020, following the death of George Floyd, a letter was sent to all parents, faculty, and staff, that parents felt indicated the School was moving toward a curriculum, culture, and focus associated with a “political agenda.” Also in June 2020, parents, faculty, staff, and alumni began receiving a video series distributed by the School entitled “Conversations About Race.” During the 2020-2021 school year, the Turpin parents and other school parents began to discuss their concerns about the communications from the School, as well as the changes in curriculum, reading materials, and classroom policies that they felt adopted a political agenda. This group of parents began calling themselves “Refocus Latin,” and requested a meeting with the Board to address their concerns. In February 2021, the Turpin parents paid an enrollment fee and entered into an enrollment contract for the 2021-2022 school year. This enrollment contract included a provision requiring parents to uphold the Parent-School Partnership and a provision agreeing to accept all policies, rules, and regulations contained in the Family Handbook. In July 2021, Refocus Latin was invited to present their concerns to the Board. Following the presentation, the Board chair communicated that neither the Board nor the administration would continue the dialogue about

the concerns Refocus Latin had presented. In September 2021, the Turpin parents emailed the Head of the Middle School with concerns they had about L.T.’s class and shared that the teacher was making comments that felt like indoctrination on progressive ideology. The Turpin parents also said that the teacher would not let L.T. pull his mask down long enough to drink water, nor would she allow L.T. to go to the bathroom. The School investigated these concerns and found no evidence of wrongdoing. When the Head of the Middle School met with the Turpin parents later that week to discuss the findings, he expressed concerns that Refocus Latin, and by association, the Turpin parents, believed that the School accepts students and hires faculty because of their color, and that neither are up to the merit of the School. Thereafter, the Head of the Middle School terminated the enrollment contracts for O.T. and L.T. In April 2022, the Turpin parents filed suit against Charlotte Latin School, the Head of School, the Head of the Middle School, and the School’s board members alleging nine different claims, including breach of contract and breach of implied covenant of good faith and fair dealing. The trial court dismissed eight of the Turpin parents’ claims. It did not dismiss the claims for breach of implied covenant of good faith and fair dealing. The Turpin parents appealed. On appeal, the Turpin parents alleged that the School breached the enrollment contract and did not apply the terms of the contract in good faith. The Court of Appeals disagreed. The Court reasoned that the enrollment agreement had plain and unambiguous language about Parent-School Partnership, which required parents to have a positive and collaborative working relationship between the School and the parents.

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January 2024

The language included that the School has the right to discontinue enrollment if the actions of the parent make such a relationship impossible or seriously interfere with the School’s mission. The School’s mission is: “to encourage individual development and civility in our students by inspiring them to learn, by encouraging them to serve others, and by offering them growth-promoting opportunities.” The Parent-Student Partnership provided that an effective partnership is characterized by support of the Mission and adherence to the Honor Code. The Honor Code provided that the School is one “where families of diverse backgrounds, races, religions, and nationalities share common values, practice mutual respect, and reach for academic excellence.” The Court of Appeals concluded that it was impossible for the Turpin parents and the School to have a positive, collaborative working relationship. The animosity between the Turpin parents and the School was obvious. The Court of Appeals noted the length and detail of the Turpin parents’ legal complaint in “assailing” the School’s political agenda. The Court of Appeal also concluded that the Turpin parents violated the School’s mission. The Court reasoned that the Turpin parents’ continued attack on the School’s adoption of a political agenda and refusal to concede to changes in the curriculum with which they disagreed, did interfere with the School’s mission of inspiring students to learn. In particular, it interfered with their learning about issues related to race, gender, and sexuality. The Court of Appeals affirmed the trial court’s ruling and dismissed the breach of contract claim. Note: Parents may at times disagree with various aspects of their child’s education and this case serves as an important reminder that the language in enrollment agreements is crucial. Here, the School was clear about their mission and creating a learning environment that promoted diversity. Their enrollment agreement also had clear language about maintaining a positive parent-school partnership. Turpin v. Charlotte Latin Sch., Inc. (Ct.App. 2024) 2024 N.C. App. LEXIS 33.

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employees

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NLRB Finds That Wearing BLM Shirts Does Not Constitute Protected Activity.

