Nonprofit News
Allison Berquist
Contributors:
Associate | Los Angeles
Hannah Dodge Associate | San Francisco
Riley Jacobs Associate | San Diego
Alison R. Kalinski Senior Counsel | Los Angeles
Stephanie J. Lowe
Associate | Los Angeles
Casey Williams Partner | San Francisco
DONOR PRIVACY
Supreme Court Holds That Government Demands For Donor Information Can Immediately Burden First Amendment Rights.
A recent United States Supreme Court decision provides important guidance for nonprofits regarding compelled disclosure of donor information. In First Choice Women's Resource Centers, Inc. v. Davenport, the Court considered whether a nonprofit may immediately challenge a government demand for donor information or whether it must wait until a court orders compliance with the demand.
It began with a State investigation seeking information about a nonprofit organization’s donors.
First Choice Women's Resource Centers (First Choice) is a New Jersey nonprofit organization that provides counseling and resources to pregnant women. In 2023, the New Jersey Attorney General, Matthew J. Platkin, served a subpoena to First Choice seeking numerous categories of records. Among other things, the subpoena demanded documents identifying many of the organization's donors, including names, addresses, phone numbers, and places of employment. The subpoena also warned that failure to comply could result in contempt proceedings and other penalties. The New Jersey Attorney General later explained that his office sought donor information in connection with an investigation into whether donors may have been misled about the organization's mission and operations.
In response to the subpoena, First Choice filed suit in federal court under 42 U.S.C. section 1983, arguing that the demand for donor information violated its First Amendment rights. First Choice alleged that donors could be discouraged from supporting First Choice if there was no guarantee of donor anonymity and that the subpoena interfered with First Choice’s ability to recruit and retain supporters.
The case turned on whether First Choice had standing to sue under the First Amendment.
Before a federal court can decide a case, a plaintiff must have "standing." In simple terms, standing means the plaintiff must show that it has suffered, or is about to suffer, a real injury that the court can address.
The key question in this case was whether the subpoena itself caused a sufficient injury to First Choice, such that First Choice had standing to sue. First Choice argued that the subpoena’s issuance alone burdened its First Amendment associational rights. The New Jersey Attorney General argued that no injury existed yet because no court had enforced the subpoena and ordered the nonprofit to produce the information.
The lower courts concluded that First Choice had not yet suffered sufficient injury.
The federal district trial court dismissed the case, concluding that First Choice had not yet suffered an injury because no court had compelled production of the requested donor information. The Third Circuit Court of Appeals affirmed.
The Supreme Court reversed and held that the demand for donor information was sufficient injury to create standing.
The Supreme Court unanimously reversed the lower courts’ decisions. The Court explained that the First Amendment protects not only speech but also the right to associate with others to advance shared political, religious, charitable, and social goals.
Relying on decades of precedent addressing compelled disclosure of donor and membership information, the Court reiterated that privacy often plays an important role in protecting freedom of association. Government demands for donor information can discourage individuals from supporting organizations and can pressure organizations to modify their activities or advocacy.
Accordingly, the Court held that First Choice had adequately alleged a present injury. The Court explained that the injury arose when the government demanded donor information and continued for as long as that demand remained outstanding. Accordingly, First Choice did not need to wait for a court order compelling disclosure before challenging the demand.
The Court also rejected arguments that there was no injury because some donors could still contribute anonymously through certain channels or because the New Jersey Attorney General represented that donor information would remain confidential. The Court emphasized that demands for donor information may burden First Amendment rights even when the information is not publicly disclosed.
The Court sent the case back to the lower courts for further proceedings. Importantly, the Court did not decide whether the subpoena ultimately violates the First Amendment. The Court held only that First Choice had standing to pursue its constitutional challenge.
First Choice Women's Resource Centers, Inc. v. Davenport (2026) 224 L. Ed. 2d 672.
Note:
This case reinforces that donor information deserves careful protection. The Supreme Court recognized that government demands for donor identities can affect an organization's ability to attract and retain supporters. Nonprofits should carefully review subpoenas and other government requests for donor information with legal counsel before responding.
SUMMER CAMP
Summer Camp Season: Key Considerations For California Nonprofits.
Each summer, California nonprofits operate day camps, overnight camps, outdoor education programs, sports camps, enrichment programs, faith-based camps, and other youth recreation activities. These programs provide meaningful opportunities for youth, but they also bring legal responsibilities related to wage and hour compliance, staff qualifications, minor employees, local camp rules, supervision, and safety.
Below are a few key considerations for California nonprofits operating summer camps and youth programs.
1. Know Whether Your Program Is An “Organized Camp”
Not every program called a “camp” is treated as an “organized camp” under California law. Under Health and Safety Code section 18897, an organized camp generally involves a site with programs and facilities established to provide an outdoor group living experience with social, spiritual, educational, or recreational objectives for five days or more during one or more seasons of the year.
