Issuu

August 2026

Education Matters

Table Of Contents 03 Litigation Employment Law 09 Labor Relations 10 Workplace Safety 11 Discrimination

12 Business & Facilities 14 Legal Updates 15 Benefits Corner 17 Consortium Call Of The Month

Ailin Nevarez Associate | Los Angeles Cynthia O’Neill Partner Emeritus | San Francisco Juliana Pech Associate | Los Angeles Madison Tanner Associate | San Diego

Connect With Us! Copyright © 2026 Requests for permission to reproduce all or part of this publication should be addressed to Jacqueline Reid, Marketing Manager at 310.981.2000. Cover Photo: Attributed to pexels.com

Education Matters is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in 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.

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

August 2026

LITIGATION CA Supreme Court Clarifies Requirements For The Section 998 Settlement Offer. Code of Civil Procedure section 998 encourages parties to settle before trial by imposing certain cost consequences when a party rejects a qualifying settlement offer and then fails to obtain a more favorable judgment or award. In Gorobets v. Jaguar Land Rover North America, LLC, the California Supreme Court addressed whether a section 998 offer becomes invalid because it gives the opposing party a choice between two different sets of settlement terms. The Court held that it does not, so long as the offer makes clear what each alternative requires, requires the opposing party to choose only one alternative, and explains how to accept that choice. At least one alternative must also be sufficiently definite that the opposing party can determine its value when deciding whether to accept the offer, and that a court can later compare that value to the judgment or award ultimately obtained. The decision provides public agencies with additional flexibility when structuring section 998 offers in employment and other civil litigation. For additional information about the decision and its implications, read LCW’s Special Bulletin.

EMPLOYMENT LAW Ninth Circuit Finds No Whistleblower Retaliation Claim Where Nonrenewal Decision Predated Protected Disclosure. The Wellpinit School District (WSD) is located within the Spokane Reservation, and the majority of its students are members of the Spokane Tribe. In September 2022, the federal government awarded the District a Native Youth Community Project Grant intended to help prepare Native American students for college and careers. The District hired David Krzesni under a personnel contract effective January 10, 2023, to serve as Project Director for the grant. Donna Bussell, an employee of the U.S. Department of Education’s Office of Indian Education, served as the District’s primary federal contact for grant-related matters. Before hiring Krzesni, the District had planned for a group of students and staff to participate in a peer mediation program in Hawaii from March 6 through March 14, 2023. The District believed the trip would further the grant’s objectives. After Krzesni started his employment with the District, he signed a requisition

form to fund the trip with grant money. In February 2023, he submitted revisions to the grant budget to Bussell for approval. Bussell responded that the Hawaii travel had not appeared in the original grant application and would not be approved. Krzesni asked whether they could discuss the trip further because the District viewed it as an important activity for meeting the grant’s goals. Bussell said she would discuss the issue with her supervisors and noted that the guidelines on travel are strict. On March 2, 2023, Krzesni emailed WSD business manager Rainy Anderson and stated, “I think we’ll likely be able to get approval, but it’ll likely be after the trip’s already done. So we definitely need to be careful about when we next draw down funds and what’s included.” From March 6 through March 14, 2023, a group of District students and staff, including Krzesni, attended the Hawaii program. Bussell did not provide approval before the trip. While in Hawaii, Krzesni emailed Anderson on March 13 and indicated that he was considering leaving his position once he could train a successor. He told Anderson that he hoped to prepare one of the new staff members to assume the Project Director role as soon as that person was ready. When Anderson asked

• www.lcwlegal.com •

whether he meant that he was preparing to leave, Krzesni confirmed that he was. After the Hawaii trip, Krzesni contacted Anderson on April 11 concerning the Annual Performance Report (APR), which the District needed to submit to demonstrate compliance with the grant’s terms. Krzesni asked about grant funds that the District had used and noted that the issue was “tricky with the Hawaii trip unresolved.” Anderson told him that she had already drawn down grant funds to pay for the trip. Krzesni then prepared the APR. The report identified $55,011.05 in expenses associated with the Hawaii trip and described the trip as a “unique opportunity for cultural exchange and traditional Hawaiian restorative justice training.” Krzesni explained that the resulting peer mediation program would further the grant’s objectives by helping reduce major disciplinary incidents and, through improved student engagement, improve student attendance and academic performance. Another District employee signed and certified the report, and Krzesni submitted it to the federal government on April 27, 2023. On May 1, 2023, Superintendent John Adkins contacted WSD’s general counsel about Krzesni. Adkins and counsel discussed not renewing Krzesni’s contract on May 2 and again on May 5. On May 8, general counsel sent Adkins talking points for a meeting with Krzesni concerning the proposed nonrenewal. That same morning, District administrators held an internal meeting and decided not to renew Krzesni’s contract, which was scheduled to expire on September 30, 2023. Also on May 8, Krzesni spoke with Bussell about the use of federal grant funds for the Hawaii trip. During that conversation, Bussell told him that drawing down grant funds for the trip without prior federal authorization constituted “fraud.” On May 10, Bussell emailed Krzesni and another WSD employee about “some discrepancies” in the APR. In June 2023, the District reimbursed the federal government for the expenses associated with the Hawaii trip. Krzesni brought an action against the District and Superintendent Adkins in federal district court. He asserted a federal whistleblower retaliation claim under the National Defense Authorization Act for Fiscal Year 2013 (NDAA), 41 U.S.C. section 4712, and a wrongful discharge claim under Washington law. Krzesni alleged that the District unlawfully retaliated against him by refusing to renew his employment contract after he made protected disclosures concerning the District’s use of federal grant money to pay for the Hawaii trip without federal authorization.

