Private Education Matters: March 2023

Private Education Matters

employeesLaborrelations

National Labor Relations Board Still Does Not Have Jurisdiction Over Religious Schools, For Now.

Saint Leo University is a private nonprofit university in Saint Leo, Florida. Benedictine monks established the University in 1889. The Saint Leo Benedictine Abbey includes a monastery church, and the monks’ residences and offices are located near the middle of campus. The Benedictine Sisters’ residences are located just off campus. There is a student chapel, and religious statues and crosses throughout campus. The mission references Benedictine values and the University’s website contains repeated references to the University’s identity as Catholic/Benedictine.

In May 1976, the University’s union was certified as the exclusive collective-bargaining unit of all fulltime faculty members employed at the university campus.

On October 23, 2020, the Board passed a resolution immediately withdrawing the Union, creating a shared governance model, and replacing the existing University

senate with a new faculty senate. The same day, the University announced this decision to the Union and all faculty via email. In creating the new faculty senate, the University bypassed the Union and dealt directly with unit employees by soliciting faculty input for the faculty handbook. These handbook changes modified the terms and conditions of employment for faculty. Similarly, the University announced and later implemented most terms of the interim handbook, without affording the Union an opportunity to bargain.

The Union filed suit against the University due to the University withdrawing recognition of the Union and changing the terms and conditions of employment without the Union’s consent in violation of the National Labor Relations Act (NLRA). The University argued that it was privileged to do so because (1) it is a religious institution exempt from the NLRA’s provisions under the case, Bethany College, 369 NLRB No. 98 (2020), and/or (2) its fulltime faculty members are managerial employees, which are excluded from the NLRA’s coverage.

The NLRA grants private sector workers the right to have labor unions and also gives certain protections to employees who work

in non-union environments. The National Labor Relations Board (NLRB) enforces the NLRA.

In the Bethany College case, the Board held that under the NLRA, the NLRB did not have jurisdiction over the faculty of an educational institution if the institution: (a) holds itself out to the public as a religious institution, (b) is a nonprofit, and (c) is religiously affiliated.

Here, the Administrative Law Judge found that the University, “clearly meets the Bethany College criteria for religious exemption from the Act’s coverage: it is [a] nonprofit; religiously affiliated; and in many and highly visible ways, both on campus and on online, regularly holds itself out to the public and to students as a religious institution guided by Catholic principles.” The Judge noted that the Bethany College standards do not require a certain degree of affiliation or religious participation by faculty and students for the exemption. In other words, there is no requirement that faculty or students be Catholic or participate in religious activities in order for the exemption to apply. As a result, the Administrative Law Judge found the University was exempt from the NLRB’s jurisdiction as a religious institution.

Nonetheless, the Administrative Law Judge considered the University’s second argument that faculty members are considered managerial employees and therefore excluded from the NLRA’s coverage. The Judge did this to prepare for the possibility that the Board decides to change or overturn the religious institution exemption framework under Bethany College.

To analyze whether faculty members are managerial employees and therefore exempt from the NLRA, the Judge must: (1) examine the faculty’s participation in academic programs, enrollment management, finances, academic policy, and personnel policies and decisions, giving greater weight to the first three areas; and (2) then determine whether, in the context of the University’s decision making structure and the nature of the faculty employment relationship with the university, the faculty actually control or make effective recommendations over those areas.

The Judge found that, here, the role of full-time faculty in the University’s decision-making process was either none or very limited. Faculty do not set overall general admission standards, establish graduation standards, establish tuition and fees, determine the size of the student body, create the budget, decide the distribution of financial aid, or decide the renewal of contracts for instructors. They do not decide whether to establish new colleges or centers, implement department chairs, or schedule classes. The senate, through its committees,

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does make some recommendations, but few are accepted by the administration. The administration maintains a high degree of control over all aspects of University operations and, therefore, faculty members are considered employees rather than managers. The faculty members would not be subject to the managerial employee exemption and the University would be subject to the NLRA.

The Judge noted that should the Board review this decision and decide that the religious institution exemption does not apply, the University’s actions in withdrawing recognition of the Union and changing the terms and conditions of employment without the Union’s consent would be a violation of the NLRA.

Saint Leo Univ. Inc. & United Faculty of Saint Leo, Nat'l Educ. Ass'n Florida Educ., Am. Fed'n of Teachers, Afl-Cio (Feb. 23, 2023) 2023 WL 2212789.

Note:

Administrative Law Judge decisions are not binding unless later adopted by the full Board. In this case, the Judge allowed the NLRB General Counsel to develop a full record during the hearing, arguing that the NLRB should abandon the Bethany College framework and return to a prior standard when considering whether the NLRB has jurisdiction over religious institutions. This signals that the full Board will likely consider this issue and may overturn the current framework outlined in Bethany College. LCW will monitor this case for future developments.

Jenai Howard, an associate in the San Francisco office, advises clients on education, labor and employment matters. Prior to joining LCW, Jenai worked as a Research Assistant for two Professors at Santa Clara University School of Law where she conducted various kinds of legal research and co-authored a Criminal Law casebook.

Kimberly Horiuchi, an associate in the Sacramento office, works primarily in the Firm’s Litigation practice group where she represents clients in employment litigation matters. She also focuses on providing trusted advice and counsel to organizations throughout the State and has extensive experience in conducting workplace investigations.

ministerial exception

Religious Institution Given Autonomy To Remove Employee From Residential Program Under Ministerial Exception.

San Francisco Zen Center is the largest Soto Zen Buddhist church in North America. The Center is a religious training institution and offers several different types of programs for individuals interested in learning about and training in Zen Buddhism. Some programs are offered to the general public, while other programs are reserved for those who live full-time at the temple and are part of a residential program. Residents participate in both “formal practice” and “work practice.” Formal practice includes morning and evening meditations, as well as services, tasks, classes, and events. Work practice includes cooking, dishwashing, bathroom cleaning, preparing guest rooms, and participating in ceremonial tasks. Both formal and work practices are necessary parts of the Zen Buddhist practice. Attendance at formal practice and work practice is mandatory.

