Nonprofit News
Ronni Cuccia
Contributors:
Associate | Los Angeles
Hannah Dodge
Associate | San Francisco
Mieko Failey
Associate | Los Angeles
Alison R. Kalinski
Senior Counsel | Los Angeles
Stephanie J. Lowe Senior Counsel | Los Angeles
Cynthia O'Neill Partner Emeritus | San Francisco
Casey Williams Partner | San Francisco
Firm Victories
Partner Alysha Stein-Manes And Associate Attorney Gabi Kamran Win Workplace Violence Restraining Order.
A part-time employee brought a gun to work. He never brought the gun inside, but he told a co-worker that he had the gun in his car because he was distraught over a female employee who did not want to talk to him. The coworker immediately notified Human Resources. At about the same time, the employee’s father realized the gun was in his son’s car and came to the workplace to take the gun back.
The employer called in the Sheriff’s Department, which later went to the employee’s house and secured additional firearms. The employer’s investigation showed that the employee had been stalking the female employee for months. The employee resigned a few days later.
Because some of the stalking had occurred in an unsecured parking lot where the female employee parked to go to work, the employer sought a workplace violence restraining order to prevent the former employee from entering the workplace and the parking lot.
LCW Attorney Gabi Kamran prepared two employees to testify, but the judge was ready to rule after hearing only the first witness. The judge ordered a three-year workplace violence restraining order against the employee from entering the workplace or contacting the female employee.
Partner Mark Meyerhoff And Associates, Olga Bryan And John LaCrosse Beat Employee’s Disability Discrimination Claims.
An employer, a Fire Department, discovered that one of its employees had a seizure disorder after he had a serious, off-duty vehicle collision. The Department ordered a fitness-for-duty evaluation. The evaluation restricted the employee from working the continuous 24- to 48-hour shifts typical for his position, because the employee needed 7 to 8 hours of sleep in every 24-hour period to reduce the risk of a seizure.
The Department promptly used an interactive process to assess whether the employee could perform his essential duties with or without reasonable accommodation. After determining the employee could not, the Department funded a vacant position that accommodated the employee’s work restrictions. This position carried the same rank, base salary, benefits, and promotional opportunities.
During the following months, the employee repeatedly requested to return to his prior position. Yet, the employee also provided deficient physicians’ notes, failed to sufficiently challenge the original fitness-for-duty determination, and outright refused to participate in the interactive process from time to time.
The employee then sued the department, alleging disability discrimination and failure to engage in the interactive process. LCW demonstrated that the Department had acted lawfully at every stage: it immediately addressed the safety risk; relied on a valid medical evaluation; created reasonable accommodations that preserved the employee’s pay and promotional opportunities; and consistently attempted to restart the interactive process even when the employee refused. The Court agreed that the employee’s change in position did not result in any adverse employment action and that the Department had completed the interactive process in good faith. By documenting the department’s proactive efforts and exposing the employee’s failure to cooperate, LCW persuaded the court to grant the Department’s motion for summary judgment.
Grants
From Regulation To Readiness: Top 5
Legal Recommendations For Nonprofits Navigating The New “Improving Oversight Of Federal Grantmaking” Executive Order.
President Trump signed an Executive Order that tightens executive control of the federal grant funding process by requiring a senior appointee at each federal agency to sign off on each grant the agency makes. A senior appointee is a non-career employee of the executive branch, often appointed by the President.
The Order directs each agency head to designate a senior appointee who will be responsible for creating a process to ensure any discretionary grants awarded are consistent with the President’s policy priorities and the national interest. Among other provisions, the Order prohibits agencies from approving grants that will fund, promote, encourage, subsidize, or facilitate:
• “Racial preferences or other forms of racial discrimination by the grant recipient”;
• “Denial by the grant recipient of the sex binary in humans or the notion that sex is a chosen or mutable characteristic”;
• "Illegal immigration"; or
• Any “other initiatives that compromise public safety or promote anti-American values.”
The Order also requires agencies, to the extent permitted by law, to take steps to revise the terms and conditions of existing grants and include in future discretionary terms: (1) allowing federal agencies to terminate grants for any reason and at any time; and (2) prevent grantees from immediately drawing down general grant funds for specific projects without the affirmative authorization of the agency.
Collectively, these provisions and others in the Order will impact the availability of federal funding, increase
scrutiny of applications for federal funding, and change the terms and conditions of existing federal grants.
As nonprofits evaluate the implications of this Executive Order, they can take proactive steps to prepare for anticipated changes in federal grantmaking. The following five steps provide a roadmap for nonprofits to move from regulation to readiness and shift from awareness of federal grantmaking changes to building the compliance capacity necessary for effective responses to the new federal grantmaking requirements.