The District and Adkins sought summary judgment on both claims. On the federal claim, they argued that Krzesni had not made a protected disclosure within the meaning of section 4712 because, among other reasons, none of his purported disclosures objectively conveyed any suggestion of misconduct. On the state-law claim, they argued that Krzesni could not establish wrongful discharge because the District did not discharge him. Instead, the District allowed him to complete the full term of his contract and simply chose not to renew it. The district court agreed with the District and Adkins and granted summary judgment in their favor on both claims. Krzesni appealed to the Ninth Circuit and challenged the grant of summary judgment. On his federal claim, he maintained that three communications constituted protected disclosures: (1) his description of the Hawaii trip in the APR, (2) a rhetorical question he directed to a supervisor after learning that the District had drawn down grant funds for the trip, and (3) his May 8 call with Bussell concerning the unauthorized use of those funds. He argued that the District retaliated against him for his protected activity by declining to renew his contract. On his state-law claim, Krzesni argued that the nonrenewal of his contract constituted a wrongful discharge under Washington law. The Ninth Circuit first considered the substantive requirements for a whistleblower retaliation claim under the NDAA. NDAA section 4712 protects employees of federal contractors and grant recipients from reprisals for making certain protected disclosures. The Ninth Circuit held that a plaintiff must establish four elements to make a prima facie NDAA whistleblower claim: (1) the statute covers the employee; (2) the employee communicated with a person or body identified by the statute; (3) the employee made a protected disclosure; and (4) the employee suffered an adverse employment action as a reprisal for making that disclosure. The Ninth Circuit addressed each requirement in order. First, section 4712 covers employees of contractors, subcontractors, grantees, subgrantees, and personal services contractors. The parties did not dispute that Krzesni qualified as a covered employee. Second, the employee must disclose to a person or entity identified in section 4712. Those recipients include a federal employee responsible for grant oversight or management and certain management officials or employees of the grantee who have responsibility to investigate, discover, or address misconduct. The parties agreed that Bussell qualified because she was the Department of Education employee responsible for

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

August 2026

oversight of the District’s grant. Krzesni also claimed that he made a protected disclosure to Anderson, the District’s business manager. Third, the employee must make a “protected disclosure.” NDAA section 4712 defines a protected disclosure as one containing information that the employee reasonably believes evidences gross mismanagement of a federal contract or grant, gross waste of federal funds, an abuse of authority relating to a federal contract or grant, a substantial and specific danger to public health or safety, or a violation of a law, rule, or regulation related to a federal contract or grant. The Ninth Circuit held that section 4712 incorporates an objective reasonable-belief standard. Relying on past case law that interpreted identical or similar language in other federal whistleblower statutes, the Ninth Circuit concluded that a whistleblower’s belief in misconduct must be objectively reasonable. Under that standard, a disinterested observer with knowledge of the operative facts must be able to reasonably conclude that the disclosure evidences misconduct. The inquiry therefore focuses on the content of the disclosure and whether it conveys sufficient information to indicate wrongdoing. A communication that merely describes events without indicating wrongdoing does not qualify. Fourth, the employee must suffer an adverse employment action in reprisal for making the protected disclosure. Although the parties agreed that the nonrenewal of Krzesni’s contract constituted an adverse employment action, Krzesni still had to show that a protected disclosure contributed to that decision. If an employee establishes the four elements of a prima facie claim, the employer may rebut the claim with clear and convincing evidence that it would have taken the same personnel action absent the protected disclosure. The Ninth Circuit then applied this framework to Krzesni’s three alleged disclosures. Krzesni first argued that reporting the Hawaii trip in the APR constituted a protected disclosure. The Ninth Circuit disagreed because the APR did not explicitly or implicitly suggest misconduct. Instead, it affirmatively characterized the trip as a legitimate grant activity, describing it as a “unique opportunity for cultural exchange and traditional Hawaiian restorative justice training.” The APR further explained that the resulting peer mediation program would further the grant’s objectives by reducing major disciplinary incidents and, through improved student engagement, improving attendance and academic performance. The Ninth Circuit concluded that a disinterested observer with knowledge of the operative facts would not reasonably understand the APR as evidencing misconduct. Therefore, Krzesni’s description of the Hawaii program in the APR was not a protected disclosure. Krzesni next argued that after learning the District had drawn down grant funds for the Hawaii trip without prior authorization, he made a protected disclosure by rhetorically asking a supervisor, “So this is how we do things?” The Ninth Circuit noted that Krzesni had not presented this theory to the district court but nevertheless considered and rejected it on the merits. The Ninth Circuit concluded that the question conveyed no “information” relating to misconduct, as section 4712 requires. Because it neither disclosed information nor identified wrongdoing, a disinterested observer could not reasonably conclude that the question evidenced misconduct. It therefore was not a protected disclosure. Krzesni’s third alleged disclosure arose from his May 8, 2023 call with Bussell concerning the District’s unauthorized use of grant funds. During that conversation, Bussell characterized the District’s use of federal grant funds for the Hawaii expenses without prior authorization as “fraud.” The district court concluded that Krzesni might have made a protected disclosure during the call but that the disclosure could not have caused the adverse employment action because the District had already decided not to renew his contract. The Ninth Circuit assumed without deciding that Krzesni made a protected disclosure during the call but concluded that he could not establish reprisal. Krzesni acknowledged that Adkins initiated the nonrenewal process on May 1, and the record showed that District administrators decided not to renew his contract on the morning of May 8. Because the record contained no evidence that the District knew of Krzesni’s protected activity when it made that • www.lcwlegal.com •

