Private Education Matters: December 2025

December 2025

Private Education Matters

Table Of Contents 03 SB 848

STUDENTS

EMPLOYEES

10 Misconduct

04 Religious Schools

11 Free Speech

06 Pregnancy

13 Business & Facilities

07 Discrimination

15 Cases We're Watching

08 Artificial Intellegence

18 Did You Know 19 Consortium Call Of The Month

Contributors: Grace Chan Christopher Fallon Partner | San Francisco Partner | Los Angeles Jordan Carman Stephanie Lowe Associate | San Francisco Senior Counsel | San Diego Hannah Dodge Madison Tanner Associate | San Francisco Associate | San Diego Sandra I. Herrera Senior Counsel | Los Angeles

Connect With Us! Copyright © 2025 Requests for permission to reproduce all or part of this publication should be addressed to Cynthia Weldon, Director of Marketing and Training at 310.981.2000.

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

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SB 848 SB 848 significantly broadens child-safety and compliance obligations for California private schools, integrating private schools into California’s public-school child abuse prevention framework. While many of the obligations do not take effect until July 1, 2026 or July 1, 2027, some go into effect on January 1, 2026.

Beginning January 1, 2026, California private schools must: Expand the Definition of Mandated Reporter: • Mandated reporters, who are subject to the school’s mandated reporter policy and must sign an acknowledgement of that policy, now include volunteers (defined as individuals over 18 that interact with students outside of the immediate supervision/control of the student’s parent/guardian or a school employee), certain contractors, and Board members. Schools should provide these new mandated reporters with the same policy and acknowledgement form that its employees already receive.

Adopt New Hiring and Record Keeping Protocols: • Applicants for all school positions must provide a complete list of all prior schools where they were employed. School should update their application forms to collect this information. LCW also recommends including language that the applicant understands and agrees that the hiring school will contact each prior employer regarding the applicant’s employment history.

• Before hiring, hiring schools must contact each prior employer to determine whether the applicant was subject to credible complaints, substantiated investigations, or discipline for “egregious misconduct,” as defined in Section 44932 of the Education Code.

• Schools must also disclose to an inquiring employer if they have reported a former or current employee to the Commission on Teacher Credentialing (CTC). If they have, they must also provide all relevant information and supporting records to the inquiring school regarding the incident that led to the report.

The law is less clear regarding whether the school must provide documentation on misconduct that was never reported to the CTC. LCW is available to advise schools regarding the considerations and potential risks of sharing that information.

• Moving forward, schools may not expunge or agree to remove credible complaints or substantiated egregious misconduct findings from personnel files, except where an arbitrator or investigator determined allegations were false, unsubstantiated, or discipline was unwarranted, and may not enter into severance or settlement agreements that restrict any party from disclosing or discussing substantiated findings of egregious misconduct or child abuse.

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Religious Schools

EMPLOYEES

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Church Autonomy Doctrine Forecloses Transgender Employee’s Bias Claims Against Religious School.

Reyzl Grace MoChridhe worked as the media specialist and librarian at the Academy of Holy Angels, a private Catholic high school in Minnesota affiliated with the Archdiocese of St. Paul and Minneapolis. During her first year in the role, her duties were entirely secular: overseeing the library program, teaching research skills, and supporting the School’s academic mission. Holy Angels’ job posting and employment agreement did not reference religious training or ministerial responsibilities, though the School’s bylaws stated that the Board must act in accordance with Catholic teaching as defined by the Archdiocese.

In spring 2022, before staff were required to indicate their intent to return for the following school year, MoChridhe met with the principal to confirm she was welcome back. The principal expressed that the School wished to renew her contract, and MoChridhe then shared that she is a transgender woman beginning her transition. According to the complaint, the principal replied that the Archdiocese would not support her transition and that she could not continue in her role if she intended to live publicly as a woman.

About a week later, the principal met with her again and introduced the “Guiding Principles for Catholic Schools and Religious Education Concerning Human Sexuality and Sexual Identity,” a document issued by the Archdiocese outlining Catholic doctrine regarding sex, gender, and identity.

