Schools Accepting COVID-19 Loans Must Be Aware of Workplace Law Implications | Fisher phillips
Many independent and private schools are considering applying for Paycheck Protection Program (PPP) and / or Economic Injury Disaster (EIDL) loans as part of the CARES Law. The PPP loan offers an attractive incentive for a substantial loan forgiveness when used for authorized payroll and other authorized expenses. While the program is certainly attractive, with loan forgiveness equivalent to “free money”, there may be a problem for independent and private schools accepting either type of loan.
Schools must understand the consequences
An easy-to-miss layout in the application, on page 4, states:
Civil rights (13 CFR 112, 113, 117) – All businesses receiving financial assistance from the SBA must agree not to discriminate in business practices, including employment practices and service to the public based on the categories cited in 13 CFR, parts 112, 113 and 117 of the SBA regulations. All borrowers must display the SBA-mandated “Equal Employment Opportunity Poster”.
In addition to the plain language of the request, the Small Business Administration stated in a recent FAQ to faith-based organizations that acceptance of an SBA loan constitutes receipt of Federal Financial Assistance (FFA). Under many federal laws, acceptance of the FFA requires the borrower to comply with certain civil rights laws. The simple SBA loan application seems unlikely to be the receipt of the FFA. However, sources also indicate that once the banks are ready to accept the applications, the granting of the loans will be instant or almost instant, leaving the school little time to decide whether or not to refuse the funds.
Schools should know that by accepting a loan and its grants, they accept the FFA and become subject to a number of civil rights laws to which they may not have previously been subject.
As noted above, the PPP loan application form expressly states that the borrower, by accepting the loan, undertakes to respect several laws relating to civil rights. These include:
- Title VI of the Civil Rights Act of 1964 – prohibiting discrimination against any individual on the basis of race, color or national origin. 13 CFR § 112 et seq.;
- Title IX education changes of 1972 – prohibit discrimination based on sex in any educational program or activity. 13 CFR § 113 et seq..;
- Age Discrimination Act 1975 – prohibit discrimination against any person on the basis of age. 13 CFR § 117 et seq..
Although the request specifically cites only the above laws, it is clear that other laws become applicable as well, including Section 504 of the Rehabilitation Act 1973, which prohibits discrimination against qualified persons with disabilities. 29 USC § 701 et seq..
What does this mean for schools?
Schools should be prepared to assess their current policies and practices to determine if they may need to adjust them in order to comply with the laws to which they will now be subject.
Under Title VI, schools must not discriminate on the basis of race, color or national origin against employees, students, parents or other participants in the business. This includes, among other things, employment practices, admission and registration criteria and other treatments. In an educational setting, this includes not discriminating against students who learn English.
Since nonprofit institutions already have these obligations under the Internal Revenue Code as part of their tax-exempt status, this law does not add any new obligations to the organization other than perhaps to protect students learning English more clearly. Schools should be aware that compensatory damages may be available for people who provide evidence of intentional discrimination. An injunction can also be granted.
Under Title IX, schools cannot refuse admission, or discriminate in the admission process, against any person on the basis of their gender. This includes discrimination based on sexual orientation and gender identity. Schools also cannot discriminate on the basis of gender in employment, ranking of student admissions, determining admission limits of one gender over another, recruitment efforts, programs or school activities, athletics, course offerings, facilities and financial aid. Schools also need to strengthen their policies against sexual harassment. It is important to note that schools must also establish a Title IX coordinator to receive and investigate complaints of sexual harassment, sexual abuse and sexual violence. Investigations should be conducted in accordance with the investigation guidelines of Title IX.
However, religious schools can request an exemption if the application of Title IX is incompatible with the religious principles of the school. People who believe that the school has not complied with Title IX can either complain to the Federal Office of Civil Rights (OCR) or file an independent complaint. Aggrieved employees may be entitled to back pay, a first salary, compensatory damages, attorney fees, costs and an injunction. Aggrieved students may be entitled to compensatory damages, attorney fees, costs and an injunction.
Age Discrimination Act 1975
Under the Age Discrimination Act 1975, schools cannot discriminate on the basis of age in denial of admission, financial aid, or treating an individual differently in their affairs and affairs. activities due to his age. This applies to students, parents and others with whom the school does business.
However, age can be taken into account when it is a factor necessary for the normal functioning of the school, as, for example, when age is used as a measure to approximate certain characteristics of the school. a pupil (eg age appropriate for admissions as required by state law. While no pecuniary damages are available to an injured party, injunction and attorney fees may be awarded.
Section 504 of the Rehabilitation Act
Section 504 of the Rehabilitation Act (Section 504) prohibits discrimination against persons with disabilities by entities that receive federal financial assistance. This law predates the Americans with Disabilities Act (ADA), but has similar obligations to employees and students / parents.
Religious and secular schools must already comply with Title I of the ADA (prohibiting discrimination on the basis of disability in employment). In addition, although schools “controlled by a religious entity” are exempted from the obligation to accommodate pupils and parents with disabilities, all other schools (including schools which are not “religious enough”) must remain. comply with ADA Title III. It is important to note, however, that all schools (religious or not) that accept SBA PPP and EIDL loans will now be required to comply with Section 504 obligations to accommodate students and parents with disabilities. has no religious exemption.
Under Section 504, schools cannot exclude qualified students with disabilities from their programs if the student can, with “minor adjustments”, receive an appropriate education as part of the program or activity. Schools also cannot charge more for the disabled pupil, unless this charge is justified by a substantial increase in costs for the school. The school must also adhere to the same assessment and placement requirements as public schools. 34 CFR § 104.39.
Schools receiving federal funding and employing 15 or more people must also designate at least one employee to coordinate the school’s efforts to comply and fulfill its responsibilities under Section 504. Contact information for this person must be published with the school’s nondiscrimination notice. are usually found in newsletters, application forms, recruitment documents, etc.
The additional concern for any school becoming bound by Section 504 is that if the school is continued and the parent / student wins, the school could be required to pay compensatory damages for humiliation, embarrassment, distress. emotional and similar concerns, in addition to lawyers. ‘fees, costs and injunction. Aggrieved employees may be entitled to back wages, compensatory damages, attorney fees and an injunction. Complaints can be filed with the OCR or the school can be sued directly by the employee, parent or student.
How long do these bonds last?
SBA guidelines state that “once the loan is repaid or canceled, the non-discrimination obligations will no longer apply.” Thus, if the schools repay the loan quickly, they will no longer be required to comply with federal laws in the future.
However, they may be required to continue to meet requirements they entered into while the loan was in progress, such as continuing to honor disability accommodation commitments for any student they admitted during that time. This is a particularly important consideration as many of our schools are in the middle of their registration season.
In addition, if the school has a summer camp and / or engages in distance education during the loan period, the school must also comply with the obligations of non-discrimination and accommodation during this period. period. In recent years, we have seen an increase in the number of complaints filed against summer camps for failure to accommodate students with reduced mobility, diabetics and others.
Finally, an SBA regulation suggests that if the FFA proceeds are used to pay a rent or a mortgage, it could extend the term of federal regulation for the life of the building. However, the SBA’s PPP loan application states that the loan funds can be used for rent or mortgage interest. Whether using these loans would actually extend federal regulations for the life of the building is an unanswered question that we follow. 13 CFR § 113.115