decision, the alleged disclosure could not have contributed to the nonrenewal. The Ninth Circuit next considered Krzesni’s argument that the District’s decision not to renew his employment contract constituted wrongful discharge under Washington law. The Ninth Circuit relied on the Washington Supreme Court’s decision in Roberts v. Dudley, which held that the tort of wrongful discharge in violation of public policy applies only when an employer discharges an employee. The Ninth Circuit also noted that Washington courts distinguish between a “discharge” and a “nonrenewal.” The District did not terminate Krzesni before the end of his contract. Instead, his contract ran through its term, and the District declined to renew it. Because a nonrenewal could not establish the prima facie element of discharge, Krzesni’s state law wrongful discharge claim failed. The Ninth Circuit affirmed the district court’s grant of summary judgment in favor of the District and Superintendent Adkins on both Krzesni’s federal whistleblower retaliation claim and his Washington state wrongful discharge claim. Krzesni v. Wellpinit Sch. Dist. (9th Cir. July 27, 2026, No. 253308) 2026 LX 318632.

Ninth Circuit Finds University Of Washington Immune From COVID-19 Vaccination Lawsuit. On August 20, 2021, Washington Governor Jay Inslee issued Proclamation 21-14.1 (Proclamation). The Proclamation required healthcare providers, employees in educational settings, and state employees to receive a COVID-19 vaccination by October 18, 2021, unless they received a medical or religious exemption. The Proclamation provided that employees who qualified for an exemption were entitled to reasonable accommodation under federal and state law unless the accommodation would impose an undue hardship on the employer. The University of Washington (UW), a public university that operates healthcare facilities, was subject to the Proclamation and adopted a vaccination policy implementing the Governor’s directive. The plaintiffs were UW employees who requested religious or medical exemptions from the vaccination requirement. UW determined that they were eligible for exemptions but then had to consider whether it could accommodate their unvaccinated status in their respective positions. UW determined that doing so would impose an undue

hardship and that it could not accommodate the plaintiffs through reassignment or telework. Because none of the plaintiffs received the vaccine, UW terminated their employment. The plaintiffs sued UW and two of its human resources officers in federal district court, alleging that their terminations violated federal and state law. The plaintiffs asserted claims under 42 U.S.C. section 1983 alleging that UW violated their rights under the First and Fourteenth Amendments. The parties filed cross-motions for summary judgment on the section 1983 claims. The district court concluded that UW qualified as an arm of the State of Washington under the three-factor test the Ninth Circuit had articulated in Kohn v. State Bar of California. Because an arm of the state is not a “person” subject to suit under section 1983, the district court granted summary judgment to UW and dismissed the section 1983 claims against it. The plaintiffs appealed to the Ninth Circuit. They argued that UW was not an arm of Washington State and instead constituted a legally independent entity that could be sued under section 1983. Among other things, they relied on UW’s history, arguing that its territorial predecessor had been created as a corporation before Washington achieved statehood and that its corporate character continued after statehood. UW, in turn, sought affirmance of the district court’s judgment and maintained that it qualified as an arm of the state. While the appeal was pending, the United States Supreme Court decided Galette v. New Jersey Transit Corp., which addressed the arm-of-the-state analysis. The intervening decision required the Ninth Circuit to determine whether Galette displaced the three-factor test the en banc Ninth Circuit had previously articulated in Kohn. The Ninth Circuit concluded that Galette did not displace Kohn but instead refined and rebalanced the test. It then applied that refined framework to determine whether UW qualified as an arm of Washington State. The Ninth Circuit addressed the plaintiffs’ remaining claims, including their claims against the individual defendants, in a concurrently filed unpublished memorandum disposition. The published opinion addressed whether UW qualified as an arm of the state and therefore could not be sued under section 1983. The Ninth Circuit began with the rule that section 1983 creates a cause of action against a “person” who, acting under color of law, deprives another of constitutional rights. States and governmental entities that qualify as