(1) Termination Clauses: Review Existing Federal Grant Agreements for Termination Provisions
The new Executive Order requires that terminationfor-convenience clauses be included in all discretionary grants, to the extent permitted by law. Federal agencies have been directed to revise their standard terms and conditions, so this language is consistently applied in future grantmaking. Nonprofits should review their current federal grants, as well as federal funds received through state pass-throughs, to identify existing termination provisions. In particular, organizations should determine whether current clauses allow termination only for cause (such as noncompliance or misuse of funds), by mutual agreement, or at the agency’s discretion for convenience. By understanding the type of termination clauses already in place, nonprofits can better assess their present level of risk and identify areas where they may be especially vulnerable to a sudden loss of funding.
(2) Program Risk: Identify Grant-Funded Activities that May be At Risk Under the Executive Order
The Executive Order bars agencies from approving grants that support initiatives deemed to “compromise public safety” or “promote anti-American values.” Nonprofits should carefully review their priority areas against the categories identified in the Order and assess whether any of their programs may intersect with these restrictions. This analysis can help organizations identify which existing funding streams may face heightened risk and allow them to prepare proactively for potential disruptions. Organizations with significant
programmatic activity in these areas should take steps now to diversify funding streams, with particular attention to private foundation opportunities.
(3) Board Oversight: Ensure Board Involvement in Contingency Preparedness and Sustainability Plans
Executive leadership and the Board of Directors should remain in close communication regarding the organization’s federal funding. As fiduciaries, board members are obligated to understand potential threats to the nonprofit’s financial health and long-term sustainability. This responsibility includes reviewing the organization’s current grant funding, being aware of the proportion of operations supported by federal dollars, and recognizing emerging risks to those funds. The board should also ensure that a sustainability plan is in place that accounts for available reserves and outlines steps the organization will take in the event of a sudden loss of federal support.
(4) FOA Monitoring: Monitor Funding Opportunity Announcements for Compliance Changes
Nonprofits should exercise particular caution when reviewing new Funding Opportunity Announcements and carefully examine all provisions. They should not assume that the terms and conditions used in prior grants will carry over unchanged. Organizations should also evaluate their capacity to comply with new requirements and realistically assess whether they could withstand a termination for convenience if it were exercised under future federal funding.
(5) Audit Documentation: Maintain Outcome Documentation and Reporting that Meets New Federal Oversight and Compliance Standards
Nonprofits should ensure that their financial records and program performance reports are complete, accurate, and well-documented. All documentation should clearly link activities carried out under federal awards to the stated objectives and deliverables. If there are concerns about meeting specific performance goals, organizations should record both their progress to date and the corrective steps planned to achieve those goals. Records should be organized in a manner that allows for easy retrieval, and all required reports should be submitted on time. While thorough documentation is essential for compliance, it also serves as a critical risk management tool under this new Executive Order.
Clients who receive federal grants should carefully monitor developments from the agencies that fund them and be prepared to comply with, and evaluate the impact of, this Executive Order on their grants and operations. LCW attorneys are available to assist nonprofit leadership in evaluating the implications of the Federal Grantmaking Executive Order through specifically-tailored advice and consultation.
Disabilities
Court Finds Employee’s Silence On Disability Bars ADA Claim.
La Salle Academy is a private, nonprofit Catholic high school in New York City. In 2018, the School hired Joseph Rosich, a Hispanic male who was 65 years old when he filed this lawsuit in 2024, to serve as a full-time science teacher. As part of his assigned duties, Rosich was responsible for overseeing homeroom, which began promptly at 7:40 a.m., with staff expected to arrive before that time. The School’s employee handbook stated that lateness was grounds for disciplinary action.
In November 2021, Rosich was involved in a car accident involving a deer, which he claimed resulted in a posttraumatic stress disorder (PTSD) diagnosis and triggered anxiety about driving, particularly in low-light or early-morning conditions. In November 2022, one year after the accident, Rosich sent an email to the School’s principal requesting a “ten-minute grace period” in the morning, which would allow him to arrive slightly later than required. He referenced his car accident and explained that driving in the dark was difficult for him following the accident. He did not mention a diagnosis of PTSD, nor did he state that he had a medical condition requiring accommodation under the ADA.
Principal Bryan Daly responded that he could not authorize a grace period and recommended that Rosich explore alternative transportation options, such as the subway, to avoid lateness. Rosich replied that using the subway had not worked well for him, and reiterated his difficulty with early travel in the dark. The principal reiterated that timely arrival was essential for faculty, citing fairness to other teachers and the School’s operational needs. Daly emphasized that the School had historically held teachers accountable for punctuality and warned that continued tardiness could lead to consequences.
Despite this exchange, Rosich continued to arrive late several times, often by only a few minutes. He claimed that he was never written up for tardiness and believed the School was informally tolerating his lateness. However, in the Spring of 2023, Rosich was assigned to
a science lab classroom with no working heat, which he viewed as a form of retaliation. He also received a new employment contract for the upcoming 2023-2024 school year, but the contract did not specify a salary, due to pending union negotiations.
