December 2025
Education Matters
Table Of Contents 03 Federal Administrative Law
10 Legal Updates
05 Workplace Violence Restraining Orders
11 Firm Victories Benefits Corner
06 Discrimination
13 Benefits Compliance Question
07 Harassment
14 LCW Benefits Best Practices Timeline
08 Freedom of Religion 09 Artificial Intelligence
15 Consortium Call Of The Month
Contributors: Amy Brandt Partner | San Francisco Jordan Carman Associate | San Francisco
Stephanie J. Lowe Senior Counsel | San Diego
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. 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.
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December 2025
Federal Administrative Law Ninth Circuit Refuses To Stay Injunction Preventing U.S. Department Of Education From Ending Mental Health Grants. The United States Department of Education awarded multi-year grants to multiple states to support school-based mental health programs serving elementary and secondary students. Congress authorized and funded these grants through the Bipartisan Safer Communities Act, a 2022 statute that appropriated funds for specified school safety and mental health initiatives. The Department made annual grant continuation decisions under 34 C.F.R. section 75.253, which requires the Secretary of Education to decide whether continued funding serves the federal government’s interests. In 2025, the Department sent notices to sixteen states stating that it would discontinue their grants at the conclusion of the existing funding period. The Department did not implement those decisions immediately and did not reduce funding during 2025. All grants remained in effect and fully funded through December 31, 2025. The governing statutes and regulations did not guarantee continued funding beyond that date, but the states disputed the lawfulness of the Department’s decisions to discontinue the grants. The States of Washington, California, and fourteen other states filed suit in federal district court against the United States Department of Education (Department) and the Secretary of Education in her official capacity. The states sought declaratory and injunctive relief under the Administrative Procedure Act (APA), which authorizes courts to set aside final agency action that is arbitrary, capricious, or contrary to law. The states alleged that the Department violated its own regulations governing grant continuation decisions, failed to engage in required notice-and-comment rulemaking under the General Education Provisions Act, which governs federal education programs, and failed to provide reasoned explanations for its actions as required by the APA. The Department filed a motion to dismiss. The Department argued that the Tucker Act deprived the district court of jurisdiction because that statute assigns contract-based monetary claims against the federal government to the Court of Federal Claims. The Department also argued that the APA barred review because the discontinuation decisions fell within agency discretion. The district court granted the states’ motion for a preliminary injunction. The preliminary injunction enjoined the Department from implementing or relying on the grant-discontinuation decisions while the case proceeded. This injunction did not order the Department to continue funding the grants, renew the grants, or disburse any funds. The Department and the Secretary appealed and filed an emergency motion in the Ninth Circuit seeking an administrative stay of the preliminary injunction pending appeal. The appeal concerned only whether the Ninth Circuit should stay the injunction, not the ultimate merits of the states’ APA claims. The Ninth Circuit applied the four-factor test from Nken v. Holder, which governs whether a court should issue a stay pending appeal. Under that test, a court considers the moving party’s likelihood of success on the merits, whether the moving party will suffer irreparable harm absent a stay, whether a stay will substantially injure other parties, and where the public interest lies. The Ninth Circuit explained that the first two factors carry the
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most weight and that it considers the remaining factors only after the moving party satisfies those two threshold requirements. The Ninth Circuit first addressed whether the Department showed a likelihood of success on its argument that the district court lacked jurisdiction to adjudicate the states’ APA claims. The Department argued that the Tucker Act barred district court jurisdiction because it grants the Court of Federal Claims exclusive jurisdiction over claims seeking monetary relief based on contracts with the United States. The Ninth Circuit explained that an APA action seeking injunctive or declaratory relief falls outside the Tucker Act unless it functions as a disguised claim for money damages. The Ninth Circuit reached that conclusion by examining the nature of the relief the states sought. The Ninth Circuit determined that the states sought only prospective relief. The states did not request payment of funds, continuation of grants, or compensation for past expenditures. The grants remained fully funded through the end of 2025, and vacating the discontinuation decisions would not automatically renew funding because 34 C.F.R. section 75.253 makes grant continuations discretionary. The Ninth Circuit distinguished recent Supreme Court cases in which plaintiffs sought