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

August 2026

arms of the state, however, are not “persons” within the meaning of section 1983 and therefore cannot be sued under that statute. The Ninth Circuit explained that the essential question in determining whether an entity is an arm of the state is whether the state structured the entity to enjoy immunity from suit. In Kohn, the Ninth Circuit had directed courts to consider three factors: (1) the state’s intent regarding the entity’s status, including the functions the entity performs; (2) the state’s control over the entity; and (3) the entity’s overall effects on the state treasury. Under Kohn, the factors appeared to carry equal weight, with no single factor dispositive. The Ninth Circuit next considered the Supreme Court’s intervening decision in Galette v. New Jersey Transit Corp., which held that the New Jersey Transit Corporation was not an arm of the state. The Supreme Court framed the ultimate inquiry as whether the state structured an entity as part of itself or as legally independent. In making that determination, the Supreme Court considered the entity’s treatment under state law, the state’s formal liability for the entity’s obligations, and the state’s degree of control over the entity. The Ninth Circuit concluded that Galette did not displace Kohn because the two decisions considered substantially the same three factors. Instead, Galette refined the considerations relevant to those factors and clarified their relative weight. The Ninth Circuit first addressed the first Kohn factor: the state’s intent as to the status of the entity. In Galette, the Supreme Court framed the inquiry as whether the state structured the entity to be legally separate. The Supreme Court stated that the corporate form provided the clearest evidence that a state created a legally separate entity. The Supreme Court also clarified that whether an entity performs traditional governmental or public functions is not relevant. Instead, the question is whether the state chose to perform those functions through its own apparatus or through a legally separate entity. Applying the first Kohn factor to UW, the Ninth Circuit rejected the plaintiffs’ argument that UW was legally independent because its territorial predecessor had been created as a corporation before Washington achieved statehood. The Ninth Circuit concluded that the Legislature created modern-day UW as a new legal entity in 1890 rather than continuing the territorial corporation. Unlike its predecessor, UW was not created as a corporate body and did not receive the full range of traditional corporate powers, such as an express right to sue and be sued. Although Washington later granted UW additional powers, state law continues to treat UW as a state agency, including under the Administrative Procedure Act, Open Public Meetings Act, and Public Records Act. Washington law subjects lawsuits against UW to procedures governing claims against the state and extends sovereign immunity to UW in state court. The Ninth Circuit therefore concluded that the first factor favored finding that UW is an arm of the state. The Ninth Circuit next addressed the second Kohn factor: the state’s control over the entity. In Galette, the Supreme Court characterized state control as “not especially probative” because a state retains ultimate control over every entity it creates, including legally independent entities. The Ninth Circuit therefore concluded that state control remains part of the Kohn analysis but carries the least weight. Applying the second Kohn factor to UW, the Ninth Circuit noted that the Governor appoints UW’s regents with the Senate’s consent. Although the regents exercise substantial control over UW and its property, their authority remains subject to state oversight. For example, UW cannot sell certain university lands without legislative approval. No Washington law expressly declares UW independent from state supervision. Given the substantial body of Washington law regulating UW, the Ninth Circuit concluded that this factor, although not particularly probative, weighed slightly in favor of arm-of-the-state status. Finally, the Ninth Circuit addressed the third Kohn factor: the entity’s overall effects on the state treasury. In Galette, the Supreme Court narrowed this inquiry to whether the state is formally liable for the entity’s judgments, debts, or other liabilities. The Supreme Court distinguished formal legal liability from the entity’s practical financial relationship with the state, such as its receipt of state funding or an expectation that the state would cover its judgments if necessary. • www.lcwlegal.com •

Applying the third Kohn factor to UW, the Ninth Circuit noted that UW maintains and funds a separate self-insurance account for its defense costs, claims, and judgments, but found indications that the account nevertheless contained state money. The Ninth Circuit tentatively viewed the fund as state money but noted that the record did not confirm or refute that conclusion. Washington had also expressly disclaimed liability for certain UW bonds, but not for all UW obligations, suggesting that Washington may remain formally liable for some liabilities. Given these uncertainties, the Ninth Circuit concluded that the third factor was neutral. The Ninth Circuit held that Galette refined and rebalanced, but did not displace, the three-factor arm-of-the-state test established in Kohn. Applying the rebalanced test, the Ninth Circuit concluded that UW is an arm of Washington State. The first and most important factor favored arm-of-the-state status, the formal-liability factor was neutral, and the control factor weighed slightly in favor of arm-of-the-state status. The Ninth Circuit therefore concluded that Washington structured UW as part of the State itself rather than as a legally independent entity. Because UW is an arm of the state, it is not a “person” subject to suit under 42 U.S.C. section 1983. The Ninth Circuit therefore affirmed the district court’s grant of summary judgment dismissing the section 1983 claims against UW. The court resolved the plaintiffs’ remaining claims, including their claims against the individual defendants, in the concurrently filed unpublished memorandum disposition. Nilsen v. Univ. of Wash. (9th Cir. Aug. 13, 2026, No. 24-7460) 2026 LX 440752.

LABOR RELATIONS CERTIFICATION PROGRAM All seven workshops include both traditional training and interactive simulations to develop skills helpful to labor relations professionals.

17 & 24 NUTS & BOLTS OF NEGOTIATIONS 03 & 10 BARGAINING OVER BENEFITS December

September

15 & 22 PERB ACADEMY October

Click Here to Start Earning Your Certificate The use of this official seal confirms that this Activity has met HR Certification Institute’s® (HRCI®) criteria for recertification credit preapproval.

*Each class consists of two dates/parts. Participation in both dates/parts is required for certification. *Participants in the LRCP program have a threeyear timeframe to complete all seven classes.

