October 3, 2016
September 11, 2016
Citing the ongoing nationwide dialogue on law enforcement-community relations, racial justice and officer and public safety, on September 8 the U.S. Department of Education (in coordination with the Justice Department) released a Dear Colleague Letter providing guidance to colleges and universities with respect to its expectations for campus policing. In the main, the guidance encourages institutions to adopt and implement “applicable” recommendations from the Final Report of the President's Task Force on 21st Century Policing . As noted by the Department, the Task Force Report covers topics including “changing the culture of policing, embracing community policing concepts, ensuring fair and impartial policing, focusing on officer wellness and safety, implementing new technologies, and building community capital.” The Department encourages institutions to use the Task Force Report as a “template for self-assessment and organizational change,” with adjustments appropriate to context (for example, suggesting that in the campus environment, community engagement efforts should include diverse members of an institution’s campus community such as students, faculty, staff, and administrators, as well as community advocacy groups with relevant expertise). The Department’s guidance also reiterates institutions’ security-oriented obligations under the Clery Act and applicable federal civil rights statutes.
August 24, 2016
The National Labor Relations Board (Board), in Columbia University , has issued a 3-1 decision holding that graduate, and undergraduate, student assistants are common law employees within the meaning of the National Labor Relations Act and therefore are eligible to organize and bargain collectively under federal labor law. In so doing, the Board overruled its 2004 determination in Brown University. Board Member Miscimarra wrote a lengthy dissent, arguing that the educational nature of the relationship between student and educational institution should dictate that student assistants are not employees and therefore they should not be eligible to organize and bargain collectively. After much speculation, and following an invitation for briefing in December 2015, the NLRB rejected the Brown holding that graduate assistants cannot be statutory employees because they are “primarily students and have a primarily educational, not economic, relationship with their university.” The Board first noted that it has the statutory authority to treat student assistants as statutory employees. The Board applied a common law test and indicated that when student assistants perform “work,” at the direction of a college or university, for which they are compensated, a common law employment relationship will be deemed to exist and the students will be eligible to organize and bargain collectively. The Board indicated that the new test will apply to all student assistants, including graduate assistants engaged in research funded by external grants (and subject to the conditions of those grants). The Board also determined that the petitioned for bargaining unit at Columbia -- which included graduate students, terminal Master’s degree students, and undergraduate students -- constituted an appropriate unit and that none of the petitioned for classifications consisted of temporary employees who should be excluded from the unit. Finally, the Board remanded the case to the Regional Director for consideration of whether student assistants not currently performing their assistant duties should be eligible to vote based upon a continuing expectation of future common law employment. The Board’s decision was long the subject of speculation and has been anticipated by many commentators. In the wake of the decision, colleges and universities should anticipate increased organizing activity on their campuses and will have the obligation to bargain with units comprised of student assistants if they are recognized after an NLRB election. Given the breadth of the Board’s decision, and the potential units that could be petitioned for by unions, this decision has the potential to represent a significant challenge if broad units of student assistants are voted in and certified under NLRB procedures.
United States District Court Enjoins Enforcement of Dear Colleague Letter on Transgender Students; Decision May Impact OCR Guidance on Sexual Violence
August 23, 2016
IRS Issues New Management Agreement Safe Harbor Provisions, Providing Enhanced Flexibility for College and University Food Service, Facilities Management and Similar Relationships
August 22, 2016
New management agreement guidelines were issued by the IRS today in a new Revenue Procedure (Rev. Proc.) 2016-44. Rev_Proc_2016-44 provides revised safe harbors under which a private management contract does not result in impermissible private business use of projects financed with tax-exempt bonds. The former limits on fixed and variable compensation in management contracts involving tax-exempt bond financed facilities have been eliminated. Rev. Proc. 2016-44 will be published in Internal Revenue Bulletin Number 2016-36, dated September 6, 2016. These revised safe harbors give colleges and universities the ability to enter into management contracts with private entities to manage or operate tax-exempt bond financed projects with more flexibility for incentives in reasonable compensation arrangements and longer terms of up to 30 years (subject to an economic life limit). The revised safe harbors also remove the previous requirements for prescribed percentages of fixed compensation for management contracts for different time periods. The revised safe harbors continue a longstanding existing prohibition against sharing of net profits, and add certain new principles-based constraints (governmental control, governmental risk of loss, and no inconsistent tax positions by private service providers). The revised safe harbors are effective for any management contract that is entered into on or after August 22, 2016.