Alex Behrend learned about the Center by searching online for volunteer opportunities after he suffered serious injuries in a car accident and had been diagnosed with post-traumatic stress disorder

(PTSD). Due to his injury, Behrend could not work in his previous career, which made it difficult to afford stable housing. Behrend continued to volunteer and participate in programming as a non-resident. In 2016, Behrend was given one month’s notice of losing his housing and the Center’s head of practice encouraged Behrend to apply for the residential program. Behrend was part of the residential program as a guest student, and later as a Work Practice Apprentice. He received room, board, and a stipend. For his work practice assignment he checked guests into lodging, handled and processed payments, prepared guest rooms, prepared conference rooms and event spaces, cleaned and folded laundry, answered guests questions. Later, Behrend was assigned to the kitchen where he cooked and washed dishes.

In September 2018, the Center reassigned Behrend to the maintenance crew, but that work exacerbated his PTSD symptoms and when he sought employment on another work crew, his request was denied. Behrend alleged that the Center’s course of dealing after September 2018, including demanding he move out in January 2019, was disability discrimination in violation of the Americans with Disabilities Act (ADA). He also alleged disparate treatment, failure to engage in the interactive process, failure to provide reasonable accommodation, retaliation, and termination.

The Court noted that state interference with churches and other religious institutions violates the free exercise clause of the Constitution, and that this clause protects a religious institution’s autonomy with respect to internal management decisions that are essential to the institution’s central mission. A component of this autonomy is the selection of individuals who play certain key roles. Arising from these principles is the ministerial exception. Under this rule, courts are bound to stay out of employment disputes involving those individuals holding certain important positions with churches and other religious institutions.

The Court found that if an employee is performing “vital religious duties,” they are more likely to hold an important position within the religious institution. Here, Behrend was a Work Practice Apprentice, and fulfilled both the formal practice and work practice requirements. He was practicing and training in Soto Zen Buddhism and spent nearly all of his time at the Center involved in the practice of Soto Zen Buddhism. The fact that Behrend did not have a leadership role did not alter the Court’s conclusion that Behrend held an important position because the ministerial exception does not apply only to leaders of the faith. The Court determined that training in both the formal practice and work practice lies at the very core of the mission of the Center. The Court found the

residential program was undisputedly a part of religious training and therefore implicated the ministerial exception. The Court found it would be a direct interference with a religious institution’s constitutional right to decide matters of faith if it were to command the Center to continue to house and train a particular person in the practice of the faith. The Court granted the Center’s motion for summary judgment. Alexander Behrend v.

Note:

This case is illustrative of the autonomy that religious institutions and religious schools maintain in making employment decisions that impact employees who serve a ministerial function.

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covid-19

University’s Decision To Terminate Employee For Failure To Follow COVID-19 Vaccination And Testing Requirements Upheld.

Dylan Cunningham was employed at University of Hawaii as an agricultural research technician beginning in January 2020. In August 2021, The University implemented a policy that required all employees to provide verification that they had been vaccinated or tested negative for COVID-19 before entering a University work site. In September 2021, Cunningham received an email from the University stating that employees who did not comply with the policy would be subject to progressive disciplinary action.

Cunningham faced disciplinary action after he failed to provide proof of vaccination or proof of a negative COVID-19 test on five different occasions in late 2021. On each occasion, the University told Cunningham to leave the premises and placed him on leave without pay. The University told Cunningham he could seek a religious exemption, which Cunningham declined to do. On November 21, 2021, the University notified Cunningham that his employment would be terminated due to his failure to comply with the COVID-19 policy on five occasions. His employment was terminated effective November 29, 2021.

Cunningham brought suit, alleging that the University violated the Americans with Disabilities Act (ADA) when it fired him. To establish a claim for disability discrimination, Cunningham must establish that (1) he was “disabled” within the meaning of the ADA statute; (2) he was a “qualified individual,” meaning he was able to perform the essential functions of his job; and (3) he suffered an adverse employment action because of his disability. To meet the definition of “disabled” under the ADA, the person must have a physical or mental impairment that substantially limits one or more major life activity.

Cunningham argued that he was classified as disabled because he was deemed to be more likely to catch COVID-19 because he was not vaccinated and a COVID-19 infection could be severe enough to substantially limit one or more of his major life activities. The Court disagreed and stated that the ADA protects against anyone who experiences discrimination because of a current, past, or perceived disability— not a potential future disability. If the Court followed Cunningham’s reasoning, it would result in the ADA forbidding employers from enforcing any measures designed to stop the spread of COVID-19. The Court found this to be unreasonable.

Cunningham also brought a retaliation claim against the University. Cunningham argued that the he engaged in protected activity by objecting to the University’s COVID-19 policy pursuant to the ADA, that he suffered an adverse employment action when he was disciplined and fired, and that there was a causal link between the protected activity and adverse employment action. The Court disagreed. The University spelled out the consequences of noncompliance with the COVID-19 policy before Cunningham opposed it. Therefore, there was no causal link between Cunningham’s criticism of the policy and his eventual termination.

The Court ruled in favor of the University and dismissed the complaint.

Cunningham v. Univ. of Hawaii (D. Hawaii, Feb. 14, 2023) 2023 WL 1991783.

Note:

Although this case is from Hawaii and not binding in California, it shows that this court upheld a school’s policy to require COVID-19 vaccination or testing for all employees.

University’s Decision To Terminate LongTime Professor Upheld Due To Documentation Of Attendance And Performance Concerns.

Dr. Christian Fugar was employed with Dillard University from 1988 until he was terminated on November 6, 2017. He was an Associate Professor of Economics and Finance.

On August 15, 2017, Dr. Fugar informed his immediate supervisor that he received a jury duty summons for the week of August 21, 2017, which happened to be the same week that classes began at the University. The University approved his leave and instructed Dr. Fugar to provide an updated summons if the service was extended. The University also requested that Dr. Fugar provide the

University and his students with a course syllabus prior to the start of classes, but he failed to do so.

Dr. Fugar appeared for his jury service on August 22, 2017 and was selected to serve as a juror. On August 26, 2017, the presiding judge dismissed the jurors and instructed them to return the following Tuesday in light of Hurricane Harvey’s anticipated landfall. Between August 23, 2017 and September 7, 2017, the University did not hear from Dr. Fugar, despite sending him multiple email requests for his syllabus. On September 8, 2017, a University administrator made contact with Dr. Fugar, who indicated that he was still on jury duty. The same day, the University contacted the courthouse and learned that the jurors were not expected to return for jury service until October because the courthouse sustained damages from the hurricane.

