Private Education Matters
EMPLOYEES
Grace Chan Partner | San Francisco
Stephanie Lowe Senior Counsel | San Diego
Contributors:
Casey Williams Partner | San Francisco
Hannah Dodge Associate | San Francisco
Monica Espejo Senior Counsel | Sacramento
Jessica Tam (Lee) Associate | San Francisco
nlrb
NLRB Finds Head Of School’s Email About Employee Union Was Not Violation Of Employee’s Right To Unionize.
Employees at the Blue School, a private 2nd through 8th grade school located in New York City, conducted an election to create an employee union for Blue School faculty and staff. The election was conducted between August 16 and September 3, 2021, but was postponed pending resolution of challenged ballots.
During this time, the Head of School sent several school-wide emails regarding the election process and the School’s concerns about how the election occurred. In particular, on March 20, 2022, the day before the ballot count was set to resume, the Head of School sent an email to all employees, where he explained the remaining steps of the election process, reiterated the School’s concerns regarding the election, and stated how it would likely respond in the event that the Union prevailed. The Head of School predicted that the count would go in favor of a combined union that represented both faculty and staff.
The email then shared the Head of School’s reservations about a potential partnership with the Local 2110 Technical Office Professional Union Department of the United Autoworkers Union, and the election process in general. As a result, if the election was certified, he said the School would decline to recognize the union and would appeal the outcome. The email also said that faculty employment offers had just gone out, which reflected a 5% salary increase, renewed contributions to 401k plans, and in some specific instances, more substantial increases to ensure teachers with similar experience and credentials were compensated equitably.
The tally of ballots showed that the majority of employees voted in favor of representation, and in April 2022, the National Labor Relations Board (NLRB or Board) certified the Union. Thereafter, the School refused to recognize and bargain with the Union in order to challenge the Board’s certification.
The Administrative Law Judge found that the Head of School’s statement in the email that the School would decline to recognize the union if asked to do so and would appeal the outcome indicated an intent to not bargain with the Union and was a threat. It conveyed a message to employees that selecting a union would be futile, as the School would not bargain with the union if the union won the election. The School appealed.
To determine whether a statement is an unlawful coercive threat under the National Labor Relations Act section 8(a)(1), the statement must be assessed in the context in which is made and on whether it tends to coerce a reasonable employee. An unlawful threat of futility is established when an employer states or implies that it will ensure its nonunion status by unlawful means.
Here, the Board considered that the email was sent long after the employees voted in the election, and therefore could not have influenced how they voted. The Board also considered that the March 20 email did not address potential collective-bargaining negotiations between the parties and suggest that the negotiations would be futile. Instead, the email said that in the event the Union is certified by the Board, the School intended to seek judicial review. The Board concluded that the March 20 email provided a limited and factually accurate explanation of the appeal process and the School’s intent to pursue it. The Board dismissed the allegation against the School.
Blue School, 373 NLRB No. 120.
Note:
LCW covered this case previously. This case illustrates that emails from administrators to employees showing a lack of support for potential unionization may be a violation of the National Labor Relations Act. Schools should consider the language and the timing of these types of emails to reduce the risk of an NLRA violation.
NLRB Reaffirms Test For Religious Employer Exemption.
Saint Leo University is a private non-profit 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 full-time 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. 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.
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 it is a religious institution exempt from the NLRA’s provisions under the case, Bethany College, 369 NLRB No. 98 (2020).
In the Bethany College case, the National Labor Relations Board (Board) held that under the NLRA, the Board 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.
The Administrative Law Judge (ALJ) applied the Bethany College standard, found that Saint Leo was a religious institution, exempt from the NLRA, and dismissed the complaint. On appeal, the Board reviewed the ALJ’s decision.
The Board concluded that Saint Leo University holds itself out as a religious institution, meeting the first prong of the test. The Board considered the University’s Catholic identity statement, which appears on its public website, and which describes the University as being a religious institution of higher learning in presentday terms. The University’s mission statement, which appears in the collective bargaining agreement, states that the University is a “Catholic, liberal-arts-based university serving people of all faiths” that is “rooted in the 1,500-year-old Benedictine tradition.” The public website describes the numerous opportunities on campus for “faith and spirituality in action,” including ministry programs, a religious student choir and band, a pro-life group, Rite of Christian Initiation for Adults, and peer ministry.
The Board also considered that the numerous Catholic religious services and projects that take place on campus, and in which students are encouraged to participate, further supported that the University holds itself out as a religious institution. For example, the sacrament of confession is scheduled twice a week and by appointment, class schedules are modified for religious occasions, and religious observances occur throughout the University’s campus.
The Board was not persuaded by the General Counsel’s argument that the University’s religious messaging is thin, that it buries its Catholic affiliation in some places to market itself to potential students, and that the University has falsely identified itself as religious merely to obtain exemption from the NLRA. The Board reasoned that even though the University predominantly promotes secular components of its religious educational environment, its religious messaging is still substantial. The Board noted that the test was not about measuring the University’s religious nature in comparison to its secular nature, and it was not going to question the sincerity of the University’s representations regarding its religious character.
The Board likewise affirmed the Judge that the University is organized as a 501(c)(3), meeting the second prong of the test.
The Board noted that for the third prong, religious ownership, operation, and control are not required—the test may be met based on affiliation alone. Here, the University is affiliated with the Benedictine monks, Saint Leo’s Abbey, and Holy Name Monastery, as
well as the Association of Catholic Colleges and Universities and the Association of Benedictine Colleges and Universities, meeting the third prong of the test.
Saint Leo University Inc., 373 NLRB No. 121.
Note:
LCW covered this case previously. In the lower decision, the Administrative Law Judge allowed the NLRB General Counsel to develop a full record during the hearing, arguing that the Board should abandon the Bethany College framework and return to a prior standard when considering whether the Board has jurisdiction over religious institutions. The Board declined to do so and affirmed the current standard for religious institutions, in the process providing helpful guidance for the types of factors the Board will look to when making this determination.
DISCRIMINATION
Assistant Principal Successfully Plead Religious Discrimination Claim After School Fired Him For Voicing His Concerns About A School Play.
Corey McNellis worked for fourteen years at Ponderosa High School in Douglas County Colorado. Most recently, he served as the Athletic Director and Assistant Principal as well as a father of a Ponderosa High School student. Throughout his employment, he consistently received excellent performance reviews, and before the events leading to the lawsuit, he never received disciplinary action.
As part of his role on the School’s Administrative Team, McNellis met weekly with the school principal and the other assistant principals. On October 2, 2020, the school theatre director Kayla Diaz emailed the entire staff of the School about an upcoming school production of The Laramie Project. The play depicts the aftermath of the 1998 murder of Matthew Shepherd in Laramie, Wyoming, which is widely acknowledged to have been a hate crime motivated by Shepherd’s sexuality. In her email, Diaz wrote that she selected the production because she wanted the students to learn about the story and participate in a meaningful dialogue. The email also noted that due to the content discussed in the show, it is not a family-friendly show.
McNellis responded to Diaz’s email, noting that he admired her work on the production, and asked as a parent of a student if there was recourse if he disagreed with the production. Several other teachers joined the email conversation expressing support for the production.
McNellis sent three more emails as part of this conversation, in which he said the following:
• "As a [C]hristian I would love to collaborate with your project. Please let me know if the love that Jesus can provide will help your play;"
• “For the record, all of administration does not agree with me on this. I am totally solo. Good night Mustangs!”
• “I understand people support this. Forgive me for having a different viewpoint and the audacity to publicly share it.”