August 10, 2016
Three lawsuits filed in early August suggest that plaintiffs’ law firms, representing employees of colleges and universities, are looking at higher education retirement plans as potential targets for lawsuits seeking millions of dollars in damages. The New York Times reported that class action lawsuits were commenced on August 9, 2016 against three prominent universities – New York University, Yale, and the Massachusetts Institute of Technology – alleging that the schools had allowed their employees to be charged excessive fees on their retirement savings. The law firm bringing the lawsuits – Schlichter Bogard & Denton – has already brought and settled many similar lawsuits against companies such as Lockheed Martin, Boeing, and Novant Health, for amounts in the tens of millions of dollars. The Lockheed Martin settlement, for example, was for $62 million. The new lawsuits suggest that Schlichter, and potentially other plaintiffs’ law firms, are now looking at college and university plans as potential targets for similar kinds of claims. The new lawsuits are putative class actions, which means that the law firm represents certain named employees who are participants in the universities’ retirement plans, and purports to represent all other similarly situated employee participants – plaintiff classes that may have thousands of members each. Once a handful of the college or university’s employees agree to be part of the lawsuit, it can be brought on behalf of all the employees in the retirement plan. The claims against NYU, MIT and Yale are similar to claims made in many of the previous retirement plan lawsuits brought by the Schlichter firm and others: that retirement plan fiduciaries breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) to prudently select investment vehicles for the plans so as to maximize returns, often by minimizing fees. Under ERISA, the “fiduciaries” of a covered retirement plan – plan fiduciaries can include administrative and investment committees and, frequently, officers and other members of management of the college or university – are subject to strict fiduciary responsibilities and can be held personally liable for any losses caused by a breach of these duties. In short, it means the college or university is obligated to administer the retirement plan funds of employees in a manner that results in the highest possible prudent growth. Beginning about ten years ago, a wave of lawsuits have been brought on behalf of retirement plan participants alleging that fiduciaries had breached their duties by selecting improper investment options, and in particular by allowing excessive fees to be paid from plan assets. If the investment fees paid by a retirement plan are deemed to be excessive, even by a seemingly small margin, the aggregate losses over an employee’s working career can be very large. A frequently cited calculation stated in a U.S. Department of Labor publication more than 10 years ago – and repeated in the Times article – recites that if investment fees are one percentage point higher than a reasonable amount, the participant’s retirement account will be 28 percent lower after a 35 year career. If that is true, then for large plans (like those sponsored by the three universities), the potential losses are enormous – the complaint against MIT alleges that the plan could have saved more than $8 million in fees in a single year by selecting investments prudently. (The complaint’s damage claim is of course not limited to a single year’s losses.) Significantly, these lawsuits also involve claims against major college and university retirement plan managers, including TIAA-CREF and Fidelity. Accordingly, any college currently using these companies for its employee retirement plans could face some of the same claims. To reduce the risk of liability going forward, retirement plan fiduciaries should, among other things:
- exercise “procedural prudence” in analyzing, vetting, and selecting investment options and advisors for the retirement plan, with a view to the risk, return and cost characteristics of each investment and the plan portfolio as a whole,
- continually monitor the chosen investments and make changes if and when appropriate,
- discuss fees and fee options with retirement plan companies to secure the most favorable arrangements for employees,
- require that retirement plan managers disclose fees and charges so they may be communicated to employees;
- avoid any conflicts of interest in the selection and monitoring processes, and
- consult with third party advisors whenever “in-house” fiduciaries lack necessary expertise.