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On September 8, 2017, the University sent Dr. Fugar a letter informing him that he was suspended without pay and that termination proceedings were being initiated against him. On September 13, 2017, Dr. Fugar contacted the courthouse, and the court informed him that the trial would not resume until October. Dr. Fugar returned to the University’s campus on September 18, 2017. The presiding judge sent a letter to the University on September 19, 2017, confirming that Dr. Fugar served as a juror on August 22-25, that the trial was postponed, and that his presence was not required in court until October. Following a termination hearing, Dr. Fugar was terminated.

Dr. Fugar filed suit against the University, alleging that the University terminated his employment on the basis of his jury service. The University argued that it terminated Dr. Fugar due to a pattern

of missed classes and mandatory University functions dating years prior to his jury service. The trial court agreed with the University and granted summary judgment for the University, dismissing the suit in its entirety. Dr. Fugar appealed.

The Court of Appeal noted that during the motion for summary judgment hearing, the University introduced evidence from depositions that established that Dr. Fugar failed to teach a portion of his required classes and that the University had brought charges against Dr. Fugar based on information compiled from 20152017. The University introduced the Faculty Handbook and numerous emails and correspondence documenting complaints made against Dr. Fugar. The Handbook outlined that the University would institute termination procedures for professional misconduct,

which includes flagrant disregard of the policies and procedures of the University, and a continued neglect for academic duties and responsibilities. Dr. Fugar admitted to receiving multiple complaints from the University regarding his absence from classes and harassment of other faculty members. He also admitted that he did not contact his supervisor from August 25 to September 8 to provide an update on his jury service or circumstances, and that as of September 8, three weeks into the semester, he had not provided a syllabus to his classes or made an effort needed to create a syllabus. He admitted that he did not come to campus until a month after classes had begun, and only after termination proceedings had been initiated.

The Court of Appeal determined that this evidence established that he failed to perform his job duties both

prior to and after his jury service. The Court of Appeal upheld the motion for summary judgment and dismissed the case.

Fugar v. Dillard University (La. Ct. App., Feb. 13, 2023) 2023 WL 1960835 (unpublished).

Note:

This case emphasizes how important it is for schools to maintain accurate and thorough documentation of employee performance concerns so that schools can rebut claims of wrongful termination.

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Court Finds That Employer’s Decision To Terminate Employee Could Have Been Motivated By Employee’s Disability.

Suchin Lin was hired by Kaiser Foundation Hospitals (Kaiser) in June 1999 and worked for Kaiser in various positions through 2019.

In May 2017, Lin worked as a Software Quality Assurance Associate Engineer in the Innovation and Transformation (I&T) department, one of eight departments within Kaiser’s Technology Risk Organization (TRO). She received positive performance evaluations in this position in March 2018.

In December 2018, the TRO organization began to plan to lay off certain employees for economic reasons and TRO directors were asked to select employees to be included on a list of potential layoffs. The I&T executive director said he chose to eliminate Lin’s position because she was struggling in performing her duties and not getting up to speed as quickly as expected. However, the Court of Appeal noted that contemporaneous documentary records did not reflect these concerns about Lin’s performance.

In January 2019, Lin fell in the workplace and suffered an injury to her left shoulder. Lin’s doctor placed her on modified duty for the next month, with restrictions requiring Lin to use a sling, limit use of her left arm, and given time to attend medical and physical therapy visits. On January 29, 2019, Lin’s supervisor completed numerical ratings of employee competencies for the members of the I&T team as part of the 2019 TRO layoffs. Lin’s supervisor rated Lin with the lowest ratings on the team. The same day, Lin’s supervisor discussed Lin’s performance with human resources, noting that Lin was slow at typing, and would be slower with this injury.

Lin’s doctor extended Lin’s modified duty through the end of March. On February 27, 2019, Lin’s supervisor met with Lin and discussed that Lin’s “unavailability” had occasionally forced her teammates to complete tasks for her and that her “pace of execution needs improvement.” Lin was placed on an

action plan, requiring her to manage her tasks within a reasonable time. Lin testified that her supervisor pressured her to work unpaid overtime off the clock. In the wake of this meeting, Lin sent written complaints to human resources about the pressure to work unpaid overtime off the clock, causing her such emotional distress that she could not sleep. Human resources referred her to the employee assistance program, which ultimately led to her referral to a psychiatrist.

In March 2019, Lin met with her supervisor about her 2018 year-end performance evaluation. Lin was again rated “successful,” but her supervisor included notes that she was on the “lower end” of successful and needed improvement in several subcategories. Lin then went on medical leave through May 19, 2019. On April 24, 2019, Kaiser notified Lin that her position had been eliminated and her employment would be terminated effective June 23, 2019.

Lin sued Kaiser alleging disability discrimination, retaliation for requesting accommodations, failure to accommodate, failure to engage in the interactive process, and wrongful termination. Kaiser moved for summary judgment, arguing that the decision to eliminate Lin’s position occurred due to the reduction in force in December 2018, before Lin sustained her disability. Lin did not dispute that her name was selected for the initial reduction in force list in December 2018, but argued that evidence showed this proposed list was subject to further review, and Kaiser gradually reduced the list from 31 employees to the 17 who were ultimately laid off. Lin also argued that her termination was a result of her supervisor’s post-disability assessment of her and the email rating from January 29, 2019. She argued these ratings and evaluations were based on her disabilities and requests for accommodations. Lin’s supervisor never assigned her lighter tasks or discussed other possible accommodations to help her overcome her disability-related pace issues.

The trial court agreed with Kaiser and granted summary judgment in Kaiser’s favor. The trial court said the decision to terminate Lin’s employment was due to the ongoing reduction in force process and that all accommodations sought were granted.

The Court of Appeal disagreed. They found that Kaiser’s initial placement of Lin on the December 2018 reduction in force list was not discriminatory as it occurred before her disability arose. However, Kaiser’s decision to leave Lin on the reduction in force list and ultimately terminate her employment could have been based, at least in part, on Lin’s disability. The Court of Appeal considered Kaiser’s evaluation of Lin in January 2019 and noted that a reasonable jury could conclude that when Kaiser was collecting this information, it did so to determine whether to proceed with Lin’s termination.