The next day, McNellis was told he needed to stay home because of his “religious comments.”
A few days later, McNellis met with the principal, the Human Resources Director, and the Director of Schools, during which time they shared that the District would be investigating him for his “religious comments,” and he would be placed on administrative leave during the investigation.
At the end of the investigation, the District terminated McNellis’ employment, citing his emails regarding The Laramie Project as the reason for his termination. Two years later, following his retirement, the School principal wrote an open letter about what happened with McNellis and his opinion that firing McNellis had “gone too far” and that McNellis was “railroaded” by a specific group of people based on his political and religious views.
The same day, McNellis sued the District asserting a number of claims, including discrimination in violation of Title VII. The District moved to dismiss the lawsuit. The trial court granted the motion, concluding that McNellis stated no plausible claims. McNellis appealed.
Under Title VII of the Civil Rights Act, it is unlawful to discharge any individual, or otherwise discriminate against them because of a protected classification, including their religion. To prove a Title VII violation, a plaintiff can either provide direct evidence or discrimination or follow a three-step burden shifting analysis.
Under the burden shifting analysis, the plaintiff must first prove a prima facie case of discrimination. To establish a prima facie case of discrimination, a plaintiff must show the following elements are met: (1) he is a member of a protected class; (2) he suffered an adverse employment action; and (3) the challenged action occurred under circumstances giving rise to an inference of discrimination. If the plaintiff clears this initial hurdle, then the burden shifts to the employer to prove a legitimate, non-discriminatory reason for the adverse employment action. If the employer meets this, then the burden shifts back to the plaintiff to show that the plaintiff’s protected status was a determinative factor in the employment decision or that the employer’s explanation is pretext.
Here, McNellis argued that the trial court erred in dismissing his discrimination claims because the allegations contained direct evidence of discrimination and there were numerous allegations in his complaint
that established a prima facie case of discrimination. The Court was not persuaded that McNellis provided direct evidence of discrimination. For example, McNellis alleged that the principal’s letter was direct evidence of discrimination because it contained an admission that the District terminated his employment for his religious views. However, this would require the Court to infer that discrimination was a motivating cause for an employment decision. The Court found that the letter suggested that McNellis’ coworkers were motivated by his political and religious views and those complaints played into a decision to ultimately terminate his employment, but the Court noted that the principal also opined that some form of disciplinary action would have been appropriate, suggesting that this was not an instance of direct evidence of discrimination.
In terms of the burden-shifting framework, the Court concluded that there was an inference of discrimination. The Court considered the following facts: McNellis is a Christian man; he was qualified to perform his position; throughout his employment he received exemplary performance reviews; in the staff email he voiced disagreement about the performance of a school play; he mentioned that Christianity could be used to help the play; he was investigated and placed on leave due to “the religious comments;” and he was ultimately terminated due to The Laramie Project emails.
The Court concluded there was a plausible link between McNellis’ termination and a discriminatory motive because the District repeatedly invoked McNellis’ “religious comments” when justifying the investigation, administrative leave, and termination.
For these reasons, the Court reversed the trial court’s dismissal of McNellis’ religious discrimination claims.
McNellis v. Douglas Cnty. Sch. Dist. (10th Cir. 2024) 2024 U.S. App. LEXIS 22927.
Note:
LCW will monitor this case for further developments. This case serves as an important reminder that taking disciplinary action against an employee after they make comments about their religion can give rise to an inference of discrimination.
FREE SPEECH STUDENTS
Court Finds That Student Wearing Eyeblack To Football Game Was Not Protected Free Speech.
J.A. began eighth grade at Muirlands Middle School, a public school in San Diego Unified School District in August 2023.
On September 27, 2023, someone reported that J.A. made racist comments referencing “watermelon” and “fried chicken” to a Black classmate. The principal of the School met with J.A., and in a written statement, J.A. admitted that he made the comments but they were a “joke”. The principal documented J.A.’s comment in his student record as a hate incident.
On October 13, 2023, J.A. attended a La Jolla High School home football game. La Jolla High School is located next door to Muirlands Middle School. In the middle of the game, a friend put warrior eyeblack on J.A.’s face. J.A. wore it for about fifteen-to-thirty minutes before leaving the game.
On October 17, 2023, the Muirlands cheer coach reported that there was a group of young boys at the game, at least one of whom had a lot of black paint on his face, and were uttering racial slurs. Both schools investigated, reviewing the surveillance videos and images, and ultimately identified three students as R.R., B.S., and J.A.
Based on these findings, the Muirlands principal met with the three students and gave each student an opportunity to respond. The three students were not given specifics when prompted, but all wrote statements. J.A. reported that he had black paint on his face, but not as much as R.R. B.S. reported that he was with J.A. and R.R. while they had black paint on their faces. R.R., like J.A., also had a recent incident for racerelated misconduct, and reported that he had black paint on his entire face.
For these reasons, R.R. and J.A. were given two-day suspensions. The incident reports were filed in the students’ records as hate incidents and R.R. and J.A.
were no longer allowed to attend La Jolla High School extracurricular activities for the remainder of the year.
J.A., through his parents, sued the principal and the District’s superintendent alleging violations of J.A.’s rights under the First Amendment of the U.S. Constitution. In addition to monetary damages, J.A. requested two types of relief: (1) enjoin the superintendent and principal from keeping any sanction against J.A. because of his free speech rights, including removing J.A.’s sporting-event ban and the two-day suspension from his school records; and (2) declare that the disciplinary actions taken against J.A. violated J.A.’s constitutional rights.
An injunction is only awarded if the plaintiff can show: (1) he is likely to succeed on the merits; (2) he is likely to suffer irreparable harm in the absence of preliminary relief; and (3) the balance of equities tips in his favor; and (4) an injunction is in the public interest.
For the first prong, the plaintiffs must show that J.A.’s free speech rights were violated. First Amendment rights of students in public schools are not absolute. A school does not need to tolerate student speech that is inconsistent with its basic educational mission, for example, even though the government could not censor similar speech outside of the school. In addition, schools may regulate some off-campus student speech.
For example, purely expressive activity, such as music without words, dance, topless dancing, movies, parades, tattoos, and certain paintings, is entitled to full First Amendment protection. However, conduct that can be used to express an idea, but does not necessarily do so, is only protected if the intent to convey a particularized message is present, and the likelihood is great that the message will be understood by those who view it. For example, burning a draft card and wearing a black armband can be done for reasons that have nothing to do with any expression, so require an interpretive step to determine the expressive elements of these processes.
Here, the Court considered that wearing eyeblack was not purely expressive. Wearing eyeblack on an individual’s face can reduce glare from field lights,
camouflage a player in a game of hide-and-seek, or be done to passively do what a friend is doing without any intent to express an idea. Therefore, the Court reasoned that the conduct was only protected if J.A. could show that he intended to convey a particular message by wearing eyeblack during the night in question, and that the likelihood was great that those who viewed it would understand that message.
J.A. argued that wearing the eyeblack was done to show “spirit” and “support,” and others would understand this message because half the attendees (around 100 people) wore some sort of face paint, and no one said anything negative or otherwise told him to stop. Further, people often wore eyeblack during other La Jolla High School football games, especially those designated as blackout games.
The Court was not persuaded. The La Jolla High School principal has been the principal for the last decade, attended the game in question, and did not see a single other fan wearing eyeblack on his or her face. He has supervised countless games, and students wear small stickers, but nothing like what the players sport. In reviewing the surveillance videos, only J.A. and his two friends were identified as persons of interest, indicating how uncommon it was to have eyeblack on faces. Furthermore, B.S.’s statement said that one of his friends had “a bunch of eyeblack on his face,” but washed it off after B.S. told him what it meant. When the principal interviewed J.A., he found him defensive, not credible, and not forthcoming as to why he and R.R. had the eyeblack on their faces.