Colleges and universities may also want to confer with existing retirement plan managers regarding responses to questions which may arise at this time from employees about current retirement plans. Attorneys in Bond Schoeneck & King’s Employee Benefits Practice Group frequently counsel clients with respect to best practices for fulfilling fiduciary duties and avoiding ERISA liability. Often this takes the form of “fiduciary training” we provide to retirement plan committees and other plan fiduciaries. In addition, the firm’s Litigation Group has substantial experience in defending ERISA lawsuits.  Tara Siegel Bernard, “M.I.T., N.Y.U. and Yale Are Sued Over Retirement Plan Fees”, NY Times (Aug. 9. 2016, accessed at http://www.nytimes.com/10/your-money/mit-nyu-yale-sued-4013b-retirement-plan-fees-tiaa-fidelity.html.  We discussed some of the numerous issues pertinent to these types of claims in previous Memoranda – , for example: ERISA Fiduciary Guidance - Fairness for Defined Contribution Fees, and ERISA Fiduciary Guidance - Making a "Watch List" Work.
Recent U.S. Department of Education Dear Colleague Letter Raises the Bar on Standards for Protecting Federal Financial Aid Data
July 12, 2016
On July 1, 2016 the U.S. Department of Education issued a follow-up Dear Colleague Letter to the Dear Colleague Letter of July 29, 2015. This most recent letter reminds institutions of their legal obligation to protect student data under Title IV and sets forth the new standards and methods the DOE will use when evaluating data security compliance. An institution’s Title IV Program Participation Agreement (PPA) requires that they must protect all student financial aid data. The Student Aid Internet Gateway (SAIG) Enrollment Agreement, the system used by educational institutions and third-party servicers to exchange data electronically with the U.S. Department of Education, contains similar requirements. In addition, the letter reminds institutions that the specific requirements of the Gramm-Leach-Bliley Act (GLBA) governing data security at financial services organizations apply to post-secondary institutions. These include implementing a written information security program, designating an individual to coordinate information security, performing ongoing risk assessments, and properly vetting third-party service providers. It is also noted that compliance with the GLBA will be incorporated into the DOE’s annual student aid compliance audit requirements. Most significantly, the letter “strongly encourages institutions to review and understand the standards defined in NIST SP 800-171.” These standards were developed by the National Institute of Standards and Technology (NIST) to protect sensitive federal information that is used and stored in non-federal information systems and organizations. NIST SP 800-171 sets forth a significant expansion of the data security requirements and controls expected in the handling of student financial aid data and other types of federal data and information. In citing these standards, the DOE acknowledges “the investment and effort by institutions to meet and maintain the standards set forth in NIST SP 800-171” but “strongly encourages those institutions that fall short of NIST standards to assess their current gaps and immediately begin to design and implement plans to close those gaps using NIST standards as a model.” The message from the US DOE is clear – institutions of higher education that use student financial aid data, and other forms of federal data are expected to “immediately” begin to integrate the specific requirements of NIST SP-171.
June 27, 2016
The Handbook for Campus Safety and Security Reporting (the “Handbook”), which provides important guidance for institutions as it relates to their compliance with the Clery Act’s safety and security requirements, was recently revised and a new version (the 2016 Edition) released by the United States Department of Education. This valuable resource had not been updated since 2011. The 2016 Edition of the Handbook contains updated provisions with respect to, among other things, the Violence Against Women Reauthorization Act of 2013.
The 2016 Edition of the Handbook, which replaces all previous versions of the Handbook, can be accessed here.
New York Institutions: NYSED Activates Electronic Submission System for Article 129-A and 129-B Compliance
June 26, 2016
The New York State Education Department has activated its electronic submission system for institutions to file certificates of compliance with Education Law Articles 129-A and 129-B, as well as the copies of rules and policies required to