This distinction matters because organized camp status can affect both wage rules and operational requirements. Programs that qualify as organized camps must address staff qualifications, supervision, health supervision, safety procedures, emergency procedures, and activity-specific procedures, including for aquatics and other higher-risk activities. (17 Cal. Code Regs., sections 30704, 30751.)
Because the rules depend on the structure of the program, nonprofits should review the program’s location, duration, facilities, activities, and purpose before determining which requirements apply.
2. Review California And Federal Wage Rules
California and federal law use different tests for camp-related wage and hour issues. Under Labor Code section 1182.4, certain student employees, camp counselors, and program counselors of a qualifying organized camp may be paid at least 85 percent of the state minimum wage. For full-time employees, this means weekly pay of at least 85 percent of the state minimum wage for a 40-hour workweek, regardless of the number of hours actually worked. Employees working fewer than 40 hours per week may be paid at least 85 percent of the state minimum hourly wage for each hour worked.
Federal law is different. The Fair Labor Standards Act includes a seasonal recreational establishment exemption that may apply to certain employees of an amusement or recreational establishment, organized camp, or religious or nonprofit educational conference center. The establishment generally must either operate for no more than seven months in a calendar year or satisfy a seasonal receipts test.
Nonprofits should review California and federal wage and hour rules separately before treating camp employees as exempt from minimum wage or overtime requirements. The California organized camp exception is narrow and does not necessarily apply to every employee working at a camp.
3. Check Local Camp Requirements
Some local jurisdictions impose additional requirements for children’s camps. For example, Los Angeles County’s Elena Matyas Children’s Camp Safety Ordinance applies to certain children’s day camps under County jurisdiction and includes health and safety requirements for day and overnight camps. Qualifying children’s camps operating four weeks or less must register with the Los Angeles County Department of Public Health, while camps operating for more than four weeks must obtain a permit.
Depending on the location, local rules may address written operating procedures, staff qualifications, background checks, volunteer disclosures, first aid and CPR training, health supervision, transportation, emergency procedures, and incident reporting. Nonprofits operating programs in more than one city or county should confirm whether different local requirements apply.
4. Obtain Work Permits And Proof Of Age For Minor Employees
Many nonprofits hire minors to work in summer camps, aquatics programs, youth sports programs, and other seasonal youth programs. Unlike public agencies, nonprofit employers generally should assume California’s minor work permit requirements apply unless a specific exemption has been confirmed.
The California Department of Education states that minors employed in California must have a Permit to Employ and Work, commonly referred to as a work permit, and that work permits are typically issued by the school where the student is enrolled. The process generally begins with CDE Form B1-1, Statement of Intent to Employ a Minor and Request for a Work Permit – Certificate of Age.
Before a minor starts work, a nonprofit should obtain the required work permit, maintain reliable proof of age, and confirm that the minor’s duties and schedule are appropriate for the minor’s age. Nonprofits should also review California and federal child labor rules before assigning minors to camp roles involving aquatics, transportation, hazardous equipment, late hours, or unsupervised responsibility for younger children.
5. Train Seasonal And Temporary Staff
Summer programs often rely on short-term employees, but temporary or seasonal status does not eliminate training obligations. For covered employers, Government Code section 12950.1 requires seasonal, temporary, or other employees hired to work for less than six months to receive harassment prevention training within 30 calendar days after hire or within 100 hours worked, whichever occurs first.
Nonprofits should build this training into onboarding whenever possible. For camp programs, onboarding should also address youth protection policies, professional boundaries with minors, supervision expectations, mandated reporting, emergency procedures, incident reporting, transportation procedures, medication and illness response, parent or guardian communication, and camper pickup and release procedures.
6. Prepare Staff For Supervision, Emergencies, And Heat
For outdoor programs, nonprofits should also train staff on heat illness prevention. Cal/OSHA’s outdoor heat illness prevention standard, 8 California Code of Regulations section 3395, applies to outdoor places of employment and addresses water, shade, rest, emergency response, high-heat procedures, acclimatization, and training.
For camp programs, heat illness training should be tied to daily operations. Staff should know where water and shade are available, how activities will be modified during high heat, how to recognize signs of heat illness, how to contact emergency services, and how to document and report incidents. Nonprofits should also train staff on supervision procedures, including head counts, transitions, bathroom supervision, field trips, emergency communication, lost camper procedures, and pickup and release rules.
In sum, California nonprofits operating summer camps and youth programs should review organized camp status, wage and hour rules, local requirements, minor employee documentation, staff training, supervision procedures, and heat illness prevention. These steps can help nonprofits reduce risk while providing safe and meaningful summer programs for children and youth.
Governance
Court Dismisses Defamation And Fiduciary Claims By Removed University Trustee, Allows First Amendment Claim To Proceed.
Barry Fenchak served as an alumni-elected member of the Board of Trustees of Pennsylvania State University from 2022 to 2025. Fenchak filed suit after he was removed from the Board following a series of disputes with University leadership over financial transparency and governance. He alleged that the University and certain Board officials defamed him, breached fiduciary duties, and retaliated against him for exercising his First Amendment rights.