Therefore, the Court concluded that J.A. did not meet the burden of showing that the eyeblack was to convey a particularized message.
The Court also concluded that the other preliminary injunction factors were not met. The two-day suspension on his record did not constitute an ongoing First Amendment injury, nor did J.A. show that irreparable harm was likely to occur without a preliminary injunction. J.A. argued that his school record could affect his acceptance into the school of his choice, but the Court noted that this was especially speculative because students do not apply to public high schools and J.A. made no indication that he planned to apply to a private high school.
The Court denied J.A.’s motion for a preliminary injunction.
J.A. v. Luna (S.D.Cal. Sep. 30, 2024) 2024 U.S.Dist.LEXIS 178023.
Note:
While this case involved a public school, high school students at private schools in California have the same free speech as public school students.
antitrust
Court Dismisses Lawsuit Brought Against Ivy League Schools For Sport Scholarship Ban.
Tamenang Choh and Grace Kirk (collectively, the student-athletes) brought a class action lawsuit against Ivy League schools based on the Ivy League Agreement not to provide athletic scholarships to Division I athletes, and not to pay Ivy League Athletes any compensation.
The Ivy League Agreement allows athletes to be admitted as students and receive financial aid only on the basis of economic need. Both Choh and Kirk were admitted to Ivy League schools to play sports, but their financial aid did not cover the full cost of tuition, room, and board. Both Choh and Kirk turned down offers from other universities, where they would have received full athletic scholarships.
The Ivy League Manual explicitly states that it “stands at the pinnacle of higher education and Division I athletics, rooted in the longstanding, defining principle that intercollegiate athletics competition should be kept in harmony with the essential educational purposes of the institution.”
The student-athletes argued that the Ivy League Agreement limits their financial aid by banning athletic scholarships, and that this policy amounts to price fixing. The Ivy League schools moved to dismiss the complaint.
Under the Sherman Antitrust Act, unreasonable restraints on competition are antitrust violations. A restraint may be unreasonable because it is considered “per se” unreasonable, or because it violates the “Rule of Reason.” Regulation of league sports falls under the “Rule of Reason” as was recently confirmed by another antitrust lawsuit involving compensation for student-athletes. The Rule of Reason is a flexible standard that is used to determine whether a business practice is anticompetitive and allows the Court to consider the practice’s overall effect on competition by considering the entity’s market power, anticompetitive effects, and procompetitive justifications.
Under the “Rule of Reason,” the Court assesses whether a business practice is reasonable or unreasonable by taking
a three-step, burden-shifting framework. The plaintiff has the initial burden to prove that the challenged restraint has a substantial anticompetitive effect that harms consumers. As part of this burden, the plaintiff must show a relevant market where competition will be impaired (i.e., must show that the entity has significant market power and the ability to control prices or exclude competitors). The relevant market must be defined as all products reasonably interchangeable by consumers for the same purposes.
Here, the student-athletes defined the relevant markets as: 1) the market for athletically and academically highachieving students (AAHA) who seek to graduate from college and play Division I sports in the NCAA; and 2) the market for athletic services of the AAHA students who seek to play for the Ivy League. The student-athletes’ complaint stated that schools other than the Ivy League (e.g., Stanford, Duke, Rice, and Notre Dame) compete to offer educational services to AAHA students, and the Ivy League schools are not the only schools to which AAHA students sell their athletic services. However, these schools were not included in the student-athletes’ defined market.
The Court therefore concluded that the student-athletes failed to show the relevant market definitions, making it impossible to evaluate whether the Ivy League had the market power necessary to withhold athletic scholarships without losing the AAHA students to other excellent schools. In other words, the anticompetitive effects related to some market participants, but did not speak to the effects on the market as a whole. The Court also concluded that the Ivy League is an athletic conference with a unique brand, as stated in the Ivy League Manual, but was not a single distinct market in the industry, and therefore the Ivy League Agreement was not a horizontal agreement.
Choh v. Brown Univ. (D.Conn. Oct. 9, 2024) 2024 U.S.Dist. LEXIS 185260.
Note:
The judge found that the plaintiffs failed to establish an antitrust violation and show that the league’s policies harmed competition. However, this decision may be appealed to the U.S. Court of Appeals for the Second Circuit. Schools should be aware that informal and formal agreements among schools about tuition and scholarships can result in antitrust violations.
mandated reporting
School’s Mistaken Identity Mandated Report Was Made In Good Faith And Therefore Subject To Immunity.
In 2021, M.C. was a student at Northwest Catholic High School in Connecticut. On November 18, 2021, M.C. was accused by a fellow student of an alleged sexual misconduct and assault. That same day, the School and its president allegedly reported the incident to the West Hartford police department and suspended M.C. from school. The School also told M.C. they would report the accusation to the state Department of Children and Families (DCF).
M.C. alleged that this was a case of “mistaken identity,” and that the School and the president lacked a good faith basis to take these actions. M.C. filed suit against the School and the president, alleging negligent infliction of emotional distress, intentional infliction of emotional distress, defamation, and slander.
In response, the School and the president filed an antiSLAPP motion. Anti-SLAPP motions are special motions to dismiss when the opposing party’s complaint is based on the moving party exercising free speech, right to petition the government, or right to association under the U.S. Constitution in connection with matters of public concern.
To succeed on an anti-SLAPP motion is a two-step process. First, the Court must determine whether the defendants made an initial showing that the complaint was based on the defendants’ exercise of rights to free speech, to petition the government, or to assemble on a matter of public concern. Second, the party that brought the complaint must set forth the circumstances giving rise to the complaint and demonstrate that they will likely prevail on the merits.
Here, the School and president argued that in notifying the DCF and the West Hartford Police Department, they were petitioning the government on a matter of public concern. M.C. argued that this was not a matter of public concern
because he was wrongly accused and not responsible for sexual misconduct. The Court, however, noted that a matter of public concern includes issues related to health or safety or community well-being. Therefore, regardless of who committed the sexual assault, the matter related to the health or safety of the victim.
For the second part of the test, the School and president did not dispute that M.C. pled a prima facie case for the various claims he alleged. However, the School and president argued that they would prevail on the merits because as mandated reporters, they were required to report the conduct to DCF and the police, and therefore are immune from liability.
Under the Connecticut Mandated Reporter statute, a mandated reporter includes any school employee, and it requires the employee to make a report if they have reasonable cause to suspect that any child under the age of eighteen years has been abused or neglected, suffered physical injury, or is placed in serious harm. Such reasonable suspicion or belief is based on the reporter’s observations, allegations, facts, or statements from a child, victim, or third party. The suspicion or belief does not require certainty or probable cause. If the report is made in good faith, the reporter is immune from liability.
Here, the reporting student submitted an affidavit to the Court where she said she told a school counselor about an incident involving a student with the same first name and last initial as M.C. This student said she did not give M.C.’s last name, but said it started with “Ch,” and M.C.’s last name starts with “Cu.”
The School, however, provided evidence of what was reported to them by the student. In particular, after the student’s initial report to a school counselor, the director of counseling met with the student, and during this meeting she showed the School text messages and described physical actions that suggested M.C. was harassing and stalking her. The school officials said that the student confirmed the identity of the perpetrator as M.C. on at least two occasions and did not express any doubt or indicate any confusion
about his identity. The counseling team informed the principal and the president, and the principal and president met with M.C. and his parents to tell them that they would be reporting the matter to DCF and the police. While the matter was being investigated, the School told M.C. and his parents that he could not be on campus.