The Court of Appeal found that a reasonable jury could find that Lin’s termination was substantially motivated by her disability because there was little evidence in the record that Lin was performing her job negatively prior to her disability. It was only after Lin’s disability that her supervisor judged her performance more harshly in comparison to her teammates.

The Court of Appeal reversed the judgment and remanded the case to the trial court.

Lin v. Kaiser Foundation Hospitals (2023) --- Cal. Ct. App. --[2023 WL 2202544].

Note:

Schools should remember that layoffs can still serve as the bases for employment claims including disability discrimination claims. While employers can use performance as a criterion to determine which employees to select for layoff, using performance as a criterion may be risky if the employer does not have adequate performance documentation. Employers should reconsider using performance as a layoff criterion unless the employer has accurate, thorough and contemporaneous documentation of performance issues and also conducted regular performance reviews.

Did You Know?

On February 9, 2023, the U.S. Department of Labor, Wage and Hour Division issued an Opinion Letter on Family and Medical Leave Act (FMLA) Leave. The letter responds to an employer’s request for an opinion concerning whether FMLA entitles an employee to limit their workday to eight hours a day for an indefinite period of time because of a chronic serious health condition, where that employee normally works more than eight hours a day. The employer stated that it is standard for employees to work and be scheduled for a workday that is more than eight hours a day because of 24-hour coverage needs in that department. The employer felt that this type of work restriction was “better suited” as a reasonable accommodation under the Americans with Disabilities Act (ADA).

The opinion letter advises that an eligible employee with a serious health condition that necessitates limited hours may use FMLA leave to work a reduced number of hours per day (or week) for an indefinite period as long as the employee does not exhaust their FMLA leave entitlement and they continue to have a qualifying reason for leave. This means that if an employee never exhausts their FMLA leave, they may work the reduced schedule indefinitely.

The letter also reiterates that the amount of leave an employee is entitled to is based on the employee’s workweek. Therefore, if an employee is regularly scheduled to work more than 40 hours per week, they are entitled to more than 480 hours of FMLA leave per 12-month period. For example, an employee entitled to work 50 hours per week would be entitled to 600 hours of FMLA leave in a 12-month period.

Finally, the letter states that the requirements and protections of the FMLA are separate and distinct from those of the ADA, meaning that an employee can invoke the protections of both laws simultaneously. For example, if an employee has exhausted their FMLA leave and needs to work a reduced schedule, that employee may have additional rights under the ADA.

Note:

This opinion letter shows that a school’s obligation to provide FMLA leave can continue indefinitely and that a school has a simultaneous duty to reasonably accommodate an employee under the ADA.

Wage&Hour

Highly Compensated Employee Gets FLSA Overtime Because He Was Not Paid On A Salary Basis.

From 2014 to 2017, Michael Hewitt worked for Helix Energy Solutions Group on an offshore oil rig. Hewitt typically worked 12 hours a day, 7 days a week for 28 days. He would then have 28 days off. Hewitt oversaw various aspects of the rig’s operations and supervised 12-14 workers. Hewitt’s pay consisted of his daily rate (about $1,000 a day) multiplied by the number of days he worked. So, if Hewitt worked only one day in the work week, he received about $1,000 a week. If Hewitt worked seven days in the work week, he received about $7,000 that week. He was not paid overtime. This pay arrangement computed to over $200,000 a year.

Hewitt sued Helix seeking overtime pay under the Fair Labor Standards Act (FLSA). The issue was whether Helix had paid Hewitt on a salary basis. If not, Hewitt would be entitled to overtime pay. The FLSA guarantees that covered employees receive overtime pay when they work more than 40 hours a week. But, an employee is excluded from overtime pay requirements, if he works “in a

bona fide executive, administrative, or professional capacity,” as defined in the FLSA regulations. The regulations allow an employer to exclude an employee from overtime pay if the employee: 1) is paid on a “salary basis”; 2) is paid at least $455 a week (that minimum amount is now $684 a week); and 3) performs high-level job duties that fall into at least one of several regulatory categories.

Still another way an employer can exclude an employee from overtime is under another FLSA regulation regarding highly-compensated employees (HCE) who make more than $100,000 a year. Under the HCE regulation, there is a higher income threshold and a shortened list of required duties, but the salary basis rule remains the same.

The FLSA regulations give an employer two general options for paying an employee on a “salary basis”: 1) pay the employee a predetermined amount of pay every work week, even if the employee only works part of that work week (29 CFR Section 541.602(a)); or 2) pay the employee an hourly, daily or shift rate that is guaranteed to be no less than $455 (now $684) a week regardless of the number of hours worked, and the guaranteed amount must be roughly equivalent to the usual earnings for the employee’s

normally-scheduled work week. (29 CFR Section 541.604(b)).

Justice Kagan explained that these FLSA salary test regulations “create a compensation system functioning much like a true salary—a steady stream of pay, which the employer cannot much vary and the employee may thus rely upon week after week.”

Helix acknowledged that Hewitt’s compensation did not meet the second option under the FLSA regulation 29 CFR Section 541.604(b). Thus, the Court focused on whether Helix paid Hewitt on a salary basis under the first option described in the FLSA regulation at 29 CFR Section 541.602(a).)

The Court decided Hewitt was not paid on a salary basis. This is because the amount of his pay was subject to reduction because of variations in the quantity of work he performed each week. The Court noted that a daily-rate worker’s weekly pay is always a function of how many days the worker has labored; as a result, the weekly pay is not a predetermined amount. A salaried employee, conversely, receives at least his or her same salary for any week in which any amount of work is performed. Hewitt, however, would only receive his salary pro-rated to how many days in the pay period he worked.

Hewitt, therefore, was a non-exempt employee entitled to overtime compensation.

Helix Energy Solutions Group, Inc. v. Hewitt (U.S., Feb. 22, 2023, No. 21-984) 2023 WL 2144441.

Note:

This case illustrates the high stakes involved in FLSA overtime-exemption cases. This employer appeared to believe that paying a high wage would mean it was not required to pay overtime pay. This employer’s mistaken belief resulted in a back pay award of thousands of dollars.

School’s Failure To Timely Pay Wages Early In COVID-19 Pandemic Results In FLSA Claim.

In 2005, Lisa Rosenbaum was hired as a secretary, a non-exempt position, at Bais Yaakov Drav Meir, a private elementary school in New York.