During his tenure, Fenchak frequently sought access to detailed financial information, particularly regarding administrative fees associated with the University’s endowment and the terms of a proposed long-term contract with Elevate Collegiate Ticketing, LLC, which was tied to a renovation project for the University’s football stadium. He reviewed publicly available IRS Form 990 filings and became concerned that administrative fees had increased significantly in recent years. Fenchak repeatedly requested underlying data and documentation supporting those figures, but his requests were denied by Board leadership, who cited confidentiality obligations and internal governance rules.
In July 2024, Fenchak filed a lawsuit in Pennsylvania state court seeking to compel the production of financial records related to the endowment and the Elevate contract. Around the same time, the Board continued to consider and ultimately approved aspects of the Elevate-related project during public meetings, even as Fenchak raised concerns about the lack of transparency. He also publicly questioned why certain trustees were granted access to the contract while others were not.
Following these events, tensions between Fenchak and University leadership escalated. In July 2024, shortly after filing his lawsuit, Fenchak attended a Board meeting where he remarked to University employees comparing a hat to a male body part, which was later characterized as inappropriate and led to a sexual harassment investigation.
As the investigation proceeded, the Board also amended its bylaws to expand the authority of board leadership. The amendments allowed the Board chair to restrict trustees’ access to certain University information and granted leadership broader authority to discipline or remove trustees. After the investigation concluded, it was recommended that Fenchak be removed from the Board for violating the Trustee Code of Conduct.
On June 16, 2025, the Board voted 30 to 4 to remove Fenchak from his position and further determined that he would be ineligible to appear on the ballot in the upcoming alumni trustee election.
Fenchak then filed the present lawsuit, asserting multiple claims. His defamation and false light claims were based on the public filing of an August 20, 2024, letter from University officials explaining why his requests for financial information had been denied. He alleged that the publication of the letter portrayed him in a false and damaging light.
The Court dismissed those claims, holding that the statements were protected by Pennsylvania’s doctrine of judicial privilege. Under that doctrine, statements made in the course of judicial proceedings are absolutely immune from defamation claims so long as they are pertinent to the issues in the case. The Court found that the letter was filed as part of the University’s pleadings in Fenchak’s earlier lawsuit and was directly related to the dispute over access to financial information.
The Court also dismissed Fenchak’s fiduciary duty claim. It explained that, under Pennsylvania law, directors of a nonprofit corporation owe fiduciary duties to the corporation itself, not to individual board members. As a result, Fenchak could not bring an individual claim for breach of fiduciary duty based on actions taken by other trustees.
Fenchak’s constitutional claims presented a more complex issue. He alleged that his removal from the Board was retaliation for his speech, including his public criticism of University leadership and his efforts to obtain financial transparency. The defendants argued that his speech was not protected under the First Amendment because he was speaking in his official capacity as a trustee.
The Court declined to dismiss the First Amendment claim at this stage. It explained that existing precedent limits First Amendment protection for public employees speaking pursuant to their official duties. However, the Court noted that it is unsettled whether those principles apply in the same way to elected officials, such as alumni-elected trustees. The Court observed that elected officials are not subject to the same employer control as traditional public employees and that courts have recognized greater protection for their speech. Given this uncertainty and the factual questions surrounding Fenchak’s role and the nature of his speech, the Court allowed the First Amendment retaliation claim to proceed.
Fenchak v. Pa. State Univ. (E.D. Pa. Apr. 17, 2026) 2026 U.S. Dist. LEXIS 84422.
Note:
While nonprofit organization trustees do not have First Amendment protections, this case is a reminder that nonprofit organizations should have clear governance practices around trustee conduct and the process for addressing disputes between board members and the leadership of the organization.
DISCRIMINATION
Court Rejects Discrimination Claims Brought By Nonprofit University Administrator Fired Weeks After Hire Due To Past “Zionist” Tweets.
Aneesa Johnson, a newly hired administrator in Georgetown University’s Master of Science in Foreign Service (MSFS) program, filed suit after she was terminated less than a month into her role when years-old social media posts resurfaced and sparked significant campus backlash. Johnson, an African American Muslim woman of Palestinian origin, alleged discrimination under Title VII based on race, religion, and national origin, along with retaliation, hostile work environment, and numerous tort claims.
Johnson was hired in October 2023 as the Assistant Director of Academic and Faculty Affairs in the MSFS program, a student-facing administrative role that required her to serve as the primary point of contact for MSFS students on academic matters and to work closely with faculty, staff, and alumni. Her offer letter made clear that her employment was at-will and subject to a six-month probationary period.