In the days and weeks that followed the death of George Floyd, beginning in early June and until sometime in August 2020, Whole Foods employees throughout the country started wearing Black Lives Matter (BLM) messaging, primarily on face masks, but also on buttons or pins, or printed on t-shirts or other clothing items. Soon after the employees started wearing BLM messaging, Whole Foods informed them that such messaging was a violation of Whole Foods’ dress code. Employees were generally given the option of removing the BLM messaging or clocking out and going home. Those who chose to go home incurred time and attendance or dress policy violations. In some cases, this led to employees’ discharge or resignation. Some employees sporadically continued to wear BLM messaging without incurring discipline, other than being instructed to remove the messaging.

there was no dispute that wearing the BLM messaging was concerted—employees were wearing masks, pins or jewelry often after learning that employees in other stores were doing so, and in response to learning that employees were being told by Whole Foods that they could not do so. The central issue in this case was whether the conduct was protected by Section 7 of the NLRA. The ALJ concluded that it was not. Section 7 of the Act protects the rights of employees to wear and distribute items such as buttons, pins, stickers, t-shirts, flyers, or other items displaying a message relating to terms and conditions of employment, unionization, and other protected matters. Here, the ALJ found that the collective decision to wear BLM messaging was in sympathy with the BLM demonstrations in the wake of Floyd’s murder. These actions were not related to workplace or working conditions, or to employees’ interests as employees. The ALJ was not persuaded by expert testimony that discussed the long historical connection between civil rights movements, such as the BLM movement, and employment issues. This testimony did not establish a nexus connecting the employees’ display of BLM messaging to a goal related to their terms and conditions of employment.

In most cases, employees wearing BLM messaging were acting concertedly, since often these employees engaged in the conduct around the same time, often after consultation with one another or in support and solidarity with others doing the same. The ALJ also considered Whole Foods’ dress codes. Whole Foods’ 2013-2020 dress code prohibited employees The question presented to the National Labor Relations from displaying any visible slogan, message, logo, or Board (NLRB) was whether the employees who donned advertising on their workplace attire. Prior to 2013, BLM messaging while at work were engaged in protected Whole Foods only prohibited messaging that was activity within the meaning of Section 7 of the National “printed” on the attire, thus allowing union pins, buttons, Labor Relations Act (NLRA). and other types of messaging attached to the clothing. The ALJ concluded that the removal of the word “printed” The Administrative Law Judge (ALJ) concluded that impliedly meant that employees could not wear Section 7

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January 2024

protected messaging, which the ALJ concluded is a violation of the NLRA. In response to the ALJ’s findings, Whole Foods was required to stop enforcing dress codes that inform employees that they cannot wear shirts/tops without any visible slogan, message, logo, or advertising and must remove the language from its dress code that states this. The ALJ required Whole Foods to add the word “printed” back into their dress code. Note: This topic has only been addressed by a handful of ALJ’s but this is a topic that will continue to come up. Here, there was a lack of nexus between BLM messaging and employees’ rights to unionize. Schools should keep in mind that overly strict dress codes that prohibit employees from engaging in protected activity could run afoul to the NLRA. Whole Foods Markets, Inc., 2023 NLRB LEXIS 601 (N.L.R.B. December 20, 2023).

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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.

Setting Expectations: How To Contract With Architects For The Construction Phase. By: Patrick Skahan When working with architects, owners should be aware of the myriad issues that can arise during construction that may call for an architect’s review. Owners should therefore require contract terms at the outset that establish the scope of the architect’s work during construction to meet owner expectations and assist with successful project completion. Setting clearly defined roles for the architect from the start of the relationship can result in cost-savings, increased efficiencies, and timely completion of the project. This article presents methods to guard against cost overruns and project delays during the construction phase through the architect’s design professional contract. Most of an architect’s work occurs before construction on the project begins. During construction, however, architects continue to perform tasks and those tasks are often an overlooked portion of the architect agreement. Such tasks include site visits, quality control to evaluate the contractor’s work and confirm the work meets design intent, communicating with the owner and contractor, reviewing and certifying payment applications, reviewing change order proposals, responding to submittals, handling disputes, and processing closeout of the project. Owners should check the language of their architect agreement before committing their architect to do construction phase work that may be outside the scope of their engagement or create costly additional services by the architect. Similarly, when contracting with the architect, owners should identify any work that may not be necessary for the architect to perform during the construction phase. The Business and Professions Code sets forth specific requirements for contracts with architects. With some limited exceptions, architect contracts must be in writing, include a written description of the project, and describe the procedure that the architect and the client will use to accommodate additional services and contract changes, including changes in project scope, description of services, or in compensation and method of payment (Bus. & Prof. Code, Section 5536.22(a)). Similarly, the American Institute of Architects (AIA) standard form agreement establishes the architect’s standard role during project construction. The standard form contract includes various clauses that specify how the architect will serve as the initial decision-maker, certify payment applications, and respond to submittals. Owners may also specify whether the architect will work on all phases of the project, or if the scope will be more limited to preconstruction services for example (See Form B101 [at Procurement and Delivery Method]). Owners should carefully evaluate the need for architects to perform the standard functions on their projects at the time of contracting. Numerous cost-savings opportunities exist during the construction phase. For example, for owners with construction-savvy project managers who may wish to avoid paying additional fees, owners should try not to allow limiting language in the architect contract with regard to the number of project meetings, the number of times that architects will review submittals, or other language limiting the architect’s tasks. However, if the architect demands a limited review, limited number of meetings, or other limiting language, the owner should account for those potential additional costs in the construction contract.