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

August 2026

Labor Relations PERB Defines Remedy For UC’s Faulty Response To Union’s Request For Information. AFSCME, Local 3299 submitted a request for information (RFI) to the University of California (UC). The RFI sought health and safety records about employees at Lawrence Berkeley National Laboratory (LBNL), a national research laboratory that UC operates. The U.S. Department of Energy (DOE) owns LBNL, but UC runs it under a contract with DOE. UC is the employer of all AFSCME-represented employees at LBNL. AFSCME requested that UC provide six categories of records for the prior five years related to the health and safety of AFSCME-represented employees at LBNL. UC responded that: 1) the RFI was overbroad and burdensome; 2) DOE owned the records; and 3) AFSCME must file a federal Freedom of Information Act (FOIA) request with DOE. AFSCME filed an unfair practice charge with PERB. The charge alleged that UC violated its duty to meet and confer under the Higher Education Employment Relations Act (HEERA) by failing to provide the records it requested. The ALJ sustained AFSCME’s claim and issued a compromise remedy intended to comply with the U.S. Privacy Act of 1974. Both parties filed exceptions to the ALJ’s order. PERB outlined the requirements an employer must follow to respond to an exclusive representative’s RFI. An employer generally must provide a representative with all information that is necessary and relevant to the right to represent employees regarding mandatory subjects of bargaining. Employers must respond with diligence and thoroughness, because an unreasonable delay is the same as an outright refusal to provide information. An employer must provide all information that is available to it, and not just information it owns. Once an agency receives a request for relevant information, it must either promptly and fully supply the information or timely and adequately explain its reasons for not doing so. If the RFI meets the necessary and relevant standard, the employer’s unjustified failure to provide that information is a per se violation of its bargaining duty, and a charging party is not required to show harm or prejudice as part of its prima facie case.

Don't Miss Our Upcoming Webinar! It’s Time to Audit Your Personnel Policies! October 7, 2026 10:00 a.m. - 11:00 a.m.

Visit the above link for more information.

• www.lcwlegal.com •

If, as in this case, the employer believes that the RFI seeks confidential information, the employer must meet and confer in good faith to negotiate a potential accommodation, such as redactions of private information in the records or a confidentiality agreement. If the parties cannot reach agreement, then PERB will decide the remedy through the resolution of an unfair practice charge. If the employer raises a significant privacy interest, then a balancing test applies: the employer has the burden of showing that the privacy interest outweighs the representative’s interest in the information. When privacy rights do outweigh the union’s interest in the information, the sensitive information can be withheld and/or redacted. PERB remedied this case by directing a PERB compliance officer to: oversee the disclosure process; ensure prompt implementation of PERB’s order; and accommodate all legitimate competing interests. This decision details PERB’s analysis of the state and federal privacy laws involved in the RFI, the redactions of information within a record that would be required, and explains that AFSCME was not required to use a FOIA request to DOE. AFSCME v. Regents of the University of California (2026) PERB Decision No. 3034-H.

Workplace Safety Release In Separation Agreement Did Not Waive Employer’s Right To Seek Workplace Violence Restraining Order. Three employees complained that Adelanto Elementary School District Superintendent Michael Krause engaged in a years-long pattern that included angry outbursts, intrusive text messages, unsolicited photographs, monitoring them at or near their homes and workplaces, and jabbing his finger at two of them. The employees sought mental-health treatment and feared retaliation. The District terminated Krause’s employment pursuant to the terms of a separation agreement and general release. The agreement included provisions that required Krause to stay away from the employees and required the District to waive all employment-related claims against Krause. Next, Krause successfully ran for a seat on the District’s Board of Trustees. The District then sought a workplace violence restraining order (WVRO) against Krause. The California Superior Court issued a WVRO that prohibited Krause from harassing, contacting, or disturbing the peace of the employees and generally required him to remain 100 yards away from them and their workplace. The order permitted him to attend Board meetings under specified conditions. Krause appealed. Krause argued, among other things, that the District’s waiver of claims against him in the separation agreement barred the WVRO proceeding. The California Court of Appeal affirmed the WVRO with modifications. The Court held that an employer’s right to seek a WVRO on behalf of employees cannot be waived under California law because preventing workplace harassment and violence is not only an individual right but serves a fundamental public purpose. The Court held that the District proved that there was a reasonable probability of future harassment due to Krause’s repeated conduct,

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

August 2026

renewed presence as a Board member, and lack of insight or remorse. The Court modified the WVRO to accommodate Krause’s First Amendment rights and shortened the four-year duration of the WVRO to three years so it would not exceed the statutory maximum. Adelanto Elementary School District v. Krause (2026) 121 Cal.App.5th 699.

Discrimination Motion To Compel Arbitration Denied On Sexual Orientation Harassment Claim. Trevor Decloedt alleged that a coworker repeatedly condemned him for being gay, told him that homosexuality was sinful, threatened to kill him, and touched or forcefully grabbed his hair. Decloedt repeatedly reported the conduct to supervisors and human resources, but he alleged that they took no action. He alleged severe emotional distress, including suicidal thoughts, and that he was later terminated without a meaningful explanation. Decloedt sued RadNet Management, related RadNet entities, his former supervisor, and the coworker, asserting 11 state-law causes of action, including hostile-work-environment and sexual-harassment claims under California’s Fair Employment and Housing Act (FEHA). The employer moved to compel arbitration under an agreement Decloedt had signed when his employment began. The California Superior Court denied the motion, finding that Decloedt had alleged sexual harassment covered by the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which makes pre-dispute arbitration agreements unenforceable for cases relating to sexual harassment. The employer appealed, arguing that harassment based on sexual orientation was not “sexual harassment” under FEHA and that Decloedt’s allegations were not sufficiently severe or pervasive to state a viable harassment claim. The Court of Appeal rejected those arguments and affirmed. Relying in part on the U.S. Supreme Court’s reasoning in Bostock v. Clayton County that discrimination based on homosexuality necessarily involves discrimination because of sex, the Court of Appeal held that sexual-orientation harassment is a form of sexual harassment under FEHA. Sexual harassment does not have to involve sexual advances, sexual desire, or explicitly sexual conduct; the critical question is whether the employee was harassed because of sex. Decloedt’s allegations of repeated antigay condemnation, threats, unwanted physical contact, and an assault described severe or pervasive harassment motivated by hostility toward his sexual orientation. Because Decloedt sufficiently alleged at least one sexual harassment claim, the EFAA exempted his entire case from compelled arbitration. Decloedt v. RadNet Management, Inc. (2026) 121 Cal.App.5th 732.