Within days of her start date, a Georgetown student searched Johnson online, and the second result was from Canary Mission, a controversial organization that creates online profiles of students and professors on college campuses who have been critical of Israel. Through Canary Mission, the student located a profile containing social media posts Johnson had made approximately eight years earlier as an undergraduate. Those posts included statements expressing a “deep-seated hate” for “Zionists,” referring to them as “dogs,” and reposting an image of an Orthodox Jewish man with a caption referencing Jews being “hated” and likened to a “devil.” The student shared screenshots of the posts on social media.
The situation escalated almost immediately. The posts went viral, and by the next morning, Georgetown instructed Johnson not to report to campus due to safety concerns and placed her on administrative leave. Around the same time, the dean circulated a school-wide email stating that the University had learned of “hateful, antisemitic” social media commentary by a newly hired staff member, that the University had not been aware of the posts at the time of hiring, and that the matter was under investigation.
Johnson alleged that she was subjected to online harassment and doxing following the posts’ circulation. During the University’s investigation, she did not deny authoring the posts but declined to substantively engage with the allegations or address their impact, instead asserting that Canary Mission was itself biased. On November 27, 2023, Georgetown terminated Johnson’s employment. The termination letter cited unprofessional conduct, the significant disruption caused to the program, and concerns about her ability to interact effectively with students and other constituencies, given the nature of her role.
Johnson filed suit, asserting that Georgetown’s response was discriminatory and that other individuals who had made controversial statements were not similarly disciplined.
The Court dismissed her claims in full. In addressing her discrimination claim under Title VII, the Court explained that while Johnson belonged to protected classes and suffered an adverse employment action, she was required to plausibly show that her termination occurred because of those protected characteristics. Johnson argued that the timing of events, comments made at a welcome luncheon about her background and the war in Gaza, and what she characterized as a rushed and biased investigation supported an inference of discriminatory intent. The Court disagreed, pointing instead to an “obvious alternative explanation” supported by the facts: the content of her social media posts, the widespread reaction they generated, and the resulting concerns about her ability to perform a highly interactive, student-facing role.
The Court also rejected Johnson’s argument that she was treated differently from similarly situated employees. It explained that, even at the pleading stage, a plaintiff must provide enough factual context to allow a meaningful comparison, such as similarities in job duties, decision-makers, and circumstances of the conduct. Johnson pointed to faculty and administrators who had made controversial or offensive statements, including one individual who had previously drawn significant criticism for a social media post. But the Court found these comparisons insufficient. The individuals held different roles, were subject to different supervisory structures, and were evaluated by different decision makers. Those differences, the Court held, were significant enough to undermine any inference that Johnson was treated differently because of her protected characteristics.
The Court also rejected Johnson’s attempt to characterize the University’s investigation as evidence of discrimination. While she alleged that the investigation was rushed and overly reliant on external sources, the Court noted that the University did engage with her during the process and that the relevant inquiry was not whether the investigation was ideal, but whether the ultimate decision was motivated by unlawful bias.
Johnson’s hostile work environment and retaliation claims were dismissed both because they were not properly exhausted through the administrative process and because the alleged conduct, which included conversations at a welcome lunch, the dean’s school-wide email, and the University’s disciplinary response, did not meet the legal standards for those claims. The Court emphasized that a hostile work environment requires conduct that is severe or pervasive, and that adverse employment decisions alone do not satisfy that standard.
The Court also rejected Johnson’s breach of contract claim, noting that her at-will, probationary status allowed the University to terminate her if her conduct was deemed unacceptable or inconsistent with job expectations.
Johnson v. Georgetown Univ. (D.D.C. Mar. 31, 2026) 2026 U.S. Dist. LEXIS 69930.
Note:
This case underscores the importance of responding to employee social media issues with a clear, well-documented, and rolespecific analysis. When concerns arise, nonprofit employers should focus on the impact of the conduct on the employee’s ability to perform their duties, conduct a prompt and fair review, and ensure that similarly situated employees are treated consistently. Careful documentation of the decision-making process and the legitimate, non-discriminatory reasons for any action remains critical.
NLRA
Employer’s Severance Agreement Survives NLRB Challenge Over Confidentiality Language.
A private employer in Ohio faced an unfair labor practice charge after it declined to renew the annual contracts of 45 professional staff members and offered each employee a separation and release agreement. The dispute centered on the agreement’s confidentiality provision, which prohibited employees from disclosing “confidential business, medical, and personnel information” and required them to notify the employer of any legal demand for such information.
The National Labor Relations Board’s General Counsel alleged that this provision violated section 8(a)(1) of the National Labor Relations Act, which prohibits employers from interfering with employees’ rights to engage in protected concerted activity, such as discussing wages or workplace conditions. The challenge relied heavily on the Board’s decision in McLaren Macomb, a 2023 NLRB decision that held that severance agreements’ confidentiality and non-disparagement clauses may be unlawful if their terms would reasonably tend to interfere with employees’ protected rights.