immediate payment of grant funds. It explained that the preliminary injunction in this case merely preserved the status quo without ordering the payment of any funds. Because the states neither sought nor suffered monetary damages, the Ninth Circuit held that the Department failed to show a likelihood of success on its Tucker Act jurisdictional argument. The Ninth Circuit next addressed whether the APA barred review because the discontinuation decisions fell within agency discretion. The Ninth Circuit explained that agency action escapes judicial review only when statutes provide no meaningful standards for courts to apply. The Bipartisan Safer Communities Act expressly identified the grant programs at issue and limited the Department’s discretion. The Department also constrained itself through regulations, including 34 C.F.R. section 75.253, which supplies standards governing continuation decisions. The Ninth Circuit emphasized that even discretionary regulatory standards can supply meaningful criteria for judicial review. Applying that principle, the Ninth Circuit held that the requirement that the Secretary determine whether continuation serves the federal government’s interests did not eliminate judicial review. Because statutory and regulatory constraints governed the Department’s decisions, the Ninth Circuit concluded that the APA permitted judicial review. The Ninth Circuit also concluded that the Department failed to show it would suffer irreparable harm without a stay. The preliminary injunction did not require the Department to disburse any funds, which eliminated the risk of unrecoverable payments. The Department argued that it would suffer irreparable harm if the funds expired and reverted to the Treasury after December 31, 2025, because the Department would then lose authority to obligate or spend those funds. The Ninth Circuit rejected that argument, explaining that courts may preserve funds beyond statutory expiration dates while litigation remains pending and that Congress has authorized courts to suspend the lapse of appropriations during ongoing litigation. The Ninth Circuit noted that the district court scheduled expedited summary judgment proceedings and intended to resolve the case promptly. Under those circumstances, the Ninth Circuit found no basis for emergency relief. The Ninth Circuit denied the Department’s emergency motion for an administrative stay of the lower court’s preliminary injunction. The Ninth Circuit expressed no view on the ultimate legality of the grant-discontinuation decisions and left further proceedings to the district court. Washington v. United States Dep’t of Educ. (9th Cir. Dec. 4, 2025, No. 25-7157).
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December 2025
WORKPLACE VIOLENCE RESTRAINING ORDERS Court Upholds Workplace Violence Restraining Order Where Employee Made Vague Reference To Prior Shooting. Neill Francis Niblett worked as a senior mechanic in the Los Angeles County Fire Department under Assistant Chief Samuel S. The County reports that Niblett frequently raised his voice at Samuel over workplace decisions. On October 5, 2022, he escalated to shouting profanities at close range, which caused Samuel to feel threatened. On October 11, 2022, while upset about the transfer of another mechanic, Niblett told a department secretary, “If they don’t change things in this department, they’re going to have another situation as they had with Tatone.” This remark referred to a prior incident in which a firefighter fatally shot a coworker. The secretary reported Niblett’s statement to Samuel and later provided a statement to the sheriff ’s department. The comment occurred during a period of heightened concern about workplace safety following that earlier shooting. On November 18, 2022, the County petitioned the trial for a workplace violence restraining order (WVRO) under Code of Civil Procedure section 527.8, identifying Samuel as the employee needing protection. The County supported its petition with declarations from Samuel and the secretary. The trial court issued a temporary restraining order. At the January 18, 2023, hearing, the secretary, Samuel, and a union representative testified. Niblett appeared but did not testify. The trial court found clear and convincing evidence that Niblett’s October 11 statement constituted a credible threat of violence and issued a three-year WVRO that barred contact, restricted Niblett from Samuel’s workplace, and required him to relinquish firearms. Niblett appealed. The appellate court held that substantial evidence supported the finding that Niblett made a credible threat of violence. The appellate court concluded that a reasonable person could interpret Niblett’s reference to the earlier shooting as an implied threat to use violence if management continued making decisions he opposed, especially given Niblett’s escalating confrontations and the fact that he owned firearms. The appellate court rejected his argument that the statement expressed only hypothetical concerns or union advocacy. The appellate court also held that section 527.8 does not require an express threat, immediate intent to harm, or identification of a specific individual. It found that Samuel was a logical target based on his supervisory role and his prior conflicts with Niblett. The appellate court also addressed Niblett’s constitutional and statutory claims. After upholding the trial court’s evidentiary findings, the appellate court addressed Niblett’s First Amendment free speech claim. The appellate court concluded that Niblett’s statement qualified as a “true threat,” which is not protected speech under the First Amendment. The appellate court also held that Niblett forfeited his labor-speech claim under Code of Civil Procedure section 527.3 by failing to develop it in his opening brief. Finally, it rejected his Second Amendment challenge to the firearm restrictions. The appellate court affirmed the workplace violence restraining order and awarded the County its costs on appeal. County of Los Angeles v. Niblett (2025) 116 Cal.App.5th 454. Note: Liebert Cassidy Whitmore attorneys can assist clients in obtaining workplace violence restraining orders that protect district employees.