On March 18, 2020, the School temporarily closed due to the COVID-19 pandemic. The School paid Rosenbaum her weekly wages for the work weeks ending on March 20 and March 27, 2020. On April 5, 2020, the School did not pay Rosenbaum, so she contacted the School. The School then paid some but not all of her wages for that week. On April 21, 2020, Rosenbaum filed for unemployment for the weeks of April 10 and 17. On April 26, 2020, Rosenbaum worked at the School from 9:00 A.M. to 4:00 P.M., handing out books to students and taking phone calls from parents to coordinate remote learning.

The School’s bookkeeper told Rosenbaum that the School was working to correct the payroll issues to provide Rosenbaum with her outstanding wages. On May 8, 2020, the School provided Rosenbaum

with her past-due wages, but did not include a check for her wages due for the workweek ending in May 8, 2020, and failed to remit the paychecks due on May 15 and May 22. Rosenbaum contacted the School to complain about her unpaid wages. The School said they would deliver the outstanding wages and told Rosenbaum that the outstanding wages would be paid less the amount Rosenbaum received through unemployment.

On June 8, 2020, after still not receiving her outstanding wages, Rosenbaum called the School and the School administrator berated Rosenbaum about her complaints regarding her unpaid wages, told her that she “unemployed herself” as a result of her complaints, and ultimately terminated her employment.

In September 2020, Rosenbaum filed suit asserting retaliation under the Fair Labor Standards Act of 1938 (FLSA). In October 2020, after the School was served with the summons and complaints, the School’s bookkeeper called Rosenbaum and encouraged her to settle the matter in Rabbinical Court. Rosenbaum said she was proceeding in secular court. Allegedly, the bookkeeper threatened Rosenbaum and reminded her that she had “children to marry off,” a warning suggesting that Rosenbaum’s pursuit of her claims in secular court would result in other people in the community refusing to marry her children. A couple of days later, the School administrator emailed Rosenbaum to schedule a time for the parties to appear before the Rabbinical Court. Rosenbaum’s counsel notified the School that she declined to consent to appear in Rabbinical Court.

In November 2020, the School filed a new action in Rabbinical Court, which contained a note that Jewish

individuals are forbidden to litigate in secular courts without consent of the Rabbinical Court.

The School filed a motion to dismiss in secular court, arguing that Rosenbaum’s claims about payment of wages fail under the FLSA and New York law because Rosenbaum did not perform any work during the relevant period; and her retaliation claims fail under the FLSA and New York law because Rosenbaum was not involved in any protected activity.

Concerning the prompt payment of wages, the School argued that once the School closed due to the pandemic, Rosenbaum only performed work on one day, April 26, 2020. The Court noted that the School is required to pay employees at least the minimum wage in any workweek where they perform work. The FLSA does not specify when the wage must be paid, but courts have long interpreted a prompt payment requirement, and late wages are considered a form of unpaid wages. The Court found that Rosenbaum’s complaint sufficiently plead facts in support of her claims, in that it detailed how the School missed payments on multiple occasions without any legitimate business reason, and these late or missed payments were unreasonable.

For her retaliation claim, Rosenbaum argued that the School violated the FLSA’s and New York law’s antiretaliation provisions after she filed the instant action. The Court found that Rosenbaum sufficiently plead that the School failed to promptly pay her wages, in violation of the FLSA, that Rosenbaum subsequently instituted this action, and, as a result, the School initiated adverse employment actions towards Rosenbaum. Rosenbaum’s complaint states that she informed the School she was pursuing the FLSA claims in federal court, and the School

terminated her employment and withheld her outstanding wages owed. The School threatened her family’s future within the Jewish community by proceeding with the action in Rabbinical Court, which Rosenbaum argues will likely have the effect of permanently tarnishing her reputation within the Jewish community. The Court found that Rosenbaum alleged sufficient facts to assert a plausible retaliation claim under the FLSA and New York law.

The Court denied the School’s motion to dismiss.

Rosenbaum v. Meir (E.D.N.Y., Mar. 1, 2023) 2023 WL 2305960.

Note:

This case shows the importance of timely paying wages to employees and is a reminder that employees can bring retaliation claims against a school under the FLSA.

Daily Journal recognizes LCW Case, Stebbins v. California Public Utilities Commission, as a 2022 Top Defense Verdict!

We are pleased to announce that DailyJournal has recognized Stebbinsv.CaliforniaPublic UtilitiesCommission , won by Partner Suzanne Solomon, Senior Counsel Dana L. Burch, and Attorney Nathan T. Jackson, as a 2022 Top Defense Verdict.

With regard to this win, Suzanne stated, “the team worked tirelessly to obtain this favorable verdict for CPUC. We are thrilled with this result and look forward to continuing our professional relationship with CPUC.”

LCW’s Litigation Practice Group prides itself on being entrusted with our clients’ most high stakes cases. Our litigators draw from a deep well of institutional knowledge and experience trying cases for our clients. LCW’s Litigation Practice team utilizes specialized internal resources including a dedicated Litigation Manager, in house Litigation Support Specialists, and a bevy of self-published resources from our own attorney experts on our client’s employment issues. LCW’s litigators primarily serve defense counsel retained by our clients at the outset of a litigation where we excel at marshalling the evidence, developing defenses, and shepherding the matter through verdict or decision. But clients also turn to LCW for support step in as lead trial counsel as cases approach trial. In these instances, LCW is able to quickly and efficiently pick up a case, work with all stakeholders to develop a winning trial strategy, and then seamlessly step in as lead trial counsel. LCW’s litigation practice also excels at providing advice and counsel in a general counsel-type capacity on litigation matters being handled by insurance-defense counsel. LCW is proud of the variety of ways it is able to provide litigation services to its clients from pre-litigation through trial.

University Did Not Have Obligation To Proactively

Provide Accommodations To Student.