The Administrative Law Judge rejected the claim and dismissed the complaint. The judge first addressed the scope of McLaren Macomb, explaining that its holding was tied to agreements that included broader, more restrictive provisions, such as sweeping non-disparagement clauses, and arose in the context of other alleged unfair labor practices. By contrast, the agreement at issue here was limited to confidentiality of specific categories of information and did not include the same expansive restrictions.
The judge concluded that the agreement would not reasonably be interpreted by employees as restricting their ability to engage in protected activity. The confidentiality clause focused on proprietary and sensitive information, such as personnel records or information obtained in confidence, and did not prohibit employees from discussing wages or working conditions. The judge emphasized that, absent other coercive circumstances, a reasonable employee would not understand the provision to limit their rights under the NLRA.
The Administrative Law Judge also addressed additional provisions in the agreement that were not directly challenged but were relevant to the analysis. In particular, the judge noted that the agreement’s non-disparagement clause was narrower than the one at issue in McLaren Macomb, as it was limited to prohibiting defamatory or maliciously false statements rather than broadly restricting any statements that could harm the employer’s image. The judge also observed that the agreement required confidentiality only as to the severance payment amount, rather than the entire agreement, which further distinguished it from the more restrictive provisions in McLaren Macomb. These distinctions reinforced the conclusion that the agreement, viewed as a whole, would not reasonably be interpreted to chill employees’ protected rights.
Because the agreement was not facially coercive and did not have a reasonable tendency to chill protected activity, the judge held that offering the agreement did not violate the NLRA and dismissed the complaint in its entirety.
University of Dayton (NLRB ALJ Apr. 10, 2026) JD–20–26.
Note:
This decision provides helpful guidance for nonprofit employers navigating severance agreements after McLaren Macomb. While overly broad confidentiality or non-disparagement provisions may still raise risk, more narrowly tailored clauses focused on legitimate confidential information may be permissible, particularly in the absence of other coercive conduct.
HOSTILE WORK ENVIRONMENT
Court Finds Racially Charged Comments And Workplace Tension Not Severe Enough For Hostile Work Environment Claim.
Alyson Stephenson worked as a fifth-grade teacher at Bottenfield Elementary School in Champaign Community School District No. 4. Stephenson worked for the District from 2015 to 2020 and received consistently positive performance evaluations, including ratings of “proficient” and “excellent,” and was never formally disciplined. She received tenure in August 2019.
Stephenson, a Caucasian female, claimed that her assistant principal created a racially charged and uncomfortable work environment and that she was treated less favorably than male colleagues.
Her claims focused on a series of incidents during the 2019-2020 school year involving the assistant principal. For example, Stephenson alleged that a comment was made at a staff meeting suggesting that some teachers could have come from a Ku Klux Klan meeting and that a statement was made about needing more Black teachers. Stephenson also cited a remark that two male teachers were better able to handle difficult students, which she interpreted as implying that she could not handle difficult students. Stephenson cited an incident where an article discussing “white supremacy” was read aloud during a meeting and an instance where she was not included in a shared ride from the airport while traveling with colleagues and her infant child. She reported some of these concerns to her principal and union representatives.
Stephenson also alleged that the administration retaliated against her after she raised concerns, including by attempting to reassign her to a different grade level. However, she was never reassigned and ultimately resigned voluntarily in July 2020 after accepting a position at a private school.
Stephenson subsequently filed suit, alleging race and gender discrimination, hostile work environment, and retaliation under Title VII. The Court granted summary judgment in favor of the District on all claims.
With respect to the hostile work environment claim, the Court emphasized that Title VII requires conduct that is both severe or pervasive and based on a protected characteristic. While some of the comments described by Stephenson were unprofessional or offensive, the Court found they were isolated, infrequent, and not directed specifically at her. Importantly, the Court concluded that the conduct did not rise to the level of “discriminatory intimidation, ridicule, and insult” required to establish a hostile work environment.
The Court also found no evidence that the alleged conduct interfered with Stephenson’s ability to perform her job. She continued to receive positive evaluations, was not disciplined, and maintained professional relationships with colleagues. The Court reiterated that Title VII does not prohibit workplace rudeness or isolated offensive comments absent discriminatory intent.
Stephenson’s discrimination claims likewise failed because she could not show that she suffered an adverse employment action. She was not terminated, demoted, or reassigned, and her voluntary resignation did not constitute constructive discharge. The Court noted that even if she had felt uncomfortable, the conditions described did not rise to the level required to establish that she was forced to resign.
Finally, the Court rejected her retaliation claim. The Court found that the discussions about a potential reassignment were the only alleged retaliatory act. These discussions did not result in any actual change to her employment and were not the type of action that would deter a reasonable employee from making a complaint. The Court also found insufficient evidence of a causal connection between her complaints and any adverse action.
Stephenson v. Champaign Cmty. Sch. Dist. No. 4 (C.D. Ill. Mar. 9, 2026) 2026 U.S. Dist. LEXIS 85555.