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Discrimination Age Claim Was Viable Even Though Employees Had Not Applied For The Promotion. Three Dealer Business Managers (DBMs) were long-term 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, 45-year-old Miko Angelese, 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 in order to promote a younger employee. They sued Circle K in California state court for age discrimination under both the ADEA and FEHA. Circle K removed the case to federal court. The federal district 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 district 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 Ninth Circuit Court of Appeals 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 Ninth Circuit 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 significant factor in the employer’s decision. The Ninth Circuit found that the DBMs had presented sufficient evidence to create a triable issue of pretext and remanded the case for further proceedings. Caldrone v. Circle K Stores Inc. (9th Cir. 2025) 156 F.4th 952.
new to the Firm! Brittany Roberts joins us as an Associate with experience as a federal law clerk and a strong background in employment law, making her a fantastic addition to our team and well-equipped to help clients navigate compliance and workplace challenges with practical, proactive solutions.
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December 2025
Harassment Employer’s Poor Responses To Employee’s Complaint Could Support Claim For Hostile Work Environment. Bakersfield Recovery Service, Inc (BRS) provides substance abuse treatment. Steven Kruitbosch was an assistant corporate compliance officer. Lisa Sanders was Kruitbosch’s coworker, though the two did not work together or in the same location often. Like many BRS employees, Kruitbosch was in recovery from substance abuse, and many employees, including Sanders, knew that Kruitbosch was sober. After Kruitbosch’s long term partner passed away, he took leave under the California Family Rights Act. In the week leading up to Kruitbosch’s return, Sanders began sending Kruitbosch multiple unsolicited nude pictures and propositioned him. Kruitbosch firmly rejected these advances. Sanders went to Kruitbosch’s home uninvited and again propositioned him. Kruitbosch told her to leave. Sanders eventually departed Kruitbosch’s property but left behind a cucumber with a condom attached in his driveway. Sanders texted Kruitbosch and invited him to a hotel room to have sex and do drugs. She sent him multiple sexually explicit images. Upon returning to work, Kruitbosch immediately complained about Sanders’s conduct to acting program director Stephanie Carroll and HR representative Kimberly Giles. Carroll said there was not much she could do. Giles posted a video to social media depicting dogs whining that made a veiled reference to Kruitbosch’s complaint. Kruitbosch’s employment became unbearable as he went to great lengths to avoid Sanders. He was fearful that he would be forced to see Sanders. He was overcome with anger and humiliation knowing Sanders was free to continue harassing him. Kruitbosch resigned because he felt that continuing to work at BRS would be detrimental to his mental health, grief recovery process and sobriety. After resigning, Kruitbosch filed a complaint against BRS and Sanders under the Fair Employment and Housing Act (FEHA). He included a claim for hostile work environment sexual harassment. The trial court granted BRS’s demurrer, finding that Sanders’s conduct was not attributable to BRS on the basis of their co-working relationship alone. The court found that although Kruitbosch was unhappy with BRS’s response, the situation was not pervasive, and BRS took no adverse action. Kruitbosch appealed. The California Court of Appeal reversed the trial court’s ruling sustaining BRS’s demurrer as to Kruitbosch’s claims for sexual harassment and hostile work environment. The Court held that while Sanders’s conduct was not sufficiently work-related to be imputed to the BRS. But BRS’s response to the Kruitbosch’s complaint, specifically Carroll and Giles’s failure to act and Giles’s comment and social media post mocking him, could support a claim for hostile work environment sexual harassment. Giles’s comment, in conjunction with BRS’s ratification of Sanders’s conduct through inaction, materially altered his working conditions. There was no investigation of Kruitbosch’s complaint, no admonition to Sanders to cease her conduct, and BRS took no steps to shield Kruitbosch from having to interact with Sanders. Kruitbosch v. Bakersfield Recovery Services, Inc. (2025) 114 Cal.App.5th 200.