The Guiding Principles direct Catholic schools to treat sex as determined at birth, require that names, pronouns, and singlesex activities align with biological sex, and prohibit expressions of identity that conflict with Catholic teaching. Holy Angels had not previously shared the Guiding Principles with her. The principal asked whether MoChridhe could comply with them, and after reviewing

the document, she said she could not.

According to the complaint, the principal told her that the Guiding Principles were the only reason she would not be offered a renewed contract and asked her to submit a resignation letter.

Before the renewal deadline, MoChridhe contacted the School’s HR department to state that she wished to return and would sign a contract if permitted, emphasizing that the Guiding Principles were the sole barrier. In June 2022, Holy Angels posted the media specialist position again using the same secular job description, later informing her that the position had been filled.

MoChridhe filed a charge of discrimination with the Minnesota Department of Human Rights and then brought suit alleging discrimination based on sex and sexual orientation under the Minnesota Human Rights Act (MHRA), aiding and abetting discrimination by the Archdiocese, and negligence. The Archdiocese moved to dismiss, arguing that adjudicating the claims would violate the First Amendment’s church autonomy doctrine because the nonrenewal decision rested entirely on religious doctrine governing employees in Catholic schools.

The trial court granted the motion, and MoChridhe appealed.

The Minnesota Court of Appeals affirmed the dismissal, concluding that the complaint itself made clear that Holy Angels’ decision not to renew MoChridhe’s contract rested entirely on the religious directives set forth in the Guiding Principles. While the MHRA generally prohibits employment discrimination, the Court explained that the First Amendment bars courts from intruding into internal church decisions that touch on matters of faith, doctrine, or mission.

Because Holy Angels is a Catholic school whose bylaws require adherence to Catholic teaching, and because the Guiding Principles set out doctrinal expectations for all staff, the Court determined that adjudicating the claims would necessarily require it to evaluate, second-guess, or override the Archdiocese’s

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application of those teachings. That type of judicial involvement, the Court held, would impermissibly entangle the state in religious governance and interfere with the church’s constitutional autonomy to direct its schools.

On appeal, MoChridhe noted that the Archdiocese did not raise the ministerial exception at the trial court level and effectively argued that the ministerial exception was the only way a religious employer could obtain First Amendment religious protections against an employment-discrimination claim. The Court clarified that the ministerial exception was not the basis for its decision and that the trial court did not consider the ministerial exception either. Instead, the Court of Appeal emphasized that the broader church autonomy doctrine independently foreclosed her claims: even for non-ministerial employees, courts cannot require a religious institution to retain an employee who cannot abide by faith-based directives central to its mission.

Because enforcing the MHRA under these circumstances would interfere with a core religious decision, the First Amendment required dismissal.

Accordingly, the Court of Appeals affirmed dismissal of all claims.

MoChridhe v. Acad. of Holy Angels (Ct.App. Dec. 1, 2025, No. A25-0559) 2025 LX 594111.

Note: This decision highlights the potential broad reach of the church autonomy doctrine, which protects religious schools from judicial interference in employment decisions that are grounded in religious doctrine, even when the employee holds a secular position.

Don't Miss Our Upcoming Webinar!

SB 848 Implementation Workshop: Training, Hiring, and Reporting Obligations for Private Schools January 27, 2026 10:00 a.m - 11:00a.m Visit the link for more information.

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pregnancy Court Finds Performance Problems, Not Pregnancy, Motivated Custodial Employee’s Termination.

made the decision to terminate her employment was the director of labor relations, Kurt Graham, who testified that he relied on input from several supervisors and did not base his decision on pregnancy-related attendance issues.

Amber Payne worked as a probationary custodial employee at Western Michigan University (WMU) for five months before her employment was terminated in August 2023. Payne learned she was pregnant the same week she began working and later alleged that WMU fired her because of her pregnancy. She sued the University for pregnancy discrimination under Title VII and for failure to accommodate her pregnancy under the federal Pregnant Workers Fairness Act (PWFA). Both parties moved for summary judgment.