Luke Nguyen enrolled in the accelerated Doctor of Physical Therapy (DPT) program at the University of St. Augustine for Health Sciences. When he enrolled, Nguyen received a student handbook and reviewed the handbook, which included a paragraph informing him he should contact the student services office to learn how to request reasonable accommodations, if needed. In his first trimester (Summer 2016), Nguyen passed all of courses, however, in Fall 2016, Nguyen withdrew from his courses after experiencing a severe panic attack. On September 19, 2016, Nguyen was diagnosed with generalized anxiety disorder and ADHD. After these diagnoses, Nguyen’s academic advisor and the director of the accelerated DPT program suggested Nguyen switch to the “flex” DPT program, which took longer to complete but allowed students to take fewer classes each trimester. Following this advice, Nguyen took a leave of absence for the rest of the fall trimester and transitioned to the flex DPT program in Spring 2017. At the time, Nguyen requested no other accommodations.

In the Spring, Summer, and Fall trimesters of 2017, Nguyen passed his classes but expressed apprehension about timed exams to three different professors. These professors told Nguyen to practice and study more, but did not refer him to the disability services office. Nguyen did not know he could request an accommodation from that office.

In Spring 2018, Nguyen passed two courses, but had to retake exams in both courses. During this time, he did not request any accommodations from the disability office. In Fall 2018, Nguyen again experienced difficulties passing his classes. Near the end of the trimester, he experienced another panic attack and asked to postpone his final examination in one class until after he saw his doctor. The request was granted, and Nguyen’s doctor told him to explore the process for requesting extra time on his exams going forward. Nguyen failed the final exam and therefore failed the class. The next day Nguyen went to the disability office and asked if he could retake his exam and receive accommodations. His requests to retake the exam were ultimately denied and

Nguyen was dismissed from the program.

Nguyen filed a claim against the University, alleging violation of the Americans with Disabilities Act for failure to provide reasonable accommodations. The University argued it had no duty to provide accommodations because Nguyen was not a “qualified individual” within the DPT program because of his academic performance and his history of unprofessional behaviors. The University also argued it had no duty to investigate whether Nguyen needed accommodations because he never requested accommodations before failing the class and did not have a duty to retroactively accommodate Nguyen when he requested accommodations after failing the class. The University noted that the University always had a disability services coordinator and Nguyen failed to use the system for requesting accommodations. Nguyen argued that the University ignored his disabilities by failing to advise him that he was required to go to the disability services office to request accommodations. Nguyen did not know about the office and relied on the University to advise him of the proper course of action. Nguyen argued that the University should have given him extra time as an accommodation.

The Court found that Nguyen never requested any accommodations, even when he expressed concern about exams to his professors. The Court also noted that Nguyen never told his professors that these requests were due to his disabilities. The Court said the University had no obligation to provide accommodations until Nguyen met his burden of identifying an accommodation and demonstrating that proposed accommodation was reasonable. Nguyen had the student handbook with the information on how to request accommodations, if needed. The University did provide Nguyen with the information for the disabilities services officer when Nguyen requested it in December 2018. The Court found that Nguyen had not identified any evidence that the University wrongfully failed to provide reasonable accommodations, and therefore dismissed those claims from the case. The Court allowed Nguyen’s state claims to proceed.

Nguyen v. Univ. of St. Augustine for Health Sciences (M.D. Fla., Mar. 6, 2023) 2023 WL 2374165 (slip opinion).

Note:

At the college level, the student has to take initiative in seeking reasonable accommodations. At the elementary and high school level, there is a greater onus on schools to initiate the reasonable accommodation process and identify potential accommodations for students.

contracts

University’s Website Guarantee Subjected School To Breach Of Contract Claim.

Jimmy Smith, an African American student enrolled at Roger Williams University Law School in the Fall of 2016, alleged that, due to his race, the University took adverse actions against him.

Smith argued that he had been outspoken on racial issues since 2016, and when he talked about issues of race in class, his white classmates complained, and he was called by the School’s Title IX coordinator to talk about the issue. Smith did not offer details of the resulting discussions, but noted that they did not result in any disciplinary action against him. Smith argued that these meetings were not held when he complained about white classmates. Smith also alleged that the University dismissed a disciplinary complaint he filed against a white female student, but the University did not dismiss the disciplinary proceedings against him brought by the same student. He also claimed that the School commenced disciplinary proceedings against him only after the sole African American on the disciplinary board contracted COVID-19.

Finally, Smith argued that he was denied an opportunity to participate in the University’s clinical program because of a “run-in” with the law, while white students with legal issues were not denied those opportunities, and while white faculty members have not been disciplined for their legal struggles. He alleged that the University “guaranteed” students a clinical placement on their website.

The Court found that Smith’s discrimination claims were not pled with facts sufficient to support a plausible claim of racial discrimination. Each claim alleges that Smith was treated differently than white students and given harsher punishments than white students, but the complaint contains only conclusory allegations, without further explanation. The Court noted that since Smith

was involved in these situations, he had more details within his control that he could share, but declined to do so. For example, Smith failed to show that the University treated a comparator group (i.e., white students) differently despite similar conduct.

As for Smith’s breach of contract claim, the Court found that although there was no indication in the Student Handbook that students were guaranteed clinical placement, there was a page on the University’s website titled, “The Clinical Guarantee.” Included on this page, in large font, was the statement that, “RWU Law guarantees that every qualified student will be afforded a substantial, hands-on clinical experience.” Then, at the bottom of the page, there was a bullet point that said, “WE GUARANTEE IT.” In light of this language, the Court denied the University’s motion to dismiss the breach of contract claim. The Court noted that even with the language that this was only a guarantee for “qualified students,” that matter will need to be decided on its merits.

The Court dismissed Smith’s discrimination claims, but allowed the breach of contract claim to proceed.

Smith v. Roger Williams University Law School (D.R.I., Feb. 16, 2023) 2023 WL 2048257.

Note:

The relationship between a student and a private school is contractual. This case serves as an important reminder that the terms of that contractual relationship are not just based on a school’s handbooks and enrollment agreement, but also other information such as statements and promises on a school’s website.

Business & Facilities

Housing For School Faculty Subject To Non-Profit Tax Exemption.

Over the past 25 years, Rye Country Day School, a nonprofit college preparatory school in New York, has used several tax-exempt, single-family residential properties to provide housing for faculty and administrators. On December 14, 2015, the School purchased a parcel of property containing six townhouses within the City of Rye. On May 1, 2018, when full-time faculty occupied all six townhouses, the School applied to the city assessor for a tax exemption. The assessor denied the application on the ground that the School did not sufficiently establish that the property is an integral part of the education process. The School filed a complaint with the City’s Board of Assessment Review, arguing that the property was exempt under the law, and the School used the property as a recruitment tool by providing short-term housing for desired faculty from outside the area. The Board agreed with the assessor and denied the application for a tax exemption.