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Freedom of Religion No Religious Accommodations Required For Employee’s Secular Judgments. Sherry Detwiler worked for the Mid-Columbia Medical Center in Oregon (MCMC). Detwiler is a Christian who believes her body is a temple of the Holy Spirit, and that she has a duty to avoid defiling her ‘temple’ with substances that the Bible explicitly condemns or which could potentially harm her. Detwiler sought a religious exemption from MCMC’s policy requiring that healthcare workers receive vaccinations against COVID-19, absent an approved exemption. Detwiler, relying on sources she found online, believed that manufacturers created COVID-19 vaccines from fetal cell lines and that the vaccines contained potentially harmful substances. She informed MCMC that her religious beliefs against abortion and the use of harmful substances conflicted with the vaccine requirement. MCMC approved Detwiler’s request for a religious exemption from vaccination. As part of that accommodation, MCMC required that Detwiler wear personal protective equipment while in the office and submit to weekly antigen testing for COVID-19 through a nasal swab. Detwiler informed MCMC that she believed that nasal swabs contained a carcinogenic substance and reasserted her religious beliefs. Detwiler proposed that MCMC allow her either to submit to saliva testing for COVID-19 or to work remotely full-time. MCMC’s Chief Human Resources Officer (CHRO) responded that MCMC had granted her request for an exemption from the vaccine requirement but denied her requested accommodations of saliva testing and full-time remote work. The CHRO advised Detwiler that saliva testing would be impractical due to the delay in test results. In addition, the CHRO confirmed that MCMC might ask Detwiler to appear for same-day, in-person work because of dissatisfaction with Detwiler’s work during her remote work periods. MCMC placed Detwiler on unpaid leave until she either: (1) complied with the vaccine mandate; (2) complied with the terms of her approved religious exemption; or (3) accepted reassignment. Detwiler chose none of those options, and MCMC terminated her employment Detwiler sued MCMC for religious discrimination in violation of Title VII of the Civil Rights Act of 1964. MCMC filed a motion to dismiss the case for failure to state a claim. MCMC argued Detwiler’s objection to antigen testing stemmed from her secular, medical judgment rather than a bona fide religious belief. The District Court dismissed the complaint, accepting Detwiler’s bona fide religious beliefs but noting that Detwiler’s specific determination of what is harmful was not premised on her religion. Detwiler appealed to the Ninth Circuit Court of Appeals. The Ninth Circuit opined that it had not yet endorsed a test for determining the nature of a religious belief underlying a Title VII claim. The Ninth Circuit ultimately held that an employee seeking a religious exemption must plead a clear connection between her faith and the specific belief that conflicts with her work requirement. The Ninth Circuit emphasized that an employee does not need to show that their belief is consistent, rational, or widely shared, but it must demonstrate that the requested accommodation flows from a truly religious principle rather than a personal or secular concern. The Ninth Circuit rejected the notion that generic references to broad religious tenets, such as treating one’s body as a temple, can automatically transform a secular preference into a religious belief. The Ninth Circuit reasoned that allowing such assertions would permit employees to bypass workplace requirements by reciting “magic words.” The Ninth Circuit concluded that courts must verify whether the asserted belief is religious in nature, as opposed to merely secular, but may not question the sincerity or reasonableness of the belief. Applying that standard, the Ninth Circuit found that Detwiler’s complaint was not sufficient. The Ninth Circuit accepted her general Christian conviction that her body is a temple. However, the Ninth Circuit determined that her actual objection, the belief that antigen test swabs were carcinogenic, rested on her personal interpretation of medical research.