A few days later, the reporting student informed the School that the suspect was present in the school hallway. At that point, the School realized they had mistakenly notified the wrong person as the alleged perpetrator.
M.C. argued that the School’s actions did not constitute a good faith report because they did not do a sufficient investigation before reporting the matter to the officials.
The Court found probable cause to believe the reporting student informed school officials that the perpetrator was not M.C. However, the Court also found that the School and president acted in good faith in reporting M.C., with the mix-up due to confusion or misapprehension. Furthermore, the mandated reporting statutes allow the mandated reporter to rely on facts or statements made by a victim. The School was not required under the statutes to undertake a full investigation prior to making the report. The Court found that the School took a cautious approach, met with the victim multiple times, met with M.C. and his parents before making the report, and removed M.C. from campus while the matter was investigated.
The Court therefore found that the School and president acted in good faith, were immune from liability, and granted the motion to dismiss.
Culligan v. Northwest Cath. High Sch. Corp. (Super.Ct. Sep. 23, 2024) 2024 Conn. Super. LEXIS 2041.
Note: California similarly provides immunity for mandated reporters under certain circumstances.
academics
University Potentially Liable for Contract and Discrimination Claims Based on Student’s Academic Suspension.
Harini Reddy was a full-time student enrolled in the University of Pennsylvania’s post-baccalaureate program. Post-baccalaureate programs are designed to support a transition to professional school (in this case, medical school) after the completion of an undergraduate degree.
Reddy was the only South Asian woman in her program. She alleged that Professor Simon Tong, her instructor in her chemistry lab and lecture, made the classes more difficult for her compared to other students who were not of darker skin tone. For example, Reddy alleged that Professor Tong was reluctant to waive a late penalty for one online quiz that Reddy submitted, but consistently waived late penalties and granted extensions for white men, including H.B., who was informed that he could submit his reports at any time before the end of the semester without a late penalty.
When working on the final version of her Lab Report for the class, Reddy collaborated with H.B. and another student, A.R., a minority female classmate. Under class policy, collaboration was permitted throughout the course. Reddy sent H.B. her completed Lab Report, which H.B. forwarded to A.R. After using Reddy’s work product, A.R. submitted her Lab Report on the evening on April 29, 2021. Reddy submitted her Lab Report on April 30, 2021, even though she had completed it the day before.
On May 12, Reddy received a letter from the Office of Student Conduct, notifying her that she had been accused of violating the University’s Code of Academic Integrity. This Notice Letter described an allegation from
Professor Tong that Reddy’s Lab Report was substantially similar to another student’s Lab Report.
Reddy made a formal bias incident report to the University regarding the discrimination to which she had been subjected in her courses. Reddy noted that she and A.R. were being accused of cheating, while H.B., a white man who was involved in the incident, was not.
Reddy met with Vice Provost and Director of the University's Women's Center and described the discriminatory incidents she had experienced, but the meeting was cut short and there was never another meeting. Subsequently, Reddy received an official letter charging her with an academic integrity violation.
Reddy requested a hearing, which was scheduled for August 26, 2021. The hearing was held remotely, with some members of the Hearing Panel attending in person, and others by video. The format led to technical issues, with witness testimony halted on several occasions, affecting the ability to assess credibility. There were also procedural problems, including that Reddy was promised that witnesses would be sequestered and then were not. For example, Professor Tong testified as a witness, and then remained in the hearing room, making it difficult for Reddy to present her side of the story.
After the hearing, Reddy was found responsible for violating the Academic Integrity Code and recommended a one-and-a-half-year suspension, a transcript notation of the violation during the suspension, and a requirement that Reddy write A.R. an apology letter. A.R. was not found responsible. Reddy appealed the decision, but it was upheld.
In July 2022, Reddy filed a complaint of retaliation under Title VI of the Civil Rights Act and breach of contract. The University of Pennsylvania moved to dismiss the claim.
Title VI prohibits discrimination under any program that receives federal financial assistance. To state a claim for retaliation under Title VI, a plaintiff must plead facts showing that: (1) she was engaged in a protected activity; (2) the funded entity subjected her to an adverse action after or contemporaneously with the protected activity; and (3) there is a causal link between the adverse action and the protected activity.
For the first prong, the Court found that Reddy’s email to Professor Tong, raising concerns of racial bias, the formal bias incident report Reddy submitted to the University,
and Reddy’s subsequent meeting with the Vice Provost and Director of the University’s Women’s Center each constituted protected activity. For the second prong, the Court found that Reddy sufficiently alleged that she was charged with and found responsible for an academic integrity violation contemporaneously or shortly after she made her complaints of discriminatory treatment. For the third prong, the University argued that Reddy failed to show a causal link between her complaints about Professor Tong and the Hearing Panel’s findings, as the decision-makers on the Hearing Panel were unaware of the discrimination complaints that Reddy made. However, the Court found that since Professor Tong was directly involved in the disciplinary proceedings against Reddy, even though he did not sit on the Hearing Panel, his initial accusation of academic misconduct triggered all of the proceedings against Reddy. Accordingly, the Court denied the University’s motion to dismiss.
For Reddy’s contract claims, she alleged that the University breached a number of promises, including the University’s Retaliation Policy and the University’s Student Disciplinary System Charter.
To state a claim for breach of contract under Pennsylvania law, a plaintiff must allege: (1) the existence of a contract; (2) a breach of a duty imposed by the contract; and (3) damages.
The relationship between a private educational institution and an enrolled student is contractual in nature; therefore, a student can bring a cause of action against a school for breach of contract where the school ignores or violates portions of the written contract. The contract includes any agreement between the parties concerning disciplinary procedures, contained within a portion of the student handbook.
Here, the University argued that the policies Reddy identified did not create enforceable, written contracts. For example, the Retaliation Policy is part of the Human Resources Policy Manual, and only applies to employees not students. And, even if they applied to students, there is a disclaimer that the policies contained in the manual are not legal documents and not intended to establish a contract.
The Court agreed with the University and found that Reddy was not a party to the Retaliation Policy. The Court reasoned that a policy located in a human resources manual for university employees is materially distinguishable from procedures found in a student handbook. While the Retaliation Policy contained
language relevant to student interests, the impact on third parties (such as students) is not enough to establish that it applies to students.
For the Disciplinary Charter, the University argued that Reddy failed to identify duties in the Charter corresponding to the University’s alleged breaches.
Reddy argued that the University breached the Charter in a number of ways, including failing to afford her the presumption of innocence, failing to provide sufficient notice of misconduct, failing to provide proper disclosure of the exhibits for the hearing, failing to reschedule the hearing and denying use of a forensic expert, and recommending a disproportionate sanction given her disciplinary record.
The Court largely agreed with Reddy, finding that the University did provide Reddy sufficient notice of her misconduct in the letter and the University’s failure to take Reddy’s “spotless” record into account was not a violation of the Charter. As to the other allegations, the Court allowed Reddy’s claims to proceed, finding that Reddy did plead sufficient facts to allege breach of contract based on the Disciplinary Charter’s provisions.
Reddy v. Univ. of Pa. (E.D.Pa. Aug. 22, 2024) 2024 U.S.Dist.LEXIS 150254.
Note:
This case shows the types of claims a student may bring following a suspension. It is crucial that schools follow its policies when handling disciplinary matters.