On May 30, 2023, Rosich emailed School administrators seeking clarification about the missing salary terms, saying it would be “impossible” for him to sign the contract without knowing his salary or salary range. The School told Rosich he should contact the union with questions. Rosich did not return a signed contract and, later that same day, was informed that the School had interpreted his failure to sign as a decision not to return. His position was subsequently posted, and he was denied reemployment.
Rosich filed complaints with the state and the Equal Employment Opportunity Commission (EEOC). He then filed suit in federal court, alleging various claims including under the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and Title VII. The School moved to dismiss.
The Court granted the School’s motion and dismissed the case in full.
The Court first considered Rosich’s failure to accommodate claim. To state a claim for failure to accommodate under the ADA, a plaintiff must plausibly allege that (1) they are a qualified individual with a disability; (2) the employer was aware of the disability; (3) the employee requested a reasonable accommodation; (4) the employer failed to provide the accommodation; and (5) the failure resulted in an adverse employment action or otherwise interfered with the employee’s ability to perform the job.
Here, the Court found that Rosich’s ADA claim failed at multiple steps of this framework. First, he did not sufficiently allege that he had a qualifying disability. While he claimed that he experienced difficulties driving in the dark due to a prior car accident, he did not allege that he had been diagnosed with a recognized mental health condition, such as PTSD, at the time he requested
the accommodation. More critically, the Court held that Rosich never notified the School that he was requesting a workplace accommodation due to a disability. His emails to the principal referenced his prior accident and travel challenges but did not mention a medical condition or use language indicating a formal accommodation request.
Without knowledge of a disability or a clear link between the condition and the requested accommodation, the School had no obligation under the ADA to grant the request. The Court emphasized that an employer’s duty to engage in the interactive process is not triggered unless the employee provides adequate notice of both the disability and the need for accommodation. Because Rosich did not do so, and because the requested ten-minute grace period was not accompanied by any medical documentation or disability disclosure, the ADA claim was dismissed.
The Court also dismissed Rosich’s discrimination claims under the ADA, ADEA, and Title VII, finding that he had not sufficiently alleged adverse employment actions or discriminatory motive. The only adverse action the Court recognized was his assignment to an unheated classroom. However, Rosich failed to show that similarly situated younger or female teachers were treated more favorably, and his allegations that other older male colleagues were also mistreated were too conclusory and factually underdeveloped to support a claim. Likewise, Rosich’s claim that the School retaliated against him under the ADA for requesting an accommodation failed because the Court found he never engaged in protected activity—i.e., he never told the School that he had a disability or that his accommodation request was tied to a disability.
Rosich sought leave to amend, but the Court denied it as futile. His proposed amended complaint added details about his conversations with School leadership and his coworkers’ treatment, but still failed to address the deficiencies in his original claims, including the failure to plausibly allege disability, comparators, or discriminatory animus.
Rosich v. La Salle Acad. (S.D.N.Y. Aug. 20, 2025) 2025 U.S. Dist. LEXIS 161523.
Note:
This case serves as a reminder that performance concerns often overlap with unspoken or emerging disability-related issues. While the Court here concluded that the employer was not on notice of a qualifying disability, another court might reach a different conclusion where an employee references apprehension or travel difficulties stemming from a documented incident, such as a car accident.
LCW In The News
To view these article and the most recent LCW attorney-authored articles, please visit: www.lcwlegal.com/news
• In Los Angeles Business Journal’s latest Corporate Philanthropy: Giving Change feature, LCW Partner and Chair of the Nonprofit Practice Group Casey Williams reinforces the importance of grounding DEI efforts in long-standing civil rights law: “A lot of this is just longstanding law and just helping organizations understand the limitations, the opportunities [that] the longstanding law provides with respect to DEI.”
As nonprofits and funders navigate today’s shifting political climate, LCW remains committed to providing trusted legal guidance that empowers organizations to stay focused on their mission while navigating legal complexities with confidence and integrity.
View the full article here: https://labusinessjournal.com/special-reports/corporate-philanthropy-giving-change/
FEHA
Court Orders UC To Reconsider Ban On Hiring Undocumented Students, Finds Fear Of Federal Enforcement Does Not Justify FEHA Discrimination.
In May 2023, the University of California formed a working group to consider whether it could employ undocumented students who lacked federal work authorization. At the time, UC employed undocumented students who had Deferred Action for Childhood Arrivals (DACA) status, but refused to hire those without work authorization.