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December 2025
Because Detwiler’s belief arose from a secular judgment rather than a religious doctrine, the Ninth Circuit ruled it was not protected under Title VII. The Ninth Circuit stressed that Detwiler had no religious conflict with the testing policy apart from her secular opinion about chemicals she believed to be in the swab materials. The Ninth Circuit warned that adopting Detwiler’s proposed lenient approach would create an unmanageable expansion of religious accommodation claims, and force employers and courts to treat ordinary personal preferences as matters of faith. Detwiler v. Mid-Columbia Med. Ctr. (9th Cir. 2025) 156 F.4th 886.
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 public sector 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. 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, agencies 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 an agency’s behalf, the agency remains responsible under FEHA. • Recordkeeping Required: Agencies 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 Council encourages agencies to conduct self-audits and fairness evaluations. The timing, scope, and quality of these efforts can support a defense if a discrimination claim arises.
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Steps Toward Compliance: Public agencies 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 disabilities. Offer reasonable accommodations or alternative methods for completing applications or assessments when needed, including for religious observances.
Legal Updates Governor Newsom Signed SB 707 Into Law In October 2025, Implementing Extensive Updates To The Ralph M. Brown Act. As we reported in the November edition of Education Matters, the existing emergency teleconference rules are expiring. On October 3, 2025, the Governor signed Senate Bill 707, which, among other revisions to the Ralph M. Brown Act, extends and expands the teleconference rules. You can read more about the change in law in our blog post: SB 707 - Overhaul of Meeting and Teleconferencing Requirements Under the Brown Act.
U.S. Department Of Education Announces Launch Of New Portal For Reporting Foreign Funding. The U.S. Department of Education announced that a new portal for reporting foreign gifts and contracts
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will launch on January 2, 2026. Institutions of higher education must currently disclose biannually any foreign gifts or contracts valued at $250,000 or more under Section 117 of the Higher Education Act. The Department of Justice enforces compliance when institutions fail to meet these obligations.
U.S. Department Of Education Launches New Earnings Indicator As Part Of FAFSA Application. The U.S. Department of Education launched a new earnings indicator within the FAFSA process to provide applicants with information about institutions’ postgraduation earnings. The FAFSA now displays a “lower earnings” disclosure when a school’s average graduate earnings fall below those of the average high school graduate, using existing Department data presented at the point of application. The Department of Education states that this feature increases transparency, relies on publicly available data, and can be used by students, families, and counselors to support informed decision-making.
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December 2025
Firm Victories LCW Attorneys Secure Dismissal Of Two Tenured Faculty Members Who Neglected Their Students. The firm successfully assisted a community college district in the dismissal of two faculty members following disciplinary charges filed against them and prepared by the firm. The first faculty member had received three 90-Day Notices of Unprofessional Conduct and Unsatisfactory Performance from the district, drafted by LCW, based on his excessive absences from class, failure to meet internal district deadlines, and failure to respond to his students’ emails and calls—which, in one instance, jeopardized a student’s ability to transfer to a four-year university. Rather than improve his conduct, the faculty member stopped appearing for work, effectively abandoning his job. After Partner Pilar Morin and Associate Gabriella Kamran drafted the disciplinary charges, the employee evaded service. LCW assisted the district in tracking him down using a private investigator. The second faculty member attempted to work full-time at the district while also working at two other community college districts simultaneously. Specifically, she falsely sought a medical accommodation for a leave of absence, and later, remote work, to perform duties for the other two community college districts while on paid leave and working remotely. Ms. Morin and Associate Madison Tanner drafted the disciplinary charges. Neither faculty member appealed their dismissal from the district. Thus, LCW achieved finality in the employees’ dismissals without the need for a hearing before the Office of Administrative Hearings.