Note:
This case highlights that while inappropriate or insensitive comments should be addressed, the standard for a hostile work environment is conduct that is severe or pervasive and results in a tangible employment impact.
FMLA
Court Finds No FMLA Violation For Employee Not Reinstated After Position Eliminated.
David Hansen, an Assistant Director of Building Services at Valparaiso University, filed suit after the University eliminated his position while he was on extended medical leave under the Family and Medical Leave Act (FMLA). Hansen alleged that the University interfered with his FMLA rights by failing to reinstate him and retaliated against him for taking leave.
Hansen had worked at the University since 2010 and was promoted to Assistant Director in 2019. In that role, he supervised three building services supervisors and reported to the Director of Building Services, who in turn reported to the Executive Director of Facilities. In early 2023, Hansen underwent surgery and took the full 12 weeks of FMLA leave beginning in February, followed by approved extensions that kept him on leave into May and beyond.
Before Hansen began his leave, University leadership had already begun discussing restructuring the Building Services Department. According to the University, the department was “top-heavy” with management, and leadership believed Hansen’s Assistant Director role added an unnecessary layer. The proposed restructuring eliminated Hansen’s position and had the supervisors report directly to the Director. Although leadership initially discussed adding a fourth supervisor position, that role was not approved or created until approximately a year and a half later.
On May 22, 2023, while Hansen was still on leave, University officials informed him during a videoconference that his position was being eliminated as part of the restructuring. They emphasized that the decision was unrelated to his medical leave and invited him to apply for other positions within the department if they became available. Hansen was also offered either a severance package or a lower-paying position as a Building Services Technician, both of which he declined.
Hansen argued that the restructuring explanation was a pretext and pointed to the timing of his termination, the delay in creating the new supervisor role, and what he characterized as inconsistent explanations from
the University. He also asserted that he should have been placed into the new supervisory role rather than terminated.
The Court granted summary judgment in favor of the University on both claims. With respect to his claim that the University interfered with his FMLA, the Court explained that although employees are generally entitled to reinstatement after leave, that right does not apply if the employer can show the employee would have lost the position regardless of the leave. The University met this burden through sworn declarations from decision-makers explaining that the restructuring was planned before Hansen’s leave and implemented in May for efficiency reasons at the end of the academic year.
The Court emphasized that Hansen failed to present evidence to meaningfully dispute this explanation. His argument that the University’s evidence was “self-serving” was insufficient, as sworn declarations based on personal knowledge are valid evidence at the summary judgment stage. The Court also noted that Hansen chose not to take depositions or submit competing evidence that could have created a factual dispute.
The Court likewise rejected Hansen’s retaliation claim. It explained that such claims require evidence that the protected activity caused the adverse action. Hansen relied primarily on the timing of his termination, but the Court held that temporal proximity alone, particularly over a period of several months, is rarely sufficient to establish causation. The Court also rejected Hansen’s argument that he should have been placed in the new supervisory role, noting that the FMLA does not entitle an employee to a different or non-equivalent position.
Because Hansen failed to show that his leave played any role in the decision to eliminate his position, the Court granted summary judgment in favor of the university on all claims.
Hansen v. Lutheran Univ. Ass'n (N.D. Ind. Mar. 19, 2026) 2026 U.S. Dist. LEXIS 57686.
Note:
While employees generally have the right to reinstatement after FMLA leave, that right is not absolute. Employers may lawfully terminate or eliminate a position during leave if the
decision is unrelated to the employee’s use of FMLA. Nonprofit employers should be aware, however, that making those types of decisions often requires a strong written record and still carries the risk of a potential claim.
Benefits Corner
Court Dismisses Challenge To Employer’s Health Plan Surcharge As Untimely Despite Violation.
Res-Care is a home-and community-based health services enterprise that serves individuals in need of specialized medical care. Res-Care offered its employees a health benefit plan. In January 2020, Res-Care began assessing a monthly $50 surcharge as part of the health benefit plan for employees who had used tobacco products within the previous six months (referred to as the tobacco surcharge). The tobacco surcharge increased to $100 per month if both the employee and their spouse/domestic partner used tobacco products. The purpose of the tobacco surcharge was to promote a healthy lifestyle and to provide an incentive not to use tobacco. Res-Care’s benefits catalogue explained that employees could avoid the tobacco surcharge by enrolling in and completing a tobacco cessation program through Res-Care’s Employee Assistance Program.
Plaintiff Minda Wiederhold worked at Res-Care and was a tobacco user. During open enrollment, she was required to respond to a tobacco usage question before selecting a health insurance plan. The tobacco attestation form directed enrollees to indicate “yes” or “no” to whether they had “used tobacco products any time in the last six months.”
Wiederhold discovered the tobacco surcharge when she reviewed her earnings statement in January 2020. According to Wiederhold, she did not contest it because she had to have health insurance. She also did not read the specific language referring to a tobacco cessation program.