The School filed a claim arguing that denying the tax exemption was improper. Under New York’s property laws, there is a mandatory tax exemption for real property of non-profit corporations. The burden for establishing that a property is entitled to a tax exemption rests with the taxpayer. For a non-profit to qualify for the tax exemption, the owner must show that: (1) the owner of the property is organized or conducted exclusively, or primarily, for an exempt purpose; and (2) the property itself primarily used for an exempt purpose.

The Court found that the School is organized and conducted primarily for exempt purposes, as it is a school, and so organized for educational purposes. The Court also found that the School demonstrated that the primary use of the townhouses furthered its primary purpose of operating as a school. The Court noted that New York has long recognized that residential

property used for housing a school’s faculty and staff is entitled to a tax exemption, and the School had other properties that were long recognized as tax exempt. The townhouses were used to attract talented faculty and staff, which is necessary and incidental to the School’s primary educational purpose. The Court overturned the tax exemption denial.

Rye Country Day School v. Whitty (N.Y. App. Div. 2023) 212 A.D.3d 819.

Note: This case is an important reminder that school-provided housing must tie to a school’s tax-exempt purposes in order for the school to receive the tax benefit.

Should Your School Have Medication To Reverse Opioid Overdoses On Campus?

Opioid related overdoses remain an epidemic in the United States, and of particular concern is the impact the epidemic continues to have on children and adolescents. In response, California legislators have introduced legislation, Assembly Bill 19, to require public middle and high schools to maintain overdose reversal medications on campus.

If passed, Assembly Bill 19 would require public schools to maintain two doses of naloxone hydrochloride or another opioid antagonist (Naloxone) on schools’ campuses at all times. While this law would not apply to private schools, it presents a good opportunity for private schools to consider maintaining doses on their campus and the obligations associated with doing so.

Currently, Education Code section 49414.3 permits private elementary and secondary schools to make Naloxone available for administration, subject to certain requirements. The law states that schools should

consider whether initiating emergency medical services in response to an overdose is a reasonable alternative to maintaining Naloxone on campus and implies that schools in difficult to reach or remote locations should make Naloxone available. Emergency response time is a significant consideration as the timely administration of Naloxone can be the difference between life and death.

Below are some additional requirements and considerations for schools to be aware of with regard to making Naloxone available on campus.

Standing Orders

In 2017, the California Department of Public Health (CDPH) issued a statewide standing order to help reduce mortality associated with opioid overdoses. The standing order permits certain entities, including private schools, to obtain and distribute Naloxone without working with a physician. (Civ. Code § 1714.22) Qualified entities, broadly defined as those in a position to administer Naloxone to those in need, must apply to use the standing order and obtain Naloxone. The application can be found here. Once an entity submits an application, CDPH will immediately generate a standing order. Once the entity has a standing order issued, it may obtain dosages of Naloxone for emergency administration.

Certain entities, including private schools, may also apply for free doses of the medication through the California Department of Health Care Services’ Naloxone Distribution Project. The application for the free doses can be found here.

Trained Personnel & Immunity

If a private school elects to make Naloxone available, a school nurse may administer the medication to students. If the school does not have a nurse or the nurse is unavailable, a volunteer may administer the Naloxone after meeting certain criteria. (Ed. Code §49414.3 subd. (h)(1).)

The Education Code prohibits a school from bestowing a benefit to a person that volunteers for this responsibility. (Ed. Code §49414.3 subd. (c).) It also prohibits any retaliation against an individual if they rescind an offer to volunteer for this responsibility. (Ed. Code §49414.3 subd. (d)(1).) The volunteer may also rescind their offer to administer the medication at any time, even after receiving training. (Ed. Code §49414.3 subd. (d)(1).)

Individuals who administer Naloxone, in good faith and without compensation, to an individual who appears to be experiencing an overdose, are immune from civil

action, criminal prosecution, and cannot be subject to professional review. (Ed. Code §49414.3 subd. (j).)

Training Requirements (Ed. Code §49414.3 subd. (e)(2).)

Individuals that volunteer to administer an opioid antagonist must first undergo training. Training must be completed initially and then annually and must include:

1. Techniques for recognizing symptoms of an opioid overdose;

2. Standards and procedures for the storage, restocking, and emergency use of Naloxone;

3. Basic emergency follow up responses, such as an administrator calling 911 and contacting the student’s parents; and

4. Cardiopulmonary resuscitation (CPR) certification.

5. The school must also maintain written materials covering each of the above-specified items. The training must also be consistent with the most recent guidelines for medication administration issued by the Department of Education.

Additional Considerations

Schools that elect to maintain Naloxone on campus must follow the legal requirements set forth in the Education Code. Schools should also consider implementing a policy that educates its staff on how to manage emergency overdose situations that may occur on campus and who will be involved in the administration and follow up. Even if schools elect to not make Naloxone available on campus, they should review their policies to ensure that a timely response can be taken to address an overdose on campus.

Assembly Bill 19 will not require California private schools to maintain Naloxone on campus. However, it highlights the importance of making sure that schools have the resources available to protect their students.

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.

Five Things To Consider When Contracting With An Architect

By: Victoria M. Gómez Philips

When undertaking a construction project, a school likely requires a design professional, such as an architect, to assist in the planning, development, design, and construction of a project. These design professionals tend to present the schools with AIA contracts that favor the design professional and do not align with the California construction laws.

The school should take the following into consideration prior to executing a contract with a design professional:

• The architect should represent that he or she is licensed with the California Architects Board. The city or county will only issue a building permit if the architect who prepared the plans and specifications certifies that they are properly licensed by the State of California.

• Architect contracts very rarely include many provisions that address the construction phase. Schools should dictate what they expect from the architect during construction and the scope of work should align with the construction agreement. If the scope of work is not clear, the architect may charge the school for hourly services in order to perform services during the construction phase, such as reviewing submittals and pay applications.

• The indemnification language must conform with California law. In California, a design professional may only indemnify the school to the proportionate extent the claims relate to the design professional’s negligence, recklessness or willful misconduct.