Benefits Corner Is Your Agency Ready For ACA Reporting In 2026? The IRS has released the final Affordable Care Act (ACA) reporting forms (Forms 1094-C and 1095-C) for filing next year to cover tax year 2025. Applicable Large Employers, as defined by the Affordable Care Act, are required to file Forms 1094-C and 1095-C to provide the IRS with information about health care offered to employees and furnish a copy of Form 1095-C to each employee to whom it pertains. Employers who fail to furnish statements or file the completed forms by the deadlines may be subject to penalties, which is why preparation is key. The Deadline to Furnish Form 1095-C to Employees is March 2, 2026. Employers must provide or “furnish” full-time employees and employees enrolled in an employer-sponsored selfinsured plan their Form 1095-C by the deadline on Monday, March 2, 2026. Applicable large employers (ALEs) have a new option to skip furnishing Form 1095-C if the employer provides a clear, conspicuous, and accessible notice that meets the following requirements. The notice is: 1. Posted in a location on the ALE’s website that is reasonably accessible to full-time employees; 2. States that employees may receive a copy of their statement upon request; • www.lcwlegal.com •
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3. Explains how employees may request a copy of their Form 1095-C; 4. Includes an email address and a physical address where employees can make a request for their Form 1095-C; 5. Includes a telephone number that employees may use to contact the ALE with questions; and 6. Is written in plain, non-technical terms and with letters of a font size large enough to call a viewer’s attention that the information pertains to tax statements reporting health coverage. For example, a website that includes words on the main page reading “Tax Information” and a secondary page that includes the statement “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS” in capital letters. For this purpose, the Form 1095-C is timely furnished if provided to the requesting employee no later than the later of January 31, 2026, or 30 days after the date of their request. The notice must be posted on the ALE’s website by March 2, 2026. The notice must remain on the ALE’s website through October 15, 2026. The Deadline to E-File ACA Returns is March 31, 2026. All public agencies are required to file Forms 1094-C and 1095-C electronically when filing ten (10) or more returns. The deadline to e-file Forms 1094-C and 1095-C is Tuesday, March 31, 2026. Employers that would like an automatic 30-day extension to file Forms 1094-C and 1095-C must submit Form 8809 on or before the due date of the returns. The IRS has increased the penalty for failing to file a correct return to $340 per return (up from $330).
New Flexible Spending Account Contribution Limits For 2026. The employee salary reduction contribution limit for health flexible spending accounts (health FSAs) will increase to $3,400 for 2026 (up from $3,300 in 2025). Health FSA funds are tax-free dollars that may be used to pay eligible medical expenses not covered by other health plans. While $3,400 is the new limit set by the IRS, employers should also review the limits set by their own Section 125 cafeteria plan documents. Some cafeteria plan documents may set a lower limit, or may need to be revised if an employer would like to allow employees to make salary reduction contributions up to the IRS limit, as it adjusts on an annual basis. The increase to the 2026 health FSA contribution limit also means the IRS will permit employees to carry over up to $680 of unused health FSA funds at the end of a 2026 plan year to the following 2027 plan year. Employers should verify whether they have adopted a carryover option for their health FSA under their Section 125 cafeteria plan, and if so, should check the maximum amount that may be carried over per the terms of their cafeteria plan document. The maximum amount of dependent care flexible spending accounts (also known as dependent care assistance plans or “DCAPs”) benefits will increase to $7,500 (and $3,750 for taxpayers who are married filing separately) in 2026. This up from $5,000 ($2,500 for married filing separately) in prior years. This change was made by the One Big Beautiful Bill Act earlier this year. Employers should review the limits set by their own Section 125 cafeteria plan documents, which may need to be revised if the employer wants to allow the new, higher DCAP contribution. Rev. Proc. 2025-32 (Oct. 22, 2024); IRS News Release IR-2025103 (Oct. 9, 2024)
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Visit the above link for more information. 12
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December 2025
Benefits Compliance Question Question: What can an agency do with all of the experience gains it has accumulated over the years from employees’ health flexible spending accounts (health FSAs)?