On January 8, 2024, Wiederhold filed a class action lawsuit challenging the lawfulness of the tobacco surcharge and seeking monetary reimbursement for all participants who paid the tobacco surcharge. She alleged the tobacco surcharge violated the nondiscrimination provision set forth in the Employment Retirement Income Security Act (ERISA) because it imposed a premium on plan participants based on their health
status. ERISA contains a nondiscrimination provision prohibiting group health plans, such as that offered by Res-Care, from charging participants a greater premium based on any health status-related factor. (29 U.S.C. section 1182(b).) However, there is an exception. A group health plan is allowed to offer a premium discount or rebate in exchange for participation in a bona fide wellness program. In other words, ERISA prohibits plans from requiring individuals to pay health-status-related premiums unless such premiums are avoidable through adherence to a bona fide wellness program. For the exception to apply, the plan must disclose the terms of the wellness program in all plan materials.
In litigation, Res-Care did not contest that the tobacco surcharge constituted a violation of ERISA’s nondiscrimination provision. However, Res-Care claimed Wiederhold brought the lawsuit too late and that the statute of limitations had lapsed. While the District Court found that Res-Care’s tobacco surcharge violated the nondiscrimination rules, the District Court ultimately agreed with Res-Care on the statute of limitations issue. The District Court found that the undisputed record showed that Wiederhold had gained actual knowledge of the facts essential to her claim in January 2020, which triggered ERISA’s three-year statute of limitations, as opposed to ERISA’s longer six-year statute of limitations that applies when the plaintiff does not gain actual knowledge of the breach or violation. Since Wiederhold initiated the lawsuit one year after the three-year statute of limitations ended, the District Court rendered her claims untimely and granted Res-Care’s motion for summary judgment.
Wiederhold v. Res-Care, Inc. (S.D. Ind. Mar. 31, 2026, No. 4:24-cv-00003-SEB-TAB) 2026 WL 874928.
Note:
There could be other legal risks with charging employees a surcharge or higher rate based on their health status. If a benefit is more costly for employees because of their health status, which could arise from a disability, there are risks of disability discrimination under the Americans with Disabilities Act and the Fair Employment and Housing Act.
Benefits Compliance Question
Question: Answer:
Is a tool allowance excludable from an employee’s gross income?
It depends on how the tool allowance is set up. When cash allowances are provided to employees for tools, the allowance is excludable from an employee’s gross income if it qualifies as a “working condition fringe benefit.” To set up a working condition fringe benefit for a tool allowance, employees need to verify to the employer that the payment is actually used for the tools needed to perform the job. Employees must submit receipts or other supporting documentation, and employees need to return any unused allowances to the employer.
In 2005, the IRS issued Revenue Ruling 2005-52, which stated that a tool allowance that was determined by estimates (instead of actual costs) was included in gross income (i.e., taxable). In Revenue Ruling 2005-52, employees were given an allowance based on an estimate of tool costs for the hours they worked. The employees were not required to submit receipts or other supporting documentation, nor were they required to return amounts in excess of substantiated expenses, which is why the IRS determined their tool allowance was taxable.
CPA Practice Advisor
In an article published in CPA Practice Advisor's Financial Reporting, LCW Senior Counsel Andrew Dorado discusses the expansion of Internal Revenue Code Section 4960 under the One Big Beautiful Bill Act and the resulting implications for nonprofit organizations. The expanded rules broaden the reach of the 21% excise tax on compensation paid by tax-exempt organizations, creating new considerations for nonprofit employers and their advisors. Read more here: Publication found here
Did You Know?
Whether you are looking to impress your colleagues or just want to learn more about the law, LCW has your back! Use and share these fun legal facts about various topics in labor and employment law.
• There are many ways to evaluate an employee’s performance. In addition to using the traditional “upward feedback” evaluations, these methods may be effective for particular categories of employees:
• A 360 evaluation gathers feedback from supervisors, peers, subordinates, and sometimes the employee themselves to provide broader insight into leadership, communication, and interpersonal skills.
• Peer reviews can promote mentorship and professional growth by allowing colleagues to observe and provide constructive feedback to one another.
• Self-assessments allow supervisors to better tailor performance discussions by comparing employees’ perceptions of their performance with feedback from others.
• The Ninth and Sixth Circuits for the U.S. Court of Appeals have held that employers may require a fitnessfor-duty exam if there is substantial evidence that an employee’s health condition is affecting their job performance.
• Courts generally support these exams if a reasonable person who has observed the employee at work would question whether the employee can safely and effectively perform essential job duties.
• The decision to require a fitness-for-duty exam must be based on objective job-related concerns rather than speculation.
• Only request a fitness-for-duty exam if the supervisor has observed and documented that the employee is having difficulty performing essential functions or other legitimate concerns, such as unusual absenteeism or sudden poor productivity.
Firm Victories
LCW Partner Danny Yoo And Associate Attorney Nicholas Grether Win Defense Verdict On Police Officer’s Disability Discrimination Trial.