The Court rejected Payne’s argument that Snell’s alleged comments constituted direct evidence of discrimination, explaining that Snell was not the decision-maker and that Payne offered no evidence tying her comments to the termination decision. Payne therefore proceeded under the McDonnell Douglas burden-shifting framework. For a plaintiff alleging discrimination based on pregnancy, she must show she was (1) pregnant, (2) qualified for the job, (3) subjected to an adverse employment action, and (4) that there is a nexus between the pregnancy and adverse employment decision. If the plaintiff establishes a prima facie case, the burden shifts to the defendant to provide evidence of a legitimate nondiscriminatory reason, and then the burden shifts back to the plaintiff to show that the real reason was pretext for an unlawful action.

The record reflected that Payne struggled with performance issues almost immediately after she started.

Supervisors testified that she did not follow instructions, delivered inconsistent results, and had to redo cleaning tasks. At her 30-day evaluation, she received unsatisfactory ratings for the quality of her work, acceptance of direction, and attendance. At 60 days, she showed some improvement, but supervisors testified that her performance declined again soon afterward. Multiple custodial staff reported concerns, including that Payne frequently used her phone during shifts, left work areas without informing coworkers, and at times “disappeared” during work hours. Shortly before her final probationary evaluation, a supervisor found her lying or sitting in a dark room during work time; Payne said she felt dizzy from pregnancy but acknowledged she did not tell the supervisor she was unwell. That supervisor, along with others, recommended she fail probation.

Payne asserted that certain remarks by her trainer, Juanita Snell, revealed discriminatory animus. According to Payne, Snell said her pregnancy was “terrible timing,” told her not to treat it as a disability, and questioned how she planned to manage her symptoms. Payne admitted she did not report the comments, and Snell denied making them. Payne also conceded she did not request any accommodations or tell supervisors that her pregnancy was affecting her work. The individual who

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On the prima facie case, the Court held that Payne could not establish a causal nexus between her pregnancy and termination. Although the University knew of her pregnancy by late May, she was not fired until late August, and the Court found the three-month gap insufficient to raise an inference of discrimination absent additional evidence. Payne also failed to identify any similarly situated employee who performed as poorly during probation yet was retained, and the evidence showed multiple pregnant custodial workers, including Payne’s sister, completed probation without adverse action.

Even assuming Payne established a prima facie case, WMU articulated a legitimate, nondiscriminatory reason for termination: consistently poor performance.

The University offered extensive supervisor testimony and written evaluations detailing deficiencies in her work quality, reliability, adherence to directions, and attitude. Payne offered no evidence demonstrating these reasons were pretextual. She did not dispute many of the documented performance problems, provided no evidence that WMU overlooked similar deficiencies

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in non-pregnant employees, and failed to show that the decision-maker relied on inaccurate or fabricated information.

The Court also rejected Payne’s claim under the Pregnant Workers Fairness Act. While she argued that WMU failed to accommodate her pregnancy symptoms, the Court found that she never informed supervisors that she needed any accommodation apart from excused absences, which WMU granted. The doctor’s notes she provided requested only that she be excused from specific days of work, and nothing in the notes or the record notified WMU of limitations requiring workplace modifications. Payne testified she never asked for help or communicated that her pregnancy interfered with performing essential job duties. Because the University lacked notice of any requested accommodation beyond excusal from work, her PWFA claim failed as a matter of law.

The Court granted WMU’s motion for summary judgment and denied Payne’s.

Payne v. W. Mich. Univ. (W.D.Mich. Nov. 13, 2025) 2025 LX 575070.

Note: This decision underscores the importance for employers—including schools—to document performance concerns and ensure decisions are grounded in well-supported, nondiscriminatory reasons. For PWFA compliance, the case highlights that employers must respond to communicated limitations, but employees must first make their limitations and needed accommodations known.

discrimination Age Claim Was Viable Despite That The Employees Had Not Applied For The Promotion.

Three Dealer Business Managers (DBMs) were longterm employees at Circle K: Brian Caldrone (54), Joseph Celusta (56), and Kathleen Staats (57). Each had a history of strong performance evaluations, awards and wanted to advance to regional leadership roles.

In 2020, Circle K’s West Coast Regional Director position became vacant. In the past, Circle K had posted position openings internally or circulated announcements by email or intranet to encourage qualified employees to apply. This time, the company did not post or open the position for applications.