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January 2024

The construction phase also presents opportunities to facilitate the timely and efficient completion of projects based on the architect’s role. For instance, architects can serve as the initial decision maker when disputes arise between the owner and the contractor as included in AIA’s standard form contract (See AIA Documents A201-2017, B1012017). Additionally, some owners may wish to handle review of payment applications on their own and skip the certification of payment applications by the architect. Thus, these roles can be modified depending on the owner’s goals, experience of the architect and project manager, or other considerations. Importantly, the general conditions in the construction agreements will also need to track with changes to the architect contract’s standard form. As touched on here, there are several opportunities to improve the construction process through specifying the architect’s role during construction. Owners should also work with their counsel to ensure appropriate modifications to the standard form contracts are included in the construction contract documents that are consistent with the parties’ expectations.

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benefits corner

By: Stephanie J. Lowe New Student Loan Matching Program Benefit. There’s a brand new benefit employers may establish beginning in plan years during 2024. Under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, employers have the option of making matching employer contributions to certain types of employer-sponsored retirement plans based on employee’s student loan repayments. This includes 457(b) and 403(b) plans. Under this new benefit, as employees pay down their student loans, their employer will provide matching contributions to their retirement plan even if the employee is not making their own retirement contributions. The underlying purpose of these new student loan matching programs is to help employees who have student loan debt and who may not have the financial means to contribute to their retirement plan when they have to prioritize paying down student loans. Before SECURE 2.0 was passed, employers started to ask the Internal Revenue Service whether they could make employer matching contributions to retirement plans for employees who are paying down their student loans as a recruitment and retention tool. SECURE 2.0 now establishes this new benefit. The key requirements for the new student loan matching programs are:

• Employer matching contributions must be based on qualified student loan payments (QSLP), which are payments on a qualified higher education loan that was incurred to pay for qualified higher education expenses at an eligible education institution. • A QSLP includes a loan to pay higher education expenses of the employee, the employee’s spouse, or the employee’s dependent. • The employee must provide certification of their student loan payments at least annually. An employer can rely on an employee’s certification. • Even if the employer typically makes matching contributions on an employee’s

elective deferrals to a 457(b) or 403(b) plan throughout the year, matching contributions based on a student loan matching program are only required to be made once a year. • An employer can only make matching contributions for student loans on behalf of employees who are or would be eligible to receive matching contributions on elective deferrals. • The matching contributions must be made at the same rate as matching contributions on the employee’s own contributions. The matching contributions must also vest in the same way as the employee’s elective deferral contributions. • Matching contributions are limited to the amount of an employee’s student loan payments. • Student loan matching contributions to a 457(b) plan are also limited to the amount of the 457 plan deferral limit ($23,000 for 2024) or the employee’s compensation if less, minus any plan contributions made by the employee for the year. If your school is interested in learning more about this new benefit, please reach out to us.

Reminder: Flexible Spending Account Dollar Limits For 2024. The employee salary reduction contribution limit for health flexible spending accounts (Health FSAs) has increased to $3,200 for 2024 (up from $3,050 from 2023). Health FSA funds are tax-free dollars that may be used to pay medical expenses not covered by other health plans. While $3,200 is the new limit set by the IRS, employers should also review the limits set by their own Section 125 cafeteria plan documents. Some cafeteria plan documents may set a lower limit, or may need to be revised if an employer would like to allow employee to make salary reduction contributions up to the IRS limit as it adjusts on an annual basis. The increase to the 2024 Health FSA contribution limit also means the IRS will permit employees to carry over up to $640 of unused Health FSA funds

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January 2024

at the end of a 2024 plan year to the following 2025 plan year. Employers should verify whether they have adopted a carryover option for their Health FSA under their Section 125 cafeteria plan, and if so, should check the maximum amount that may be carried over per the terms of their cafeteria plan document. The maximum amount of DCAP benefits does not change year-to-year and remains at $5,000 (or $2,500 if married filing separately) for 2024.