ON-DEMAND TRAINING

Don’t Delay. Train Today. Visit our website for all our on-demand offerings: www.lcwlegal.com/events-and-training/ on-demand-training • www.lcwlegal.com •

BUSINESS & FACILITIES California Court Enforces Online Arbitration Agreement Where An App Gave Users Clear Notice Of Terms Of Service. In Wilkins v. Cruise, LLC, the California Court of Appeal held that an arbitration agreement contained in an online Terms of Service was enforceable because the company’s mobile app gave users sufficiently clear notice that continuing through the account process meant agreeing to those terms. The Court reversed the trial court’s order denying arbitration and directed the trial court to compel the plaintiff ’s claims to arbitration. Gino Wilkins was an employee of Cruise, LLC, an autonomous ride-hailing company. Wilkins was injured while riding in a Cruise autonomous vehicle, but at the time of the accident, he was not working as an employee. Instead, he was using Cruise’s ride-hailing service as a customer. Wilkins sued Cruise and two related General Motors entities for claims including negligence, product liability, and breach of warranty. The defendants sought to require Wilkins to arbitrate his claims based in part on an arbitration provision contained in the Terms of Service associated with his Cruise customer account. The trial court refused to compel arbitration, concluding that Cruise had not sufficiently established that Wilkins agreed to the arbitration provision. The Court of Appeal disagreed. The Court explained that contracts formed online are subject to the same basic rules as other contracts: users must have adequate notice of the contractual terms, and their actions must demonstrate agreement to those terms. Online agreements can take several forms. Some require a user to affirmatively click an “I agree” button (click-wrap agreement), some require a user to simply browse a site (browse-wrap agreement), while others provide notice that taking another action, such as signing up, signing in, or continuing to the next screen, constitutes agreement to linked terms and conditions (sign-in wrap agreement). Courts have held that sign-in wrap agreements can be enforceable if the user receives reasonably conspicuous notice of the terms and then takes action that demonstrates agreement to them. Cruise used this type of sign-in process. During the account process, users encountered a screen stating in bold type: “By continuing, you agree to our Terms & Privacy Policy and confirm you are at least 18 years old.” Immediately below, the screen instructed users to read the Terms of Service and Privacy Policy, with links to both documents displayed in contrasting text. At the bottom of the screen was a prominent button containing an arrow that the user had to press to continue to the next screen. The Court concluded that this design provided adequate notice. The screen was uncluttered, contained only two sentences, and prominently told users that continuing meant agreeing to Cruise’s Terms of Service. The links to the Terms of Service and Privacy Policy were readily visible and could be accessed with one click. Nothing else on the screen distracted users from the notice. Given this presentation, the Court concluded that a reasonable user would understand that pressing the button to continue meant agreeing to the Terms of Service. The Court then considered whether the Terms of Service themselves gave users sufficient notice of the arbitration requirement. They did. Near the beginning of the Terms, bold language informed users that the document constituted a legally binding contract and specifically warned that Section 5 contained an arbitration agreement and class action waiver requiring most claims against Cruise to be resolved through individual binding arbitration. The table of contents also identified Section 5 as “Dispute Resolution and Arbitration,” and the arbitration section itself was clearly labeled and formatted consistently with the rest of the document.

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

August 2026

Wilkins argued that this was insufficient because, when viewed on a cell phone, the Terms of Service extended across approximately 31 screens, with the initial arbitration warning appearing on the third screen and the arbitration provision itself beginning on the twelfth. The Court rejected this argument. It emphasized that the arbitration provision was not hidden or difficult to identify and that requiring a user to scroll through an electronic agreement did not, by itself, make the terms inaccessible or unenforceable. The Court also rejected Wilkins’s argument that the arbitration language was ambiguous. Although one subsection stated that either party “may” initiate arbitration if a dispute could not be resolved informally, another expressly stated in bold capital letters that Cruise and the user mutually agreed to resolve disputes exclusively through final and binding individual arbitration. Reading the provisions as a whole, the Court concluded there was no reasonable ambiguity: a user could decide whether to pursue a claim, but if the user chose to do so, the agreed procedure was arbitration. Finally, the Court rejected the trial court’s alternative conclusion that arbitration should not be required because Wilkins had also sued two related General Motors entities that had not signed the agreement. Wilkins’s own complaint alleged that Cruise and the GM entities were related and acted as agents, joint venturers, or alter egos of one another, and he asserted the same claims based on the same underlying facts against all defendants. The Terms of Service also expressly extended the arbitration provision to Cruise affiliates and related parties. Under those circumstances, the Court concluded that the related GM entities could enforce the arbitration agreement and were not outside “third parties” whose presence would justify denying arbitration. Accordingly, the Court reversed the order denying arbitration and directed the trial court to grant the defendants’ motions to compel arbitration. Wilkins v. Cruise, LLC (2026) 121 Cal.App.5th 927. Note: Organizations should exercise care when agreeing to terms of use through websites, mobile apps, online registration systems, or other electronic platforms. As this case demonstrates, an organization may be bound by lengthy online terms even if its representative does not actually read them or click a separate “I agree” box. Where the platform provides clear notice that taking an action, such as clicking “continue,” constitutes agreement to linked terms, those terms may be enforceable. Organizations should therefore ensure that employees tasked with contracting for services on behalf of the organization understand that their online actions will bind the organization in the same manner as a contract and can limit an organization’s scope of remedies. Organizations should carefully review terms, including arbitration provisions, before proceeding.