& Register for the California Legal Symposium
November 7, 2024 9:00 a.m. - 3:30 p.m.
Liebert Cassidy Whitmore has once again partnered with Cal-ISBOA to bring you the annual California Legal Symposium! This virtual event is filled with legal updates important to independent school business officers and those with human resources responsibilities. *Consortium members will receive discount pricing and a code via email.
Learn more here.
negligence
California Universities Do Not Have Duty To Protect Students From Emotional Harm.
Before coaching at the University of California San Diego (UCSD), Geoff Bond was a rowing coach at the University of Pennsylvania (UPenn). During his time at UPenn, multiple members of the rowing team allegedly expressed concern about Bond’s coaching style and behavior, which included having an unfair selection process, sexually charged insults, ineffective training methods, and publicly shaming rowers that utilized UPenn’s psychological services.
After leaving UPenn, Bond was hired by UCSD. Katie McGann, the associate athletic director in charge of Bond’s hiring, allegedly rushed the process and did not research why Bond left the UPenn position.
B.L. enrolled at USCD in the fall of 2019 and joined its men’s rowing team. B.L. was previously diagnosed with juvenile rheumatoid arthritis, gained thirty pounds in middle school, and struggled with obesity, a matter he discussed with his team and coaches. As months progressed, Bond allegedly engaged in “explosive behavior,” including making sexually inappropriate comments, and having unprovoked rage-filled outbursts.
In early January 2020, several women accused an athlete on the men’s rowing team, Z.B., of sexual harassment and assault. B.L. had multiple conversations with Bond about Z.B. because he was troubled by UCSD’s refusal to take action against Z.B. and Z.B.’s continued presence on the team. B.L. subsequently decided to contact others at UCSD concerning the Z.B. matter. Thereafter, Bond verbally attacked B.L., shouting comments about B.L.’s weight and demoting him on the team.
B.L. met with McGann about Bond’s psychological abuse, and McGann told B.L. he could report the conduct directly to the Office for the Prevention of Harassment and Discrimination (OPHD) (which was not the University’s policy) or see a therapist.
In April 2020, B.L. completed an anonymous survey for McGann about the men’s rowing team, and B.L.
complained about Bond’s failure to report the allegations against Z.B. to UCSD, Bond’s retaliatory conduct, and notified UCSD that he had a few fleeting thoughts of suicide throughout the process, but did not reveal them because he was afraid of the implications. McGann responded to B.L.’s survey and assured him that any issues reported to her were reported up the chain to OPHD properly.
B.L. reached a stable place towards the end of 2020 and returned to UCSD. In December 2020, B.L. informed Bond that he was opting out of the upcoming rowing season. On January 4, 2021, B.L. took his own life.
B.L.’s parents filed suit against UCSD, McGann, and Bond (collectively, the Defendants), alleging, among other claims, negligent hiring, supervision, and retention. The defendants moved to dismiss.
Under California law, to establish a cause of action for negligence, the plaintiff must show that the defendant had a duty to use due care, that he breached that duty, and the breach was the proximate or legal cause of the resulting injury. The threshold question for this case was whether there was a legal duty of care owed to the plaintiff. In general, there is not a duty of care to protect a plaintiff from harm at the hands of a third party, but one exception is the special relationship doctrine, which often applies when one party relies on the other for protection and has superior control over the means of protection.
Here, the parents argued that their negligence claim was not reliant on a special duty to prevent B.L.’s suicide, but rather McGann owed a duty to protect B.L. from serious mental harm, which occurred when she negligently failed to discover Bond’s history of abuse and to discipline or investigate Bond after learning about the psychological abuse of B.L. and the sexual harassment of the rowing team.
The Court concluded that universities do have a special relationship with students while they are engaged in activities that are part of the school’s curriculum or closely related to its delivery of educational services. This includes athletic team settings.
However, the special relationship does not mean UCSD must protect B.L. from all foreseeable injury. Based on current California precedent, the Court concluded that there is no duty that universities have to protect students from non-physical harm.
The Court considered a number of policy considerations in regulating student conduct. It noted that it used to be that universities stood in loco parentis, however, the current legal landscape has shifted to a “bystander” era, where the privacy and autonomy rights of adult students outweigh a college administrator’s authority to control student behavior. Imposing a duty on a university administrator to prevent emotional distress could threaten the independence and autonomy students seek. The Court considered that university employees might otherwise force students complaining of harassment to seek mental health treatment when other, less intrusive resources are available to address the harm (e.g., rules against harassment, reporting complaints to the harassment office, and accessible mental health services.) The Court also raised concerns about students’ privacy interests and the potential increased cost of tuition for universities to protect against liability for intangible harms.
For these reasons, the Court concluded that it was not going to impose on a university a duty to protect its students from non-physical harm. The Court dismissed the negligence claims.
Lilly v. Univ. of Cal.-San Diego (S.D.Cal. Sep. 30, 2024) 2024 U.S.Dist.LEXIS 179075.
Note:
This Court had both parties prepare briefs on the specific issue of whether universities must protect students from nonphysical harm. This matter may be appealed, as California’s Supreme Court has not decided this issue. These obligations are also distinct from the K-12 setting, where schools do stand in loco parentis for students and have greater duties to protect students from non-physical harm.
religious freedom
Private School Cannot Broadcast Pre-Game Prayer During Championship Football Game.
Cambridge Christian is a private Christian school in Tampa, Florida. As part of the School’s mission, it regularly engages in communal prayer. Communal prayer is also a regular feature of athletics—coaches lead prayer at practices, and all home sporting events open with public prayer using the loudspeaker. It is the School’s practice to offer a prayer over the PA system before all home football games, even when the opponent is a secular school. For away games, Cambridge Christian defers to the tradition of the home team. When the away games are against nonChristian schools, Cambridge Christian does not use the PA system when praying.
The Florida High School Athletic Association (FHSAA) is a state actor with the authority to govern some aspects of high school athletics in Florida. In that role, it has the authority over certain sports activities for public and private schools throughout the state, one of which is Cambridge Christian School.
In 2015, after a successful regular season and playoff run, Cambridge Christian football team made it to the
FHSAA state championship game, where it would play University Christian. Leading up to that game, the two schools asked the FHSAA for permission to use the stadium’s public address system for a prayer before the game.
FHSAA has a Football Finals Participant Manual that governs state championship football games specifically, and it dictates that playoff and championship games are not home contests for the host schools and must maintain an atmosphere of neutrality. For the playoff and championship games, the FHSAA creates scripts and expects PA announcers to follow those scripts.
In light of these rules, the FHSAA denied the schools’ request.
Cambridge Christian filed suit, claiming violations of its rights under the Free Speech and Free Exercise Clauses of the U.S. Constitution and the Florida Constitution. The FHSAA moved for summary judgment, which the trial court granted in favor of FHSAA.
On appeal, the Court of Appeals noted that Cambridge Christian no longer had standing to seek an injunction and the issue was moot because the championship game had already passed. Nonetheless, the Court of Appeals still considered the merits of the case to determine if any nominal damages were owed.
The Court of Appeals first considered the Free Speech claim. The Free Speech Clause protects private persons from encroachments by the government on their right to speak freely. To determine whether speech is government or private speech, the Court generally considers three factors: the history of the expression at issue; the public’s likely perception as to who (the government or a private person) is speaking; and the extent to which the government has actively shaped or controlled the expression.