The City of Monterey Park placed one of its police officers on leave pending a fitness for duty exam after the officer was observed speaking in an incoherent
manner and not being able to track conversations during management team meetings. The examination showed that the officer was not fit for duty. The City attempted to engage the officer in the interactive process to explore potential accommodations.
While on leave, the officer’s police powers were suspended, but the officer attended his son’s graduation from the police academy in full uniform, and he carried an unloaded gun. The officer told another chief of police who was present that “You did not see
me here” because the officer did not want his own chief to find out that he was in uniform, contrary to his chief’s directives. The City’s police department investigated and determined the officer was insubordinate for exercising police officer powers while they were suspended, was dishonest for saying he did not know he could not be in full uniform, and violated the Penal Code. The City terminated the officer’s employment.
The officer filed a lawsuit claiming: 1) disability discrimination; 2) failure to accommodate; and 3) failure to engage in the interactive process. Danny and Nicholas rapidly adapted to all the twists and turns of a jury trial, including inconsistent theories of liability; attacks on the City’s efforts to engage in the interactive process; and the challenges to the psychologists’ opinions regarding possible accommodations. Their work convinced the jury that none of the officer’s three claims had any merit. The jury ultimately decided that the City did not perceive the officer to have a mental disability; the officer could not perform his essential job duties; and that the officer failed to ask for any accommodations for the disability that the City perceived him to have.
Senior Counsel Alison Kalinski And Associate Attorney Nicole Powell
Win Three-Year Workplace Violence Restraining Order Against Former Officer.
A police sergeant was demoted, appealed his demotion, lost, and subsequently retired. The former officer began mailing flyers to city residents to criticize police leadership, including the former chief, the current interim chief, and a commander. Later, the officer sent individualized mailers directly to the former and interim
chiefs and the commander, as well as to the former city manager and police union president. The officer sent between 5 and 20 mailers to these individuals, a number that escalated over time. The mailers: insulted the recipients; accused them of dishonesty, incompetence, and infidelity; suggested they were under surveillance; and contained escalating and veiled threats of violence.
The city applied for a workplace violence restraining order (WVRO) for all of the individuals and one individual’s family member. During four days of direct and cross-examination of eight witnesses, the city witnesses described how the mailers threatened and intimidated them and caused them to alter their behavior in significant ways, including quitting a job and installing surveillance cameras on their property. Although the officer claimed that his mailers contained protected speech, he testified that he sent them to air his personal grievances by mocking the recipients, hurting their feelings, and demonstrating that he would not stop.
The Superior Court judge found that the flyers constituted harassment under the WVRO law codified at Code of Civil Procedure section 527.8 because their content would both cause a reasonable person substantial emotional distress, and actually did so, according to the witnesses’ testimony. The Court rejected the officer’s First Amendment arguments because the officer’s speech was not protected and constituted a credible threat of violence. The Court found the evidence showed a reasonable probability of future violence and issued a three-year WVRO against the former officer.
Note:
Many employers encounter similar harassment issues and may not have considered a WVRO as a viable option to address ongoing behavior from a former officer.
new to the Firm!
Moriah Denton joins Liebert Cassidy Whitmore’s Los Angeles office as an Associate! She brings experience representing employers and companies in complex litigation matters involving labor and employment, antitrust, product liability, and class actions.
Featured Consortium Call
Members of Liebert Cassidy Whitmore’s consortiums are able to speak directly to an LCW attorney free of charge to answer direct questions not requiring in-depth research, document review, written opinions or ongoing legal matters. Consortium calls run the full gamut of topics, from leaves of absence to employment applications, student concerns to disability accommodations, construction and facilities issues and more. Each month, we will feature a Consortium Call of the Month in our newsletter, describing an interesting call and how the issue was resolved. All identifiable details will be changed or omitted.
Question:
A Human Resources Manager contacted LCW with a question about providing paid sick leave to temporary workers. The manager said that she noticed the CA Department of Industrial Relations website said that employers must provide at least 40 hours or five days of paid sick leave each year to full-time, part-time, and temporary workers who have worked for the same California employer for at least 30 days within the year and who have completed a 90-day employment period before taking any paid sick leave. The manager noted that the organization has summer camp counselors who work for less than 90 days from mid-June to August, and she did not know if the organization needed to provide them with paid sick leave.
Answer:
The LCW attorney advised that California’s Paid Sick Leave Law applies to summer camp counselors even though they are short-term employees. Because these employees will work at least 30 days in California, they are eligible to accrue paid sick leave. However, because the law allows employers to require employees to complete 90 days of employment before using accrued leave and assuming the organization has language reflecting this in their sick leave policy, the counselors generally will not be able to use any leave while employed. The LCW attorney advised that if a counselor is rehired within 12 months, the organization will need to reinstate any previously accrued, unused sick leave, and the counselor’s prior days worked will count towards satisfying the 90-day waiting period.
Liebert Cassidy Whitmore