• The contract should address the ownership of the documents developed by the architect. The school needs ownership of the instruments of service (plans and specifications) or an irrevocable, perpetual license to use the documents developed by the architect under the agreement in the future in order to maintain, complete or make any alterations to the construction project.

• The design professionals’ authority to file a lien on the property should also conform to California law. An architect’s lien is limited to the remaining amount of the design professional’s fee for services provided under the contract, or the reasonable value of those services, whichever is less. The architect must satisfy each of the conditions outlined in Civil Code Section 8304 prior to filing a lien against the real property.

Many AIA and other form contracts address these issues but these forms do not clearly conform to California laws. When presented with a design professional contract, the schools should consult with legal counsel to modify the contract provisions to ensure the school’s interests are protected.

lcw best timeline

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.

• 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:

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.

- 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.

Auctions:

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

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

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

- 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.

benefits Corner

The ABC Test Does Not Apply To Expense Reimbursement Claims.

By: Stephanie J. Lowe

Fred Bowerman was a vendor for Field Asset Services, Inc. (FAS), which was a business engaged in preforeclosure property preservation. Under Bowerman’s contract with FAS, he was required to cover his own business expenses. Bowerman filed a lawsuit on behalf of himself and other class members alleging FAS willfully misclassified them as independent contractors rather than employees. One of his claims was the misclassification resulted in FAS’s failure to reimburse him for business expenses.

In March 2017, the district court granted partial summary judgment in favor of Bowerman by finding that the class members had been misclassified as independent contractors and FAS was liable for failing to pay their business expenses. The district court relied on the common law test for distinguishing between employees and independent contractors from S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (Borello test). The Borello test primarily considers whether the hiring entity has the right to control the manner and means of the work and then assesses a number of secondary factors about the service relationship

After FAS appealed the district court’s decision, the California Supreme Court issued a decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 in 2018, which established the ABC test for distinguishing between employees and independent contractors. The ABC test presumes a worker is an employee and only finds that a worker is an independent contractor if: (A) the worker is free from the control and direction of the hirer; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the

worker is customarily engaged in an independently established trade, occupation, or business.

The Ninth Circuit held FAS’s appeal in abeyance pending Dynamex. On appeal, FAS argued that the Borello test, and not the ABC test, applied to Bowerman’s reimbursement claim. The Ninth Circuit agreed with FAS. Bowerman’s expense reimbursement claims were based on Labor Code section 2802, which requires employers to indemnify (or reimburse) employees for all necessary expenses incurred in the discharge of duties.

The Ninth Circuit held that Dynamex only applied the ABC test to wage order claims. Since Bowerman’s expense reimbursement claim was rooted in Labor Code Section 2802 and not a wage order, the ABC test did not apply to determine whether class members were employees for purposes of determining whether they were entitled to business expenses reimbursements. Thus, the Borello common law test, and not the ABC test, applies to the expense reimbursement claims. The Ninth Circuit further assessed that there was evidence of both an independent contractor and employee relationship under the Borello test and reversed the district court’s decision that class members had been misclassified.

Bowerman v. Field Asset Services, Inc. (9th Cir. 2022) 39 F.4th 652, amended February 14, 2023.

NOTE:

After the Dynamex case, the Labor Code was amended to apply the ABC test beyond the wage orders, although not to expense reimbursement claims. The ABC test applies to employment status for Workers’ Compensation coverage and Unemployment Insurance coverage.

Agencies Should Maintain Records of ACA Filings

With the March 31st deadline for electronically filing Forms 1094-C and 1095-C quickly approaching, agencies should maintain a file of records after

completing the filings. Keeping a record of the filings will serve to defend the agency in the event the IRS charges the agency with a penalty under for failing to furnish and/or file forms under Internal Revenue Code Sections 6721 and 6722. Employers should retain the following records:

(1) Documentation proving the employer furnished (handed out or mailed) Forms 1095-C to current and former full-time employees by the March 2 deadline.

(2) A copy of all electronic records (Forms 1094-C and 1095-C) within each submission, along with the Receipt ID for each transmission.

(3) A document showing the transmission status when the IRS completes processing. The transmission status should state one of the following: Accepted, Accepted With Errors, Partially Accepted, or Rejected.

(4) If the transmission status is anything but “Accepted,” maintain the Error Data File. The Error Data File contains a detailed list of errors, which are critical to understand for making corrections. Employers should troubleshoot the error and refile the forms without error as soon as possible.

Employers who use a third-party transmitter to file documents should obtain these same records in case the third-party transmitter goes out of business or otherwise becomes unavailable to file corrections for the employer. See IRS Publication 5165 for more information.

ACA Compliance Question: Cash in Lieu

Did you know that cash in lieu of health insurance can affect whether your agency offers affordable minimum essential coverage? Cash in lieu is added to the employee’s required contribution for purposes of calculating affordability. The one exception is where cash in lieu is conditioned on an “eligible opt-out arrangement.” To learn more about what constitutes an “eligible opt-out arrangement,” reach out to us.

BENEFITS BEST PRACTICES TIMELINE

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

March

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

• File Forms 1094-C and 1095-C by March 31, 2023 if filing electronically (file earlier on February 28, 2023 if filing on paper). Ensure the IRS accepts the filing.

• If agency administers the maximum grace period for health FSAs or DCAPs, the period ends March 15 for plan years that ended December 31, 2022.

April

• If the IRS rejects the Forms 1094-C or 1095-C filing, immediately troubleshoot and correct the error and refile.

For more information on some of our upcoming events and trainings, click on the icons:

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:

A school is in need of an investigator. A board member referred the school to an out-of-state attorney who has experience conducting investigations. The school asked if there would be any issues with using an out-of-state attorney to conduct an investigation.

Answer:

The attorney advised that the California Business & Professions Code regulates who can conduct investigations. With few exceptions, such as being a California licensed investigator, only attorneys who are members of the California State Bar are permitted to conduct investigations. Therefore, if the out-of-state attorney were licensed to practice law in California, the attorney could conduct the investigation. If not, the California Business & Professions Code would preclude the attorney from conducting the investigation. The attorney further explained that the Business & Professions Code imposes penalties if a person knowingly engages an unauthorized individual to conduct an investigation. School employees, however, are permitted to investigate claims of misconduct at the school.

Liebert Cassidy Whitmore