Here, the Court of Appeals concluded that the pregame speech has traditionally constituted government speech—it is entirely scripted and limited to welcome messages, announcements from scholars, national anthem introduction and performance, the presentation of colors, the pledge of allegiance, and the introductions of starters and officials. All of this speech was narrated by the announcer, who was selected by the Central Florida Sports Commission, not the schools competing. The national anthem, presentation of colors, and pledge of allegiance are inseparably associated with
ideas of government, and the other introductory announcements were communicated on behalf of the FHSAA, a state actor. The Court of Appeals noted that the few promotional messages from sponsors did not transform the pregame speech into private speech, especially because the messages were often drafted by the sponsor but approved and added to the PA script by the FHSAA.
Similarly, the Court of Appeals concluded that the perception was that the PA announcements were government speech. The Court came to this conclusion because the state organized the game, it was a championship game organized by the FHSAA, the PA system was part of a stadium owned by the government, the PA announcer was a neutral party, and there was no host school for the championship game.
Finally, the government controlled the speech—the PA announcements were entirely scripted, controlled by FHSAA employees, and FHSAA rules governed the content of announcements and commentary.
The Court of Appeals next considered the School’s free exercise claims. The Free Exercise Clause requires government respect for, and noninterference with, the religious beliefs and practices of individuals. The Free Exercise Clause, however, does not require the government to conduct its own internal affairs in a way that comports with the religious beliefs of particular citizens. Here, the FHSAA was regulating its own expression when it restricted pregame speech.
Accordingly, the Court of Appeals upheld summary judgment as to the School’s free speech and free exercise claims.
Cambridge Christian Sch., Inc. v. Fla. High Sch. Ath. Ass'n, Inc. (11th Cir. 2024) 115 F.4th 1266.
Note:
In this case, although both schools were private religious schools, the conference was able to deny the pre-game prayer because the conference was considered a state actor.
artificial intelligence
AI in the Educational Setting: Crafting Policies for Independent Schools.
Artificial Intelligence (AI) is transforming the educational landscape, introducing both opportunities for innovation and risks of misuse. For independent schools, implementing a thoughtful AI policy is essential to maximize benefits and curb potential harm. An effective policy can help align AI use with the school's mission, defining acceptable applications while protecting against ethical breaches, misinformation and privacy concerns. Here are key areas schools should address when developing AI guidelines.
1. Ethical AI Use and Academic Integrity
Ethics are foundational to responsible AI use. Schools must outline ethical boundaries clearly to prevent AI from compromising academic integrity. Without guidance, students and staff may inadvertently use AI in ways that undermine individual effort or promote plagiarism. An effective AI policy should define ethical use explicitly, providing examples of acceptable and unacceptable applications. For instance, AI may be acceptable for research assistance but not for generating complete assignments. By promoting responsible use, schools can foster digital citizenship and accountability.
Schools should also consider how their policies apply beyond campus. Since some AI misuse, like using chatbots for non-school purposes, may occur outside of school hours, it’s important for policies to specify the circumstances under which off-campus behavior may impact the school community.
2. Deepfakes: Addressing the Threat of Digital Deception
Deepfakes, hyper-realistic fabricated audio or video content, are a growing concern in schools. These manipulated media forms can spread misinformation rapidly, with potentially damaging effects. Schools should understand the risks associated with deepfakes and incorporate preventive measures into their AI policies. This includes linking misuse of deepfakes to existing harassment or bullying policies and clarifying disciplinary actions. As deepfakes are often highly offensive and have the potential to sow distrust on a large scale, schools should be prepared for rapid response to deepfakes to limit misinformation and reputational harm.
3. Algorithmic Bias: Ensuring Fair and Equitable AI Use
Algorithmic bias occurs when AI systems reflect or amplify human prejudices embedded in data or algorithms. This issue is particularly relevant in educational contexts, such as admissions, assessments, and performance predictions, where biased algorithms may disadvantage certain groups. Schools should inform students and staff about algorithmic bias, explaining how these biases can reinforce discrimination.
To address potential biases, schools should perform regular audits, using methods like disparate impact analysis, to check for inequities in AI applications. Involving a review team comprising employees with different experiences and perspectives can help identify and mitigate biases more effectively. Transparency is essential; schools should maintain documentation of AI decision-making processes and be able to justify the results AI produces within an educational and employment context.
4. Data Protection and Privacy: Safeguarding Sensitive Information
As schools increasingly integrate AI, safeguarding data privacy is paramount. AI systems often rely on extensive data inputs, which may include sensitive student information such as academic records, addresses and discipline information. With educational institutions frequently targeted by cyberattacks, the potential exposure of such information is a significant risk.
To mitigate these risks, schools should evaluate any AI tools for their data handling and security practices before adoption. Limiting the collection of sensitive data also minimizes exposure risks, and clear communication with students, parents, and staff on data use and storage is crucial. Schools should also enforce strict access controls, restricting data access to authorized personnel only.
Regular training on data privacy is essential for both students and staff. Policies should prohibit the unauthorized sharing of personal information with AI systems, especially information about other students or staff. Security measures, such as encryption and regular security audits, should be implemented to guard against unauthorized data breaches. Having a robust breach response protocol is also key to minimizing damage in the event of a data security incident.
Conclusion
Developing comprehensive AI policies allows schools to harness AI responsibly, ensuring it enhances the educational experience without compromising ethical standards or privacy. By setting clear expectations and protections, schools can position AI as a tool for educational empowerment rather than a source of risk.
Note: This article was prepared for LCW’s AI week. To view other articles regarding AI, click here.
wage&Hour
Taking “Reasonable Steps” to Protect Against PAGA Claims and Penalties in the New Year.
On July 1, 2024, Governor Gavin Newsom signed two bills that reformed the Private Attorneys General Act of 2004 (PAGA). PAGA allows employees to recover substantial penalties on behalf of other employees and the state for violations of California’s wage and hour laws, such as strict laws regarding meal and rest breaks for nonexempt employees. Although PAGA was intended to protect workers, PAGA has come under increased criticism for causing excessive litigation and crippling penalty awards against well-intentioned employers, including independent schools.
Accordingly, the PAGA reform bills were negotiated between business and employee groups to address this criticism while still providing a robust mechanism for employees to recover substantial penalties for wage and hour violations. We do not yet know how effective those changes will be in addressing employer’s concerns, but you can read more about all of the changes in our previous update here.
As we embark on the New Year, one of the most discussed reforms were measures that allow employers to take “reasonable steps” to preemptively reduce the penalties an employee can recover in a PAGA. Specifically, built into the reform measures is an incentive to encourage employers to take steps to come into greater compliance with California’s wage and hour laws. Under those measures, if an employer can show that it took certain “reasonable steps” the employer can argue that PAGA penalties should be
capped at 15% or 30% of what the employee would otherwise recover. PAGA penalty awards can be substantial, even under the newly reformed PAGA. The basic civil penalty under the reformed PAGA is $100 for each aggrieved employee for each pay period that there was a violation. Penalties are now slightly less in some cases, such as $25 per employee per pay period for certain wage statement violations, but can also be as high as $200 per employee per pay period if an employer acted, for example, fraudulently in violating wage and hour laws.
However, now, under the reform measures, an employer can seek to have the recoverable penalties in a PAGA claim capped at 15% if the employer can show that it took all “reasonable steps” to comply with the California Labor Code prior to receiving a notice of violation or request for personnel records from an employee. “All reasonable steps” that can be taken before receiving a PAGA notice or personnel records request from a potential PAGA complaint include, but are not limited to:
• Conducting periodic payroll audits and taking action in response to the results of the audit.
• Disseminating lawful written policies.
• Training supervisors on applicable Labor Code and wage order compliance.
• Taking appropriate corrective action with regard to supervisors.