In January 2024, the UC voted to dissolve the working group without changing its policy. The minutes from that meeting reflected UC’s concern that employing undocumented students might trigger federal enforcement action under the Immigration Reform and Control Act of 1986 (IRCA). The IRCA prohibits employers from knowingly hiring individuals who are not lawfully admitted for permanent residence in the U.S. or authorized for employment under federal law. Although no court had directly ruled on whether IRCA applied to state government entities, UC cited significant enforcement risk.
Subsequently, the California Legislature passed a bill that would have prohibited public universities from denying employment to students based on a lack of federal work authorization, unless required by federal law. It would also have required public institutions to treat IRCA as inapplicable to the state. In September 2024, Governor Newsom vetoed the bill, citing potential civil and criminal liability for state employees.
In October 2024, petitioners Jeffry Umaña Muñoz and Iliana Perez filed a petition for writ of mandate, seeking an order compelling the Regents to abandon the policy. They alleged that the policy constituted an abuse of discretion and violated the Fair Employment and Housing Act (FEHA). Under FEHA and its implementing regulations, an employer may not discriminate based on immigration status unless it proves by clear and convincing evidence that federal law requires it. Muñoz
and Perez argued that the policy facially discriminated against undocumented students based on immigration status. The trial court summarily denied the petition.
Muñoz and Perez filed a petition for review with the California Supreme Court, seeking to overturn the trial court’s denial. In response, UC noted uncertainty about whether IRCA applied to state employers and stated that a judicial ruling could benefit all parties. The California Supreme Court granted review and transferred the case to the Court of Appeal with instructions to issue an order to show cause.
The Court of Appeal asked UC to explain the legal basis for its policy and whether it believed federal law required the policy. UC did not argue that federal law required the policy. Instead, it contended that the policy was a discretionary measure based on litigation risk and did not constitute discrimination. UC emphasized that it hired undocumented students with federal work authorization, such as DACA recipients, and asserted that its policy was aimed at avoiding potential liability, not excluding individuals based on immigration status.
Muñoz and Perez argued that the policy discriminated against a subset of undocumented students based on a lack of work authorization, which they argued was a proxy for immigration status. They contended that litigation risk could not justify a policy that facially violated FEHA, and that UC had offered no evidence that federal law required the exclusion.
The Court of Appeal agreed. It found that UC’s policy facially discriminated based on immigration status and that FEHA required UC to show that such discrimination was mandated by federal law. Because UC had expressly declined to take a position on IRCA’s applicability and had not attempted to meet that standard, the Court of Appeal concluded that it had abused its discretion. The Court of Appeal rejected UC’s arguments under the bona fide occupational qualification defense and held that litigation risk alone was not a sufficient justification for a facially discriminatory policy.
The Court declined to decide whether the policy violated FEHA on its face. It explained that it did not need to reach that question because Muñoz and Perez had not
fully developed the argument in their initial filings. Nonetheless, the Court of Appeal held that UC could not justify a facially discriminatory policy based solely on litigation risk.
The Court of Appeal granted a writ of mandate, ordering UC to reconsider its employment policy under the proper legal standards. The Court of Appeal made clear that it did not require UC to adopt a particular policy, only that it could not continue relying on litigation risk alone to justify one that discriminates on its face.
Muñoz v. The Regents of the University of California (Aug. 5, 2025) 113 Cal. App. 5th 466.
Note:
This case reinforces for all employers, including nonprofit employers, that under California’s FEHA, employers may not adopt facially discriminatory hiring policies based on immigration status unless clearly required by federal law. A generalized fear of federal enforcement is not a sufficient defense.
Harassment
Employee Wins Harassment Claim Based On Her Second-Hand
Knowledge That A Widely Shared Nude Photo Was Falsely Said To Be Of Her.
An employee, who was a supervisor, learned that a photo of a topless woman, which was falsely said to be her, was circulating at her workplace. One of her team members, whom she supervised, told her: 1) he had seen other employees looking at the photo on a cellphone and making lewd comments about her; and 2) he had heard employees were talking about the photo everywhere. The employee asked her employer to notify personnel that the photo was not of her and to order them to stop sharing it.
The employer investigated. The investigation found that an unknown employee, while on or off-duty, circulated a photograph of a nude woman throughout and indicated it was the supervisor. The investigation identified 10 to 13 people who saw the photo and four separate incidents of people viewing or hearing about the photo.
The supervisor received a letter from the employer that said appropriate penalties would be imposed, but did not disclose further details, citing confidentiality reasons. However, the supervisor later learned that no employees were disciplined, and the employer did not inform employees that the photo was not of the supervisor. Nor did the employer tell employees to stop circulating the photo.
The supervisor sued her employer, asserting a single cause of action for hostile work environment due to sexual harassment under the Fair Employment and Housing Act (FEHA). A jury found in her favor, finding the employer failed to take immediate and appropriate corrective action despite knowing of the conduct. It awarded $4 million in non-economic damages.