ACA Compliance Question: Question: If an employee enrolls in a private medical cost sharing plan, will it count as alternative health insurance that meets the Affordable Care Act’s requirements? Answer: No. A medical cost sharing plan helps individuals pay for their medical costs that are not otherwise covered by health insurance, but it does not provide health insurance coverage on its own. It is not going to meet the ACA’s requirements for providing minimum essential coverage. Further, some organizations offer employees cash in lieu for opting out of employer-sponsored group health insurance. If an organization offers cash in lieu under the terms of an eligible opt-out arrangement (which is recommended), then the employee will need to attest that they have alternative minimum essential health coverage for themselves and their entire tax family in order to receive the cash in lieu. Coverage that is not health insurance, such as a medical sharing cost plan, is not minimum essential coverage and will not satisfy the requirements of the eligible opt-out arrangement.

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• Chesapeake Montessori School in Annapolis, Maryland paid $85,000 to resolve a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission. The case followed the School’s decision to not renew a longtime teacher’s contract because it assumed her daughter’s disability, coupled with the COVID pandemic, would undermine the teacher’s focus and commitment to her job. Instead, the School elected to renew the contract of other teachers with less experience and tenure. This case serves as a reminder that disability discrimination extends to actions taken because of an individual’s relationship or association with a person with a disability. • A federal district court has entered a permanent injunction barring the State of California from enforcing Assembly Bill (AB) 51, a California law that precludes employers from requiring arbitration agreements as a condition of employment. AB 51 took effect in 2020, and at that time, a preliminary injunction was issued to stop enforcement of AB 51 for arbitration agreements governed by the Federal Arbitration Act (FAA). The FAA is broad—it generally applies to any business involved in interstate commerce, subject to a few exemptions. Now that preliminary injunction is a permanent injunction, meaning that AB 51 cannot be enforced with respect to arbitration agreements governed by the FAA. LCW covered the case on the preliminary injunction, which can be found here. • The National Center for Education Statistics (NCES) has released data from the 2021-2022 Private School Universe Survey. The survey indicated that the number of students at K-12 private schools remained the same from the 2019-2020 academic year. The survey also indicated that the number of K-12 private schools decreased by three percent. There were increases in enrollments for grades K-4 and no measurable change in the enrollments for grades 5 through 12, except for a decrease in three percent in grade 11.

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Consortium

Seminars

Webinars

• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •

January 2024

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.

Question:

Answer:

A school saw that there was an update on COVID-19 guidance from the California Department of Public Health (CDPH) and asked LCW how this guidance affects their school.

The attorney advised that on January 9, 2024, the CDPH issued new guidance on the definitions of “close contact,” “infectious period,” and “outbreak” due to the reduced impacts from COVID-19 compared to previous years. The attorney advised that the new definition of a close contact will vary based on the size of the campus. The new definition of infectious period for a symptomatic, confirmed case is now considered the day of symptom onset until 24 hours with no fever, without the use of fever-reducing medications, and where symptoms are mild and improving. For asymptomatic cases, there is no infectious period for the purposes of exclusion or isolation. For schools, this means that students and employees may be able to return to campus sooner, depending on their symptoms and fever. Finally, the definition of outbreak changed from at least three cases in a 14-day period, to at least three cases in a seven-day period. This is a substantial reduction that may cause fewer schools to meet the definition of “outbreak,” and therefore may reduce the need for schools to implement outbreak testing and related procedures. LCW covered this new guidance in a recent special bulletin, which can be found here.

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lcw best timeline JANUARY/FEBRUARY Review and revise/update annual employment contracts.

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

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

Issue contracts to existing staff for the next school year.

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

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 at 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: • 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.

• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •

January 2024

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. 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: School and classroom janitorial. School site administrative. School site grounds and landscape maintenance. Pupil transportation. 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: That there is a physical barrier at the worksite to limit contact with pupils. 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: 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. 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. 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. • 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. 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. Items withdrawn from a seller’s inventory and donated directly to nonprofit schools located in California are not subject to use tax. 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.

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Liebert Cassidy Whitmore