Additionally, employers can also take similar reasonable steps to come into compliance within 60
days after receiving a notice, in which case employers can seek to have potential penalties capped at 30% of the penalties sought, provided the any auditing or dissemination of policies is aimed at the alleged violations in the notice. In either case, the reform measures also explain that whether a particular employer’s actions are reasonable will be based on the totality of the circumstances, taking into consideration the size and resources available to the employer and the nature, severity, and duration of the alleged violations.
Below are some important considerations for schools considering preemptively conducting some or all of these “reasonable steps” in order to be able to argue for reduced penalties in the event of a PAGA claim.
• Periodic Payroll Audits – The PAGA reform measures encourage employers to conduct periodic payroll audits and, importantly, to take action in response to the audit results. It remains to be seen how this provision will be interpreted. For example, it is unclear what qualifies as “periodic.” As another example, it is unclear if an audit must comprehensively cover all aspects of an employer’s wage and hour practices or if targeted audits at certain issues will be sufficient (e.g., classification of nonexempt, overtime practices, meal and rest break compliance). Another issue for the courts to work out and for employers to be aware of is whether an employer will be required to waive the attorneyclient privilege in an audit conducted by an attorney, before the employer can rely on that audit to show that it took reasonable steps.
• Disseminating Lawful Written Policies – This reform measure incentivizes employers to adopt and regularly update written policies addressing things such as meal and rest breaks, timekeeping practices, and overtime compliance. The term “lawful” suggests that policies need to be regularly evaluated and updated to ensure they keep up with changes in the law. The term “disseminating” also implies that these policies need to be effectively given to employees, which could involve providing physical and digital copies to employees and making copies easily accessible, such as posting them on an online dashboard or intranet. Having employees sign acknowledgments that they have received the policies is already considered a best practice, and it may now also be helpful in showing that “reasonable steps” were taken under the PAGA reform measures.
• Training Supervisors – The PAGA reform measures encourage employers to provide training to supervisors specifically on wage order compliance. Again, the reform measures do not provide guidance on how often this training should occur or address what topics should be covered, but the measures suggest that the trainings should cover laws and wage orders applicable to an employer. For example, supervisors could be trained on the basics of meal and rest breaks laws under an applicable wage order, so those supervisors will be more effective in setting lawful meal and rest break schedules and ensuring nonexempt employees are being provided compliant meal and rest breaks. Accordingly, schools may want to think about making wage and hour compliance training for supervisors a regular part of their training schedules or practices for employees.
• Taking Corrective Action Against Supervisors – Finally, the PAGA reform measures make it clear that employers are expected to hold their supervisors accountable for wage and hour compliance. Accordingly, it will be even more important to take corrective action against supervisors who violate wage and hour laws, for example, by allowing employees to work off the clock. What will qualify as appropriate corrective action will depend on the specific circumstances, but as in other areas of law, the courts will likely expect the corrective action to be proportional to the violation and sufficient to address and prevent the violation from reoccurring.
By taking this step along with other reasonable measures, the hope is that schools can substantially reduce their exposure to PAGA penalties thanks to these reform measures. Moreover, by taking these sorts of steps, schools may avoid potential claims altogether by having legally compliant policies and practices in place. LCW attorneys regularly assist with conducting payroll audits, preparing lawful written wage and hour policies, and training supervisors. They are available to consult with schools on these aspects of the PAGA reform measures.
benefits corner
New ACA Affordability Percentage for 2025 is 9.02 Percent.
The IRS has set the new Affordable Care Act (ACA) affordability percentage to 9.02% for 2025. This new affordability percentage is 0.63% higher than the current 2024 affordability percentage (from 8.39% to 9.02%).
While the Internal Revenue Code originally set the affordability threshold to 9.5%, the Internal Revenue Service (IRS) retains the authority to release an adjusted percentage each year. (See 26 U.S.C. section 36B(c)(2)(C) (i).) From 2015 to 2022, the IRS set an affordability percentage above 9.5%, going as high as 9.86% in 2019. For 2023, the IRS dropped the affordability percentage below 9.5% for the first time by setting it at 9.12% and then dropped it even lower at 8.39% for 2024.
Applicable large employers are advised to check whether their offers of employer-sponsored health coverage are affordable using the 9.02% threshold. To determine whether an offer of health coverage is affordable, an employer must run an affordability calculation to determine whether an employee’s “Required Contribution” toward the premium for the lowest cost employee-only coverage exceeds or does not exceed 9.02% (2025) of the employee's household income for the taxable year. Since employers typically do not know the total household income of each of their employees, the ACA provides three affordability safe harbor options an employer may adopt and apply on a reasonable and consistent basis:
1. Under the Form W-2 Safe Harbor, coverage is affordable if the employee’s Required Contribution is less than or equal to 9.02% of the employee's wages reported in Box 1 of Form W-2.
2. Under the Rate of Pay Safe Harbor, coverage is affordable if the employee's Required Contribution is less than or equal to 9.02% of the monthly wage amount for hourly employees (the hourly rate multiplied by 130 hours), or the monthly salary for salaried employees.
3. Under the Federal Poverty Line Safe Harbor, coverage is affordable if an employee's Required Contribution does not exceed 9.02% of the Federal Poverty Line for a single individual.
Please note that there are additional factors, such as health flex contributions and cash in lieu, that can greatly impact the amount of an employee’s Required Contribution and the affordability calculation. For more information about how to run the affordability calculation and whether your agency needs to revise its employer contribution to maintain affordable offers of health coverage, please reach out to us.
cases we are watching
• Earlier this month, a class action antitrust lawsuit was filed against 40 selective U.S. colleges and universities, as well as the nonprofit College Board, for conspiring to overcharge certain students for tuition. The suit was filed by a current Boston University student and a Cornell alumnus, claiming that the tuition calculations for students who live with only one parent are unfair because they require both parents to submit financial information, even if one is a noncustodial parent who does not contribute to the student’s tuition. The lawsuit alleges that this structure increases tuition by an average of $6,200 per year per student. The plaintiffs are seeking $5 million in damages and a court order halting the consideration of noncustodial parental income in financial aid packages. The lawsuit also alleges that the College Board pressured colleges into adopting this framework back in 2006.
• On June 3, 2024, a Federal Court of Appeals ruled against the Fearless Fund, a venture capital firm with a nonprofit Foundation running a program called the “Strivers Grant Contest,” to provide $20,000 grants to businesses owned by Black women. Specifically, the Court of Appeals ruled that a preliminary injunction halting the program should be imposed pending a full legal challenge to the program’s race-based nature. The American Alliance for Equal Rights challenged the grant program, arguing that it violated section 1981 of the Civil Rights Act, a federal law prohibiting race discrimination in contracting. LCW previously covered this case. Now, the Fearless Fund has agreed to settle the case and permanently end its grant program. By choosing to settle at this stage, the Fearless Fund limits the impact of the case to the 11th Circuit, which includes Alabama, Florida, and Georgia. An appeal to the Supreme Court could have had a nationwide legal impact.
• The University of California (UC) was recently sued by a former undocumented UCLA student and UCLA lecturer, alleging that UC has the authority to hire undocumented students to fill campus jobs, but its refusal to exercise that authority results in discrimination against thousands of students enrolled at campuses across the state. The complaint alleges that the UC Regents are relying on a mistaken interpretation of the Immigration Reform and Control Act, a federal law that prohibits the hiring of undocumented immigrants. The complaint alleges that the law does not apply to state government employers, and the impact is that students cannot pursue advanced degrees because they are unable to complete the necessary teaching or other employment requirements, like working a medical residency. In their petition, the complainants are seeking relief under two theories. The first, that UC’s policy is an abuse of discretion. The second, that the policy violates the Fair Employment and Housing Act’s prohibition on immigration status discrimination.
did you know...?