The employer appealed, claiming that there was insubstantial evidence that the harassment was sufficiently severe or pervasive to alter the supervisor’s working conditions and create an abusive work environment.
The California Court of Appeal rejected the appeal. The Court determined that substantial evidence supported the jury’s determination that the supervisor endured severe or pervasive harassment that altered the conditions of her workplace, based on her secondhand knowledge that the photo was widely circulating. She understood that the photo circulated for some length of time and to “dozens if not hundreds” of employees.
Plus, despite her repeated requests, the employer did not order employees to stop sharing the photo, advise them that it was not the supervisor, or discipline anyone who distributed the photo. The fact that the employer allowed the distribution to continue unchecked supported not only her claims that her employer’s response to the harassment was not sufficient, but also demonstrated the pervasiveness and severity of the harassment itself.
FMLA
Carranza v. City of Los Angeles, 111 Cal.App.5th 388 (2025).
Note:
The Court of Appeal held that even secondhand knowledge of severe or pervasive harassment can support a hostile work environment claim if the conduct is widespread and the employer fails to act. Nonprofit employers must take prompt and effective action to stop harassment, regardless of whether the targeted employee personally witnesses the misconduct.
Court Dismisses Second Disability And Retaliation Claims Brought By Former HR Employee Against University Officials And Trustees.
Gloria Dickerson worked as a Principal Human Resources Administrator at the New Jersey Institute of Technology (NJIT). Dickerson was frequently absent from work on medical leaves, including under the Family and Medical Leave Act (FMLA). In July 2018, while Dickerson was on FMLA, she attended a colleague’s retirement party and danced. Upon learning this, Dickerson’s supervisor, Annie Crawford, the Vice President of Human Resources, allegedly remarked to others, “How can you dance on FMLA?” Dickerson claimed this comment was evidence of discrimination based on her disability and alleged that it set off a pattern of harassment, marginalization, and retaliation. Dickerson remained employed for nearly two additional years after the comment, continued to utilize medical leave, received full compensation, and did not suffer a demotion or formal discipline. She was ultimately terminated in July 2020.
In Dickerson’s first lawsuit (Dickerson I), she brought suit against NJIT and Crawford, alleging that the “How can you dance on FMLA?” remark reflected discriminatory animus, created a hostile work environment, and resulted in a retaliatory termination. NJIT moved for summary judgment, arguing that the single comment was insufficient to support a claim under either the ADA or New Jersey’s antidiscrimination law, and that Dickerson could not demonstrate an adverse employment action or causal link between her disability or protected activity and her eventual termination.
The Court agreed. It held that even if the comment was inappropriate or unprofessional, a single offhand remark, unaccompanied by further harassment or tangible changes in job conditions, does not constitute severe or pervasive conduct under the applicable legal standards. The Court noted that Crawford’s comment was to clarify the nature of Dickerson’s condition in light of recent absences. Moreover, Dickerson’s own continued use of FMLA leave for nearly two years after this comment, without any interference or denial of benefits, undermined her claims.
The Court found no evidence that the remark affected her responsibilities, salary, or working conditions. Her hostile work environment claim failed for lack of severity, and her retaliation claim failed because she could not identify any materially adverse employment action connected to her complaint or her medical condition. The Court also dismissed all claims against Ms. Crawford individually, because New Jersey law does not permit individual liability without an underlying violation by the employer.
While the motion for summary judgment was pending in Dickerson I, Dickerson filed a second lawsuit (Dickerson II) against a broader group of NJIT officials. This time, she named NJIT’s Board of Trustees, the University President, General Counsel, and another HR professional as defendants. The allegations in Dickerson II were largely a restatement of the same factual narrative from the first case, with some new language accusing the defendants of
treating her “like a slave,” denying her promotions, and subjecting her to a hostile work environment. The new suit added vague references to age discrimination and claimed a deprivation of constitutional rights under 42 U.S.C. section 1983. Dickerson filed this second case in 2024, more than four years after her termination.
The Court dismissed Dickerson II in its entirety, with prejudice. First, the Court found that the second lawsuit was barred by the doctrine of res judicata (claim preclusion), which prohibits parties from re-litigating claims that have already been decided or could have been raised in an earlier proceeding. Although Dickerson named new defendants in the second suit, the Court found that they were all agents of NJIT or served in a common legal interest with NJIT. Since the allegations arose from the same set of facts already litigated in Dickerson I, the Court concluded that Dickerson II was simply an attempt to re-litigate issues that had already been dismissed.
The Court also found that Dickerson’s service of the complaint was deficient. She failed to follow the proper procedures for serving summonses on government officials and entities, and even after being given opportunities to correct the deficiency, she did not cure it.
In addition to these procedural defects, the Court held that the complaint in Dickerson II was too vague and conclusory to survive. It did not allege specific discriminatory acts or adverse employment actions, and it failed to plausibly connect the named defendants to any unlawful conduct. Even if her claims were not barred by res judicata, they would still fail on the merits due to lack of factual detail and legal sufficiency.