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

Consortium

Seminars

• www.lcwlegal.com •

Webinars 13

Legal Updates California Community Colleges Board Of Governors Approves Regulatory Action On Associate Degree Course Requirements, Climate. The California Community Colleges Board of Governors approved regulatory action titled “Associate Degree Course Requirements, Climate,” and it was filed with the Office of Administrative Law and the California Secretary of State on August 10, 2026. This regulation becomes effective 30 days from the August 10, 2026 filing date, or September 9, 2026. Pursuant to the California Code of Regulations, section 52010, college districts may conform their policies and procedures to the regulatory requirements within one hundred and eighty (180) days of the effective date, which is March 8, 2027.

California Community Colleges Board Of Governors Approves Regulatory Action On Credit For Prior Learning & High School Course Articulation. The California Community Colleges Board of Governors approved regulatory action titled “Credit for Prior Learning & High School Course Articulation,” and it was filed with the Office of Administrative Law and the California Secretary of State on August 10, 2026. This regulation becomes effective 30 days from the August 10, 2026 filing date, or September 9, 2026. Pursuant to California Code of Regulations, section 52010, college districts may conform their policies and procedures to the regulatory requirements within one hundred and eighty (180) days of the effective date, which is March 8, 2027.

California Community Colleges Board Of Governors Approves Regulatory Action On Awarding Credit For Advanced Placement & Other External Standardized Examinations. The California Community Colleges Board of Governors approved regulatory action titled “Awarding Credit for Advanced Placement & Other External Standardized Examinations.” It was filed with the Office of Administrative Law and the California Secretary of State on August 10, 2026. This regulation becomes effective 30 days from the August 10, 2026 filing date, or September 9, 2026. Pursuant to the California Code of Regulations, section 52010, college districts may conform their policies and procedures to the regulatory requirements within one hundred and eighty (180) days of the effective date, which is March 8, 2027.

2027 Annual Public Sector Employment Law Conference FEB. 18 - 19 • HILTON SAN DIEGO BAYFRONT 14

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

August 2026

BENEFITS CORNER Can Time Theft Rise To The Level Of “Gross Misconduct” Under COBRA? A Federal Court Says Yes. When an employee is terminated, employers generally assume they need to provide a COBRA election notice so the employee has the opportunity to continue health coverage. But there is one important exception: COBRA’s continuation coverage requirements do not apply if the employee is terminated for gross misconduct. The challenge, of course, is that neither COBRA nor its implementing regulations define what “gross misconduct” actually means. As a result, employers have been left to rely on court decisions for guidance, and those decisions have often been highly fact-specific. A recent federal district court decision provides additional guidance by concluding that an employee’s intentional time theft constituted gross misconduct, relieving the employer of any obligation to offer COBRA continuation coverage. Background COBRA generally requires employers to offer continuation health coverage to covered employees and their qualified beneficiaries following certain qualifying events, including termination of employment. However, an employee whose employment is terminated due to gross misconduct does not experience a COBRA qualifying event. As a result, the employer has no obligation to provide a COBRA election notice or offer continuation coverage. Despite the significance of this exception, Congress did not define “gross misconduct,” and the COBRA regulations likewise provide no definition. Consequently, courts have developed the standard through case law, often emphasizing that the exception should be applied cautiously because an incorrect determination may expose an employer to COBRA penalties and other liability. The Court’s Decision In Green v. Clement Auto Group, LLC, a federal district court in Missouri considered whether an employer properly denied COBRA coverage after terminating an employee for time theft. The employee had been approved for intermittent leave under the Family and Medical Leave Act but routinely clocked in before leaving work for medical appointments without recording leave. Although the employee admitted that he performed no work during the periods between clocking in and returning from his appointments, he nevertheless received compensation for those hours. Surveying decisions from multiple jurisdictions, the court observed that gross misconduct generally requires conduct that is significantly more serious than poor performance, negligence, or isolated lapses in judgment. Instead, conduct must be intentional, willful, wanton, deliberate, reckless, or demonstrate deliberate indifference to the employer’s interests. Applying that standard, the court concluded that the employee’s intentional falsification of time records and receipt of pay for unworked hours constituted gross misconduct. The court held that the employer had no obligation to provide COBRA continuation coverage following the employee’s termination. What This Means for Employers Although this decision is not binding outside the federal district in which it was issued, it illustrates the type of conduct that courts may find sufficiently egregious to qualify as gross misconduct for COBRA purposes. The opinion reinforces that intentional dishonesty, particularly where an employee knowingly receives compensation for hours not worked, may satisfy the standard for gross misconduct. • www.lcwlegal.com •