Instead, Circle K’s senior management handpicked a younger employee (Angeles), aged 45, to fill the position. Angeles had previously served as the Southeast Regional Director, though he had a mixed performance record in that role.

When the three DBMs learned of the promotion, they believed that the company had bypassed its normal process to promote a younger employee. They sued Circle K in California state court for age discrimination under both the ADEA and FEHA. The trial court granted summary judgment for Circle K, holding that the DBMs could not establish age discrimination because they had not applied for the position. The trial court also found that, even if they could establish age discrimination, Circle K had provided a legitimate, nondiscriminatory reason for its decision, and the DBMs had not shown that this reason was pretextual.

The U.S. Court of Appeals for the Ninth Circuit reversed. The Ninth Circuit held that, when an employer does not announce a vacancy or solicit applications, employees are not required to show that they applied for the position to establish age discrimination. The Court also clarified that, although a ten-year age difference is the usual threshold for a “substantial” age gap, the DBMs could overcome a smaller gap by providing evidence that age was a

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significant factor in the employer’s decision. The Court found that the DBMs had presented sufficient evidence to create a triable issue of pretext and remanded the case for further proceedings.

Caldrone, et al. v. Circle K Stores, 2025 U.S. App. LEXIS 25766 (9th Circuit 2025).

artificial intelligence California Civil Rights Department Publishes New Regulations To Prevent Discrimination From Use Of AI Tools.

Artificial intelligence (AI) and other automated decision systems (ADS) have a growing role in hiring.

Resume screeners, video interview platforms, and other algorithmic tools promise efficiency, but they also create legal exposure.

On October 1, 2025, California’s new Fair Employment and Housing Act (FEHA) regulations took effect. They include a new regulation that defines terms (2 Cal. Code Regs. section 11008.1) and revisions to several existing regulations. They clarify how FEHA applies to AI and ADS in employment decisions. And, they aim to prevent discrimination in hiring and promotion practices based on protected characteristics such as race, gender, age, disability, religion, and other categories. The new regulations apply this protection to any AI or ADS tool used in recruiting, testing, evaluating, or promoting employees. Employers must treat automated tools the same way they treat human decision-makers under the regulations.

Key Provisions: • Disparate Impact Counts: Even when bias is unintentional, schools can face liability if an automated system disproportionately excludes applicants from a protected group.

• Examples of Risk: Tools that rank candidates by schedule availability, measure reaction time, or evaluate facial expressions or speech patterns in video interviews may disadvantage applicants with disabilities, religious commitments, or language differences.

• Pre-employment Inquiries: FEHA limits what an employer can ask before hiring, and those limits apply equally to inquiries made by or through automated systems.

• Liability Extends to Agents: When a vendor or recruitment partner uses a discriminatory algorithm on a school’s behalf, the school remains responsible under FEHA. • Recordkeeping Required: Schools must retain records of ADS use for at least four years. This includes data inputs, selection criteria, and employment outcomes • Bias Testing Encouraged: Although the regulations do not mandate bias testing, the Civil Rights

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Council encourages employers to conduct self-audits and fairness evaluations. The timing, scope, and quality of these efforts can support a defense if a discrimination claim arises.

Steps Toward Compliance: Schools can continue to use AI and automated tools under the new regulations, but they must manage those systems carefully to maintain FEHA compliance.

1. Inventory and Assess AI Tools: Identify every automated system involved in recruitment, hiring, promotions, and employment decisions. Determine whether each tool directly or indirectly screens or ranks applicants.

2. Audit for Bias: Test each system for disparate impact on protected groups. Request documentation from vendors showing validation studies and fairness testing.

3. Update Policies and Vendor Contracts: Require vendors to certify compliance with FEHA. Include shared responsibility and indemnification clauses in contracts. Specify that human review will supplement any automated recommendations or scores.

4. Strengthen Recordkeeping: Maintain ADS-related data, selection criteria, and decision records for at least four years. Document all compliance activities to create a clear record of diligence.

5. Train HR and Hiring Staff: Educate staff about the capabilities and limitations of AI tools. Train them to identify potential bias and to exercise independent judgment when reviewing automated results.

6. Ensure Transparency and Accessibility: Provide accessible hiring processes for applicants with wdisabilities. Offer reasonable accommodations or alternative methods for completing applications or assessments when needed, including for religious observances.