The Court also ruled that her claims under federal and state law were time-barred. Under both the ADA and New Jersey law, employment discrimination claims must be brought within two years of the alleged adverse action. Dickerson filed her second complaint more than four years after her July 2020 termination, making the entire action untimely.
Dickerson v. New Jersey Institute of Technology (D.N.J. July 29, 2025) 2025 U.S. Dist. LEXIS 144802.
Note: This case underscores the importance of handling employee concerns professionally, including when an employee is taking medical leave.
New Notice Requirement Under California’s Expanded Victims’ Leave Law (AB
2499).
As of July 1, 2025, California employers are required to provide a new employee notice issued by the Civil Rights Department (CRD) concerning leave and accommodations for victims of crime or abuse. This requirement stems from AB 2499, which went into effect on January 1, 2025, and expanded both leave rights and accommodation protections under state law.
AB 2499 allows employees to take up to 12 weeks of job-protected leave if they are a victim of certain acts of violence, or if they are a family member of someone who has died as a result of such an act. Covered acts include domestic violence, sexual assault, stalking, and other forms of serious violence. Employers are also required to consider and, where appropriate, provide safety-related accommodations to affected employees.
The CRD’s updated materials include a model notice and a set of frequently asked questions. These materials provide important guidance regarding when employees may request time off, what types of accommodations may be appropriate, and the protections in place against discrimination and retaliation. The FAQs clarify that employees may support their leave or accommodation requests with a variety of documentation, such as police or court records, letters from service providers, or a signed statement from the employee or someone acting on their behalf.
• Employers are required to provide the notice (or a substantially similar version) to employees:
• At the time of hire;
• Once per year to all employees;
• Upon request; and
• Whenever an employee discloses that they or a family member has been the victim of a qualifying act.
Business & Facilities
Employer Statements About Arbitration Agreements Cannot Be Misleading.
In Velarde v. Monroe Operations, LLC, et al., a California Court of Appeal clarified that employer arbitration agreements may be unenforceable if signed under coercive circumstances and in reliance on misleading statements regarding its terms.
Monroe Operations, LLC, doing business as Newport Healthcare (Newport), a national behavioral health company, hired Karla Velarde in 2020. On her first day, Newport provided Ms. Velarde a stack of 31 onboarding documents, including a five-page arbitration agreement. The HR manager told Ms. Velarde to sign the documents “as fast as possible,” and completion was required for her to start work. Ms. Velarde expressed that she did not understand the agreement and was hesitant to sign it. The HR manager told her it was required to start work and would allow the company to resolve issues “without having to pay lawyers.” Relying on those statements, Ms. Velarde signed. Newport later terminated Ms. Velarde.
After Ms. Velarde was terminated, she sued Newport, alleging discrimination, retaliation, and whistleblower violations. Newport moved to compel arbitration. The trial court denied the motion on the grounds of unconscionability. Newport appealed, and the Court of Appeal affirmed, finding both the execution and substance of the agreement unenforceable under the circumstances.
The Court found Ms. Velarde had no meaningful opportunity to understand the agreement. She was rushed, given no time to consult counsel, and misinformed about the agreement’s effect. Ms. Velarde’s signature was not the result of a voluntary or informed agreement.
The Court highlighted the fact that the agreement terms did not match what was represented by the HR manager. Ms. Velarde was told dispute resolution would be informal and inexpensive, when in reality, the agreement provided a process that mirrored formal litigation. The Court emphasized that the complex legal terms, procedural rules, and fee arrangement made the agreement “so one-sided” as to only benefit Newport.
The Court emphasized that whether Newport meant to mislead Ms. Velarde was not the issue. What mattered was the effect of the misrepresentation.
The Velarde decision serves as a critical reminder to employers that arbitration agreements, even if legal in form, may be deemed unenforceable when presented in a coercive or misleading manner. Courts will closely examine both the content of the agreement and the circumstances under which it is signed, particularly when employees are required to sign as a condition of starting work.
To mitigate risk, employers should implement clear and consistent onboarding procedures that promote transparency. Employers should provide new hires with reasonable time to review onboarding documents and ensure that any representations made by HR accurately reflect the terms of the agreement. Most importantly, employers must take steps to confirm that employees are entering into arbitration agreements knowingly, voluntarily, and free of undue pressure.
Velarde v. Monroe Operations, LLC (2025) 111 Cal.App.5th 1009.
When Arbitration
Isn’t
Mutual: California Court Voids One-Sided
Agreement.