At the same time, employers should continue to exercise caution before relying on the gross misconduct exception. Courts have historically interpreted the exception narrowly, and an incorrect determination may result in liability for failing to provide required COBRA notices and continuation coverage. Before concluding that an employee was terminated for gross misconduct, employers should carefully evaluate: • Whether the misconduct was intentional rather than merely negligent or inadvertent. • Whether the employer has thoroughly documented the facts supporting the termination. • Whether the evidence demonstrates deliberate misconduct rather than poor performance or misunderstanding of workplace policies. • Whether the employer has consistently applied its disciplinary policies in similar situations. Practical Considerations For most involuntary terminations, the safest course remains providing a COBRA election notice. Employers should consider relying on the gross misconduct exception only when the facts clearly demonstrate intentional or egregious misconduct and the supporting evidence is well documented. When employers believe the exception may apply, consulting legal counsel before withholding COBRA rights can help reduce the risk of later claims that continuation coverage was improperly denied. Takeaways While Green v. Clement Auto Group, LLC does not establish a nationwide rule, it offers useful insight into how courts may analyze the gross misconduct exception. The decision confirms that intentional time theft supported by substantial evidence may constitute gross misconduct sufficient to eliminate an employer’s COBRA obligations. Nevertheless, because the exception remains highly fact-specific and is construed narrowly, employers should proceed carefully and ensure that any decision to deny COBRA coverage is supported by thorough documentation and a well-developed factual record.

IRS Increases Affordability Percentage For Affordable Care Act. The IRS has set the new Affordable Care Act (ACA) affordability percentage to 10.22% for 2027. This new affordability percentage is 0.26% higher than the current 2026 affordability percentage (i.e., 9.96%). (Rev. Proc. 2026-26 (July 27, 2026).) While the Internal Revenue Code originally set the affordability threshold to 9.5%, the Internal Revenue Service (IRS) retains the authority to release an adjusted percentage each year. (See 26 U.S.C. section 36B(c)(2)(C)(i).) From 2015 to 2022, the IRS set an affordability percentage above 9.5%, going as high as 9.86% in 2019. For 2023, the IRS dropped the affordability percentage below 9.5% for the first time by setting it at 9.12%, then dropped it even lower to 8.39% for 2024. The affordability percentage increased to 9.02% for 2025 and 9.96% for 2026. The new 2027 affordability percentage of 10.22% is a new high. Applicable large employers are advised to check whether their offers of employer-sponsored health coverage for 2027 are affordable using the 10.22% threshold. To determine whether an offer of health coverage is affordable, an employer must run an affordability calculation to determine whether an employee’s “Required Contribution” toward the premium for the lowest cost employee-only coverage exceeds or does not exceed 10.22% of the employee’s household income for the 2027 taxable year. Since employers typically do not know the total household income of each of their employees, the ACA provides three affordability safe harbor options an employer may adopt and apply on a reasonable and consistent basis: 1. Under the Form W-2 Safe Harbor, coverage is affordable if the employee’s Required Contribution is less than or equal to 10.22% of the employee’s wages reported in Box 1 of Form W-2.

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

August 2026

2. Under the Rate of Pay Safe Harbor, coverage is affordable if the employee’s Required Contribution is less than or equal to 10.22% of the monthly wage amount for hourly employees (the hourly rate multiplied by 130 hours), or the monthly salary for salaried employees. 3. Under the Federal Poverty Line Safe Harbor, coverage is affordable if an employee’s Required Contribution does not exceed 10.22% of the Federal Poverty Line for a single individual. Please note that there are additional factors, such as health flex contributions and cash in lieu, that can greatly impact the amount of an employee’s Required Contribution and the affordability calculation. For more information about how to run the affordability calculation and whether you need to revise the employer contribution to maintain affordable offers of health coverage, please reach out to us.

Consortium Call of the Month

Members of Liebert Cassidy Whitmore’s consortiums are able to speak directly to an LCW attorney free of charge to answer direct questions not requiring in-depth research, document review, written opinions or ongoing legal matters. Consortium calls run the full gamut of topics, from leaves of absence to employment applications, student concerns to disability accommodations, construction and facilities issues and more. Each month, we will feature a Consortium Call of the Month in our newsletter, describing an interesting call and how the issue was resolved. All identifiable details will be changed or omitted.

Question: A District client frontloads 12 days of sick leave each year. An employee used sick leave and left the District before fully accruing the front-loaded sick leave. Separately, the District, through its agreement with the union, has a retroactive incentive pay tied to certain metrics. This retroactive incentive will be made to employees who separated but were employed during the retro period. The separated employee is entitled to a retro payment, and the District wanted to know if it could deduct the difference between sick leave used but not accrued and the retro payment without obtaining written authorization from the former employee.

Answer: The LCW attorney explained that this was not advisable due to California State Employees Association v. State of California (1988) 198 Cal.App.3d 374, which ruled that the state cannot unilaterally deduct money from employee paychecks to recover past salary overpayments without following formal wage garnishment and attachment laws. The attorney advised that small claims court is the appropriate avenue if the District is unable to acquire written authorization.

• www.lcwlegal.com •

Liebert Cassidy Whitmore