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Students

misconduct Court Allows USC To Proceed With Student Conduct Hearing Despite Parallel Lawsuit Filed By Student.

Emery Ogah, a senior at the University of Southern California (USC), became embroiled in an escalating dispute with a housemate, Nicholas Woltersdorf, while living in an off-campus rented house managed by Orion Housing. In August 2023, after a confrontation over garbage placement during which Woltersdorf threatened that he had a gun, Ogah contacted USC’s Department of Public Safety (DPS). DPS found a prop gun but took no further action because the incident occurred off campus and Woltersdorf was not a USC student. For months afterward, the tenants continued reporting disputes to the landlord, culminating in a physical altercation on February 4, 2024. Both men called the LAPD, and Ogah also contacted DPS. Accounts differed as to who initiated the fight: Ogah reported that Woltersdorf placed him in a chokehold, while Woltersdorf claimed Ogah threw the first punch. The following day, Ogah admitted throwing a glass “to create distance,” and Woltersdorf later obtained a restraining order.

Based on the February incidents, USC notified Ogah in March 2024 that he faced potential violations of the University’s policies on disorderly conduct and physical harm, triggering USC’s formal resolution process. That process provides written notice of allegations, access to relevant information, a presumption that the student is not responsible, a written explanation of the decision, and an opportunity to appeal to the Vice President of Student Life. At an August 16 meeting, USC presented preliminary findings and, because Ogah disputed portions of the determination, referred the matter to a review panel.

That same day, Ogah filed a civil lawsuit against Woltersdorf, Orion Housing, and USC. The bulk of the complaint asserted intentional tort claims against Woltersdorf and negligence and premises liability against Orion Housing. His sole claim against USC alleged negligence by DPS for failing to protect him

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after earlier reports of threatening conduct. As USC prepared to move forward with its student disciplinary hearing, Ogah sought an emergency injunction to halt USC’s proceedings until the civil case concluded.

He argued that allowing USC to proceed would cause irreparable harm because his attorney could not speak or object during the disciplinary hearing, witnesses would not be subject to cross-examination, and USC might “manufacture” factual findings to insulate itself in the civil lawsuit. The trial court granted the injunction and USC appealed.

The Court of Appeal reversed. It began by noting the longstanding principle that universities have authority to regulate student conduct and may conduct disciplinary proceedings concurrently with civil or criminal cases arising from the same events. The Court also explained that USC’s disciplinary procedures—including limited attorney participation, lack of cross-examination, and informal evidentiary rules—were consistent with the fair-procedure doctrine governing private university discipline in California.

While Ogah argued that these procedural differences would unfairly advantage USC in the civil case, the Court held that such concerns did not constitute irreparable harm. The disciplinary process did not create rights or consequences that could not later be addressed: any evidentiary disputes could be resolved in the civil case, no transcript would be created that could be used against him, and any attempt by USC to use disciplinary findings to its advantage would be subject to judicial review and traditional evidentiary protections.

The Court also rejected Ogah’s argument that USC might manufacture factual findings to shield itself from liability, finding that the potential for harm was too speculative.

USC’s process lacked several hallmarks of a judicial proceeding, such as the ability to subpoena records, live cross-examination, and a formal evidentiary record, therefore the potential for the disciplinary proceedings to be preventative of the civil proceeding was too remote to justify stopping the disciplinary process.

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Having found no irreparable harm as a matter of law, the Court of Appeal reversed the order granting the injunction.

Ogah v. University of Southern California (Nov. 12, 2025) ___Cal.App.5th___ [2025 Cal. App. Unpub. LEXIS 7219].

Note: This case illustrates the interplay between disciplinary procedures and civil litigation. It also reinforces the fair procedure standard for imposing discipline against students at private schools (including K-12 schools) in California, which includes providing the accused student a notice of the charges and an opportunity to respond, but does not require cross examination or a live hearing.

E H E C R F PEE S Court Orders University To Reinstate Student Expelled For Offensive X Posts.