In Silva v. Cross Country Healthcare, Inc. (2025), a California Court of Appeal invalidated an employer’s arbitration agreement after finding that conflicting provisions in simultaneously executed contracts rendered the agreement unconscionable. The Court of Appeal held that when an employer requires employees to sign both an arbitration agreement with mutual terms and a separate employment agreement that overrides those terms to favor the employer, the resulting arbitration framework is unenforceable.
The employer required employees to sign an arbitration agreement obligating both parties to resolve all claims through arbitration. At the same time, it presented a separate employment agreement to employees that preserved the employer’s right to litigate certain claims in court while restricting the employee’s rights to arbitration only. Three employees challenged the arbitration provision,
arguing that the second agreement effectively stripped the first of its purported mutuality.
The Court of Appeal considered the two documents together and concluded that they formed a single, integrated agreement. It found that the employer had undermined mutuality by carving out claims more likely to be brought by the employer, such as those related to trade secrets or restrictive covenants, while forcing the employee to arbitrate the types of claims employees are more likely to assert. That imbalance created substantive unconscionability.
The Court of Appeal also found the two agreements created procedural unconscionability. The employer presented both agreements simultaneously, offered no explanation of their relationship, and gave the employee no meaningful opportunity to review, negotiate, or reject the terms.
Although the employer attempted to isolate the arbitration agreement as a standalone contract, the Court rejected that argument. It reaffirmed that courts will construe multiple agreements signed at the same time as a unified contract, particularly where one
agreement overrides or contradicts another. The Court of Appeal noted that even an integration clause, which ordinarily limits interpretation to the specific terms of that contract, cannot shield an employer from scrutiny where the practical effect of multiple documents is to create an unfair arrangement.
In addition to striking the arbitration provision, the Court of Appeal found the employment agreement contained other unlawful terms, including overbroad confidentiality, non-compete, and non-solicitation covenants, which further contributed to the finding of unenforceability.
Silva underscores the importance of ensuring consistency and fairness across all employment documents. Courts will closely examine the substance of arbitration agreements and reject those that appear procedurally coercive or substantively one-sided. Employers who include carve-outs that favor their own interests or who present conflicting terms across documents risk losing the ability to compel arbitration and exposing themselves to litigation in court.
Silva v. Cross Country Healthcare, Inc. (June 13, 2025) 111 Cal. App.5th 1311.
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Benefits Corner
One Big Beautiful Bill Act Increases Maximum Contribution For Dependent Care.
The One Big Beautiful Bill Act, which was signed into law on July 4, 2025, makes a number of changes to employee benefits. One of the big changes is that the Act increases the tax-free contribution limit for dependent care flexible spending accounts (also known as dependent care assistance plans or “DCAPs”) from $5,000 to $7,500 (and from $2,500 to $3,750 for taxpayers who are married filing separately). The Act amends the Internal Revenue Code to permit a taxpayer to exclude up to $7,500 from gross income for dependent care expenses. Prior to the One Big Beautiful Bill Act, the DCAP contribution limit had not changed from $5,000 since the date it was established in 1986, except for the temporary increase to the limit during COVID-19 under the American Rescue Plan Act of 2021. The increased contribution limit of $7,500 will go into effect beginning with tax year 2026.
While $7,500 is the new limit set by the Internal Revenue Code, employers should also review the limits set by their own Section 125 cafeteria plan documents. Some cafeteria plan documents may set a lower limit, or may need to be revised if the employer would like to allow employees to make salary reduction contributions up to $7,500.
Moving Expenses Permanently Remain Taxable.
The One Big Beautiful Bill Act permanently eliminates the moving expense deduction and tax-free moving expense reimbursements. The elimination was originally passed in 2018 and was scheduled to last for an eight-year period until 2026. The Act makes the elimination permanent beyond 2026. As a result, when an employee relocates and moves for a job and their employer pays for or reimburses the employee’s moving expenses, the employee will not be able to exclude those expenses from their gross income. There remain specific exclusions and deductions for certain members of the Armed Forces and members of the intelligence community who are not also in the Armed Forces.
Employer Tax-Free Repayments Of Employee Student Loans Continue Permanently.
The One Big Beautiful Bill Act permanently extends the time an employer can pay for an employee’s qualified education loans through a Section 127 plan. Section 127 of the Internal Revenue Code (Section 127) allows employers to provide up to $5,250 per year in educational assistance to an employee, which may be excluded from gross income if it is provided pursuant to an educational assistance program (EAP) that meets certain requirements. In 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) added a new, temporary provision that allowed employers the option to repay up to $5,250 of an employee’s qualified education loan per year through a Section 127 plan. This temporary provision was set to expire January 1, 2026, but the One Big Beautiful Bill Act extends it permanently. As a result, employees may continue to exclude employer payments for employees’ qualified educational loans up to the $5,250 annual limit beyond January 1, 2026.