• Governor Gavin Newsom recently signed AB 1780, which prohibits legacy and donor preferences in the admissions process for private, nonprofit institutions. Legacy and donor preferences have long been excluded from the state’s public university admissions process. Under the new law, all private colleges and universities in the state must submit an annual report to disclose compliance.
• The General Counsel for the National Labor Relations Board recently released a memo warning employers that “Stay-or-Pay” provisions (i.e., provisions requiring employees to remain at an employer for a specific period of time or otherwise repay certain costs) are generally unlawful. The memo also discusses potential remedies for unlawful and overly broad non-compete provisions, including lost pay for being without a job, the difference in pay from a job with lesser compensation, moving costs to relocate, and retraining costs to obtain a job in another industry. The full memo can be found here
• The U.S. Department of Labor and the Partnership on Employment & Accessible Technology (PEAT) recently published the AI & Inclusive Hiring Framework. The framework is a tool designed to help employers use artificial intelligence in their hiring technology, specifically to increase benefits for job seekers with disabilities. The framework has 10 focus areas, including practices, goals, and sample activities that employers can adopt. The framework can be found here
• The U.S. Department of Education, Office for Civil Rights (OCR) issued four new resource documents regarding the rights of students with anxiety, depression, bipolar disorder, and eating disorders, and the responsibilities of schools to accommodate these conditions under section 504 of the Rehabilitation Act of 1973. Although section 504 only applies to schools that receive federal funding, the documents provide helpful guidance for schools providing reasonable accommodations for these conditions.
LCW In The News
To view this article and the most recent LCW attorney-authored articles, please visit: www.lcwlegal.com/news
• Recently published in The Mercury News, LCW Partner Amy Brandt notes the legal challenges California public K-12 schools, CCDs, and universities are facing due to the national legal battle over new federal Title IX regulations, which extend protections to gender identity, among other things. While California is not directly challenging these regulations, hundreds of schools are impacted by a Kansas federal court injunction at schools with affiliations or students that are members of plaintiff organizations. Brandt explains that schools were “blindsided” by the sudden changes, causing widespread confusion, especially from a policy implementation standpoint. Regardless of their approach, Brandt notes that schools could face challenges from both sides of the issue.
lcw best timeline
NOVEMBER THROUGH JANUARY
Issue Performance Evaluations.
We recommend that performance evaluations be conducted on at least an annual basis, and that they be completed before the decision to continue employment for the following school year is made. Schools that do not conduct regular performance reviews have difficulty and often incur legal liability terminating problem employees - especially when there is a lack of notice regarding problems.
• Consider using Performance Improvement Plans but remember it is important to do the necessary follow up and follow through on any support the School has agreed to provide in the Performance Improvement Plan.
Compensation Committee Review of Compensation before issuing employee contracts.
The Board is obligated to ensure fair and reasonable compensation of the Head of School and others. The Board should appoint a compensation committee that will be tasked with providing for independent review and approval of compensation. The committee must be composed of individuals without a conflict of interest.
Review employee health and other benefit packages, and determine whether any changes in benefit plans are needed.
If lease ends at the end of the school year, review lease
terms in order to negotiate new terms or have adequate time to locate new space for upcoming school year.
Review tuition rates and fees relative to economic and demographic data for the School’s target market to determine whether to change the rates.
Review student financial aid policies.
Review, revise, and update enrollment/tuition agreements based on changes to the law and best practice recommendations.
File all tax forms in a timely manner:
Forms 990, 990EZ
• Form 990:
Tax-exempt organizations must file a Form 990 if the annual gross receipts are more than $200,000, or the total assets are more than $500,000.
• Form 990-EZ:
Tax-exempt organizations whose annual gross receipts are less than $200,000, and total assets are less than $500,000 can file either form 990 or 990EZ.
• A School below college level affiliated with a church or operated by a religious order is exempt from filing Form 990 series forms. (See IRS Regulations section 1.6033-2(g)(1)(vii)).
• The 990 series forms are due every year by the
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.
15th day of the 5th month after the close of your tax year. For example, if your tax year ended on December 31, the e-Postcard is due May 15 of the following year. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
• The School should make its IRS form 990 available in the business office for inspection.
Other required Tax Forms common to business who have employees include Forms 940, 941, 1099, W-2, 5500.
Annual review of finances (if fiscal year ends January 1st).
The School’s financial results should be reviewed annually by person(s) independent of the School’s financial processes (including initiating and recording transactions and physical custody of School assets). For schools not required to have an audit, this can be accomplished by a trustee with the requisite financial skills to conduct such a review.
The School should have within its financial statements a letter from the School’s independent accountants outlining the audit work performed and a summary of results.
Schools should consider following the California Nonprofit Integrity Act when conducting audits, which include formation of an audit committee:
• Although the Act expressly exempts educational institutions from the requirement of having an
audit committee, inclusion of such a committee reflects a “best practice” that is consistent with the legal trend toward such compliance. The audit committee is responsible for recommending the retention and termination of an independent auditor and may negotiate the independent auditor’s compensation. If an organization chooses to utilize an audit committee, the committee, which must be appointed by the Board, should not include any members of the staff, including the president or chief executive officer and the treasurer or chief financial officer. If the corporation has a finance committee, it must be separate from the audit committee. Members of the finance committee may serve on the audit committee; however, the chairperson of the audit committee may not be a member of the finance committee and members of the finance committee shall constitute less than one-half of the membership of the audit committee. It is recommended that these restrictions on makeup of the Audit Committee be expressly written into the Bylaws.
JANUARY/FEBRUARY
Review and revise/update annual employment contracts.
Conduct audits of current and vacant positions to determine whether positions are correctly designated as exempt/non-exempt under federal and state laws.
NEW TO THE FIRM!
Barbara J. Boktor is an Associate in the Los Angeles office of Liebert Cassidy Whitmore, where she provides advice and counsel on labor and employment law matters.
Nandini Ruparel serves as an Associate in the San Francisco office of Liebert Cassidy Whitmore, where she offers specialized guidance and legal support in the areas of labor and employment law.
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:
A Director of Human Resources reached out to LCW with a question about cell phone reimbursement. The Director of Human Resources explained that the School’s early childhood teachers are required to use a child care and daycare management app daily, and all other teachers are required to use a security app as needed to report any safety issues. The School asked whether they need to be providing a cell phone allowance for teachers using these apps.
Answer:
The LCW attorney advised that Labor Code section 2802 states that an employer must indemnify employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.
The attorney advised that because the early childhood teachers are required to use the childcare app in the direct discharge of their duties, and that all employees are required to use and install the security app as part of their job, to be in compliance with section 2802, the School would need to reimburse all of these employees for a reasonable percentage of their cell phone bill.
In terms of the method to provide this reimbursement, the attorney recommended that the School figure out a reasonable estimate of a monthly stipend to cover these costs. The School can require employees to show some sort of documentation of this expense, such as their monthly cell phone bill. In coming up with the lump-sum payment/ stipend amount, it is important to estimate the percentage of business use the employee uses their cell phone for, and to apply this reimbursement equally. For example, if a position requires more frequent use of an employee’s cell phone, the reimbursement amount can be different based on the position. Here, this would mean that the early childhood teachers could receive a higher payment/stipend than the teachers who only need to use the security app.
Liebert Cassidy Whitmore