Answer: “Experience gains” are the difference between annual forfeitures and the health FSA’s losses from overspent accounts. The Proposed Treasury Regulations that govern flexible spending accounts sets the guidelines on what an employer can do with the unspent money. Pursuant to Proposed Treasury Regulation section 1.125-5(o)(1), experience gains or forfeitures, may be: Retained by the employer maintaining the cafeteria plan; or If not retained by the employer, may be used only in one or more of the following ways: To reduce required salary reduction amounts for the immediately following plan year, on a reasonable and uniform basis (Note: This option requires the forfeitures to be used in the “following plan year” and not later plan years); Returned to the employees on a reasonable and uniform basis (Note: The amount cannot be returned to employees based on their forfeiture amounts); or To defray expenses to administer the cafeteria plan. An employer would need to cross-check the reasons it can use the health FSA experience gains with its Section 125 cafeteria plan document. Depending on its terms, the plan document may allow all of the options stated above from Section 1.125-5(o), or it’s possible that a cafeteria plan document could limit the options. • www.lcwlegal.com •
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LCW BENEFITS BEST PRACTICES TIMELINE Each month, LCW presents a monthly benefits timeline of best practices.
December:
• For Districts that have benefit plan years that begin January 1, ensure any changes to a Section 125 cafeteria plan document are adopted by the District’s governing body by December 31 to be effective by the start of the new plan year. • Ensure employees submit their salary reduction agreements for flexible spending account amounts for 2026. • Notify employees who participate in a flexible spending account (health FSA, DCAP, or adoption assistance) of any deadline to withdraw funds before the end of the plan year. Notice shall be by two different forms, one of which may be electronic. (Lab. Code, section 2810.7.) • For Districts with cash-out election procedures for leave that avoid the constructive receipt doctrine, ensure employees make irrevocable elections before December 31, 2025, to cash out vacation and sick leave that will be earned in 2026.
January: • Prepare for the Monday, March 2, 2026 deadline to furnish Form 1095-C to employees. Retain a record of your agency furnishing the forms to employees. • Prepare for the Tuesday, March 31, 2026 deadline to e-file Forms 1094-C and 1095-C. Retain a record of the forms and proof of the e-filing. To the extent a vendor performs these filings on behalf of the agency, the agency should secure copies of the filings from the vendor. In the event of a potential future assessment, the agency will need to see the details of exactly what was filed. • If agency would like an automatic 30-day extension to file Forms 1094-C and 1095-C, agency must submit Form 8809 on or before the due date of the returns. 14
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December 2025
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:
Answer:
A Community College District client asked LCW if it was acceptable to require that candidates not use Artificial Intelligence (AI) tools during any stage of the interview process or the completion of the written exercise.
An LCW attorney explained that while there were no laws specifically prohibiting a proposed policy for AI use in the interview process, the client should be mindful of applicants using AI as part of an accommodation for the interview process. The attorney suggested in-person interviews or screen-sharing when candidates are preparing written responses to ensure that they are not using AI to generate responses. The attorney also advised that the client could include language in a proposed policy that states that the use of AI is prohibited when not for a reasonable accommodation.
Annual Public Sector
Employment Law Conference https://lcwtraining.com/lcw2026n • www.lcwlegal.com •
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Liebert Cassidy Whitmore