To be a qualified education loan, the loan: (1) must be a loan for education at an eligible educational institution, including colleges, universities, vocational schools, or other postsecondary educational institutions; (2) must have been incurred by the employee for the education of the employee (not for the education of a family member, such as a spouse or dependent); (3) must have been paid or incurred within a reasonable period of time before or after the employee took out the loan, although qualified education loans may be incurred by the employee in prior calendar years and prior to employment; and (4) must have been for education provided during an academic period for an eligible student.
cases we are watching
• The Seventh Circuit reversed a grant of summary judgment in favor of an Indiana public high school that had refused to continue accommodating a teacher’s religious objection to using transgender students’ chosen names. John Kluge, a high school music teacher, had been permitted to refer to all students by last names only, but alleged that the School later revoked this accommodation due to complaints from students and staff. After Kluge resigned under protest, he sued under Title VII, claiming religious discrimination. Applying the U.S. Supreme Court’s clarified standard from Groff v. DeJoy, the Court held that there were factual disputes over whether accommodating Kluge’s beliefs would impose an undue hardship on the School. The Court emphasized that emotional discomfort and speculative liability under Title IX were not, on their own, sufficient to meet this burden as a matter of law and remanded the case for trial.
• Derek Mobley, an African American job applicant over the age of 40 with a disability, filed a lawsuit on behalf of a group of people against Workday, Inc., alleging that the company’s AI-driven hiring software disproportionately disqualifies applicants based on race, age, and disability in violation of Title VII, the Age Discrimination in Employment Act (ADEA), the ADA Amendments Act, and Section 1981. The complaint claims that Workday’s algorithmic tools, which it markets to hundreds of companies, embed and perpetuate discriminatory bias by sorting, scoring, and recommending applicants in ways that disadvantage protected groups. Mobley alleges he applied to over 80 jobs using Workday’s platform and was rejected every time.
Did You Know?
Whether you are looking to impress your colleagues or just want to learn more about the law, LCW has your back! Use and share these fun legal facts about various topics in labor and employment law.
• The U.S. Department of Labor (DOL) recently reinstated its Payroll Audit Independent Determination (PAID) program, allowing employers to voluntarily self-audit and resolve potential violations under the Fair Labor Standards Act (FLSA) and, for the first time, the Family and Medical Leave Act (FMLA). Employers who meet eligibility criteria and are not under investigation may work with the DOL to correct wage or leave issues and provide back pay or other remedies without litigation. The program
imposes disclosures about prior complaints and certification of compliance, and participation does not shield employers from liability under other state or federal laws. While employers can avoid penalties and expedite resolution, employees retain the right to reject settlement offers and pursue their own claims. Nonprofits should consult LCW before participating in the program. More information about the program can be found here.
• Employers can lawfully conduct pre-employment drug tests of applicants only if there is a special need associated with the job at issue. Case law suggests that employers can test applicants who apply to safety “safety-sensitive” positions, which means positions that perform work that involves danger to the public, such as bus drivers, medical professionals, and security workers.
new to the Firm!
John Louis Chiappe is an Associate in our Sacramento office, where he provides labor, education and employment law expertise to our clients.
Hoaithi “Y.T.” Nguyen is Senior Counsel in Liebert Cassidy Whitmore’s San Francisco Office. Y.T. has over 15 years of experience in employment litigation, labor relations and investigations.
Selena Farnesi, an Associate in Liebert Cassidy Whitmore’s Fresno office, brings extensive litigation and policy experience to LCW’s clients, with a focus on education, employment, and administrative law.
Featured Consortium Call
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 Human Resources Director of a nonprofit organization asked about the required frequency for sexual harassment training for different types of employees (employees, managers, new employees, and seasonal workers), and if the training needed to be conducted live.
Answer:
Our nonprofit attorney explained that California law requires all employers with five (5) or more employees to provide sexual harassment and abusive conduct prevention training to supervisory and nonsupervisory employees as follows:
Supervisors:
Employers must provide all supervisors with at least two (2) hours of training in an interactive format, every two (2) years for existing supervisors and within six (6) months of being appointed to a supervisory position. New supervisors must receive training within six months of being hired or promoted and then at least every two years thereafter.
Nonsupervisory employees:
All nonsupervisory employees must receive at least one hour of training in an interactive format within six months of assuming their positions. The training must occur at least once every two years.
Seasonal and temporary employees hired to work less than 6 months:
Effective January 1, 2021, employers must also provide the applicable supervisory or nonsupervisory training for seasonal and temporary employees, or any employee who is hired to work for less than six months. This training must be provided within thirty calendar days after the employee’s hire date, or within their having worked 100 hours – whichever occurs first.
For all trainings, the training can be in-person, e-learning, or a webinar, but it has to have an “interactive component.” LCW provides Harassment Prevention training through many platforms including in-person, via Zoom and as recorded "on-demand" webinars that can be incorporated into Learning Management Systems.
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