Preston Damsky, a law student at the University of Florida, became a source of controversy on campus after classmates and faculty raised concerns about the content of two seminar papers he wrote and a subsequent series of posts he made on X (formerly Twitter). The papers, submitted for graded coursework, advanced provocative and racially charged political arguments and ended with language some readers interpreted as suggesting violent resistance. Although the papers upset many students, the law school initially declined to discipline him, concluding after review that the writings were protected speech and did not constitute true threats.

The following semester, student anxiety about Damsky continued, and administrators met with him to discuss the impact of his rhetoric. Matters escalated on March 21, 2025, when Damsky posted on X that “Jews must be abolished by any means necessary,” referencing a Harvard professor’s academic argument

as the conceptual basis for his statement. One week later, a Jewish law professor responded publicly, asking whether Damsky was “saying [he] would murder me and my family.” Damsky replied with further rhetorical commentary about the professor’s question and the academic debate he believed he was referencing. While the professor initially said she was not personally alarmed, many students and several faculty members expressed significant fear. Some students cried in administrators’ offices, reported feeling unsafe attending class with him, and worried he might bring a weapon to campus, even though the record showed no evidence that Damsky had made threats, suggested violent intent, or possessed weapons.

On April 2, the University suspended Damsky, barred him from campus, and increased police presence at certain events. It later charged Damsky with “disruptive conduct” and “harassment” under the Student Conduct Code, using his two seminar papers and the X posts as primary evidence. A disciplinary board recommended expulsion, which the Dean of Students adopted. In the expulsion letter, the Dean characterized the writings and posts as threatening and disruptive, notwithstanding

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that the Code explicitly excluded First Amendment–protected speech from those definitions. After an unsuccessful administrative appeal, the expulsion became final.

Damsky filed suit in federal court, alleging the University violated the First Amendment by expelling him for protected speech, and moved for a preliminary injunction ordering his reinstatement. To succeed on a preliminary injunction, the plaintiff must show: (1) a substantial likelihood he will succeed on the merits; (2) that he will suffer irreparable harm without a preliminary injunction; (3) that his threatened injury outweighs harm the injunction may inflict on the University; and (4) that a preliminary injunction would not disserve the public interest.

In light of this framework, the Court granted the preliminary injunction. The judge concluded that Damsky had shown a substantial likelihood of success on the merits because the University had not demonstrated that any of his speech fell into an unprotected category such as “true threats” or incitement. The Court emphasized that, even though deeply offensive, his statements did not express a serious intent to commit unlawful violence, nor were they directed at a specific person in a manner that conveyed an imminent threat. The context, including his explicit reference to an academic theorist, reinforced that his posts reflected extreme political commentary rather than actionable threats.

The Court also rejected the University’s argument that the speech was punishable under Tinker v. Des Moines Independent Community School District, a Supreme Court case that recognized that the special characteristics of the school environment allow schools to regulate certain categories of expressions inappropriate for that setting. Here, the Court reasoned that the student speech cannot be restricted merely because it deeply upsets peers or leads to heightened administrative concern; rather, Tinker permits regulation only when speech is reasonably construed as a school-directed threat or causes an actual material and substantial disruption. Here, the disruption stemmed largely from others’ reactions and the University’s own response, not from the speech itself.

Because the University directly penalized protected expression, the Court found that Damsky established irreparable harm; being excluded from campus and classes because of protected speech is itself a continuing constitutional injury. The Court further concluded that the balance of harms and public-interest factors weighed heavily in favor of an injunction, noting that protecting expressive freedom serves the public interest, while the University had no legitimate interest in enforcing unconstitutional restrictions. The Court ordered the University to reinstate him to normal standing by December 1, 2025, conditioned on the posting of a bond.

Damsky v. Summerlin (N.D. Fla. Nov. 24, 2025) No. 1:25-cv-275.

Note: Although this case involved a public university, it is a useful reminder for California private high schools covered by the Leonard Law, which prohibits disciplining students for speech that would be protected by the First Amendment.

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Enforcing Arbitration Agreements: California Court Interprets Net Effect Of Onboarding Documents And Finds Arbitration Agreement Unconscionable.

In Gurganus v. IGS Solutions LLC (2025), the California Court of Appeal affirmed a trial court's denial of an employer’s attempt to force an employee into arbitration. The Court ruled that an employer’s arbitration agreement was unconscionable after determining that the trial court could look beyond the arbitration agreement and consider it together with the employer’s confidentiality and non-disclosure agreement to determine the net effect of both agreements.

When the employee initially completed onboarding documents, they did not include an agreement to arbitrate or mention arbitration. About five months later, the employer asked the employee to sign several additional employment documents, including an arbitration agreement and a confidentiality and non-disclosure agreement.

The arbitration agreement contained a broad confidentiality provision that prohibited a party from disclosing any information in the arbitration to any person not involved in the arbitration. The agreement also stated that it was not a required condition of employment and that the employee could opt out. The confidentiality and nondisclosure agreement, signed by the employee at the same time, permitted the employer alone to bring disputes to court and seek injunctive relief without a

December 2025

business & facilities bond or proof of actual damages. In contrast to the arbitration agreement, the confidentiality and nondisclosure agreement did not say that the employee could opt out or that it was not a condition of employment.

The Court interpreted the arbitration agreement and the confidentiality and non-disclosure agreement together to determine whether the arbitration agreement was unconscionable. It determined that there was a lack of mutuality that was substantively unconscionable because the arbitration agreement required arbitration of any employment-related dispute, which is more likely to be brought by an employee, while expressly excluding from arbitration claims that are more likely to be brought by the employer against its employees. The Court also concluded that the arbitration agreement’s confidentiality clause was substantively unconscionable because it was so broad that it could hamper the employee’s ability to investigate or interview witnesses as part of their informal discovery.

The Court also stated that arbitration contracts are typically adhesive, as they are drafted by the party with greater bargaining strength and imposed upon the other party, usually on a “take it or leave it” basis. It also stated that the employer had failed to raise any specific arguments in support of its claim that the arbitration agreement was not a contract of adhesion, and had therefore forfeited this claim.

Gurganus has implications for any employer seeking to enforce an arbitration agreement under California law. It highlights the importance of ensuring that contract terms are clear and consistent not only within the arbitration agreement, but also

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throughout all employment documents. In determining the enforceability of an arbitration agreement , courts can evaluate arbitration clauses in the context of all employment documents that an employee signed.

Employers who wish to minimize legal challenges to compel arbitration should closely evaluate their arbitration agreements and other employment documents to ensure that they do not favor the employer’s interests to the extent that they lack mutuality, present them transparently at the start of employment with an opportunity to understand the documents, and maintain consistency across all onboarding documents so that the overall process appears fair and voluntary.

Gurganus v. IGS Solutions LLC, No. A170738

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cases we are watching • Two longtime Athletics Department employees at The Lawrenceville School, a private school in New Jersey, have filed suit alleging they were terminated in retaliation for reporting what they believed was a quid pro quo sexual relationship between their supervisor, the Dean of Athletics, and another employee. The complaint asserts that after raising concerns about favoritism, broken communication channels, and the supervisor’s creation of a new position to promote the alleged romantic partner, both employees were marginalized and then informed for the first time in their decades-long careers that their contracts would not be renewed. The plaintiffs have brought claims under the New Jersey Law Against Discrimination for sex discrimination and retaliation, alleging the School’s stated budgetary rationale for their nonrenewal was pretextual.

• The American Alliance for Equal Rights filed suit against the Hispanic Scholarship Fund (HSF), alleging that the organization’s flagship Scholars Program violates 42 U.S.C. Section 1981 by limiting eligibility to students who identify as being of Hispanic Heritage and thereby excluding non-Hispanic applicants from entering what the complaint characterizes as a contractual relationship. The Alliance, founded by Edward Blum, who has led several post–affirmative action challenges (including the admissions challenges against Harvard and UNC), claims its nonHispanic members are ready and able to apply but are barred from doing so solely because of their ethnicity. The lawsuit seeks an injunction preventing HSF from considering ethnicity in any way when awarding scholarships.

• The U.S. Justice Department has moved to intervene in S.W. et al. v. Loudoun County School Board, a lawsuit brought by two Christian students challenging the school district’s policy permitting transgender students to use facilities aligning with their gender identity. The intervention follows a recent Education Department finding that Loudoun County and several other Northern Virginia districts violated Title IX by maintaining transgender-inclusive policies, which resulted in those districts being placed on reimbursement-only status for federal funding.

The student plaintiffs, represented by two conservative legal organizations, previously obtained a temporary restraining order preventing their suspensions and now seek damages and a permanent bar on the district’s policy.

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lcw best timeline NOVEMBER THROUGH JANUARY

Review, revise, and update enrollment/tuition agreements based on changes to the law and best practice recommendations.

Issue Performance Evaluations.

Compensation Committee Review of Compensation before issuing employee contracts.

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.

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.

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 990-EZ. 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 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.

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December 2025

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.

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 ended 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.

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.

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.

JANUARY / FEBRUARY

Schools should consider following the California Nonprofit Integrity Act when conducting audits, which include formation of an audit committee:

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

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

Review and revise/update annual employment contracts.

Inform those who are newly deemed mandated reporters under SB 848 (Board members, certain volunteers) of their obligations and collect signed acknowledgement forms from them.

• www.lcwlegal.com •

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did you know...?

•The EEOC released new and updated educational resources to help workers and employers understand and prevent national origin discrimination, including a new one-page technical assistance sheet titled Discrimination Against American Workers Is Against the Law and an expanded national origin discrimination webpage with guidance. These materials, grounded in Title VII and existing EEOC policy, explain what unlawful national origin discrimination can look like in hiring, job assignments, harassment, and retaliation, and offer guidance to workers on how to file a charge if they believe their rights have been violated. The updates focus on protections against “anti-American” national origin bias.

•Fresno Unified School District’s A4 program, originally the African American Academic Acceleration department, was created to provide targeted academic and social-emotional support to address longstanding achievement gaps among Black students, though the District says it has long served other marginalized groups as well. The District recently made the decision to rename and restructure A4 amid mounting legal and political pressure, including a federal discrimination lawsuit alleging the program excluded non-Black students and the Trump administration’s threat to place districts with race-based programs on reimbursement-only status for federal funding. A federal judge dismissed the lawsuit in August for failing to allege that any non-Black student had actually been denied access. Now, the Californians for Equal Rights Foundation has appealed, arguing A4 remains an unlawful, racially segregated program.

•The University of California, Berkeley reached a settlement with Israeli dance professor Yael Nativ, who sued the UC Regents alleging she was denied reappointment to teach her contemporary Israeli dance course because of her Israeli nationality amid heightened post-Oct. 7 campus tensions.

Nativ’s lawsuit highlighted a WhatsApp message from her department chair stating that faculty and graduate students were pressuring the department not to “bring anybody from Israel” or offer Israel-related courses because “things are very hot here right now.” After Berkeley’s Office for the Prevention of Harassment and Discrimination concluded in 2024 that she had been subjected to national origin discrimination, the University issued a formal apology, agreed to pay her $60,000, and invited her to return to teach during a semester of her choosing.

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

Question: The Director of Human Resources at a private school reached out to LCW with a question about holiday pay for nonexempt employees. The HR director explained that the School has a non-exempt employee who works a schedule of 5.75 hours per day and who waives their meal break each shift. The HR director asked whether, on paid holidays, this employee was entitled to 5.25 or 5.75 hours of pay because of the waived meal break.

Answer: The LCW attorney advised that if an employee waives their meal break during a 5.75-hour workday, it is important to ensure that the meal break waiver is valid and enforceable. The attorney advised that although the School may already have this type of waiver in place, it is important to note that the waiver must be mutual, meaning agreed upon by both the School and the employee, and that LCW recommends that this waiver is in writing and signed by the employee.

In terms of holiday pay, the attorney advised the School to follow any relevant information from the School’s employee handbook about paid holidays for non-exempt employees. For example, if the employee handbook states that non-exempt employees are paid for their regularly scheduled hours, they should be paid for the time that they normally work on a regularly scheduled day. Here, if this employee normally works a full 5.75 hours because they do not take a lunch break, they should receive their pay for the full 5.75 hours. However, if they waive their meal break and typically only work 5.25 hours per day, they would be paid 5.25 hours for their holiday pay.

• www.lcwlegal.com •

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Liebert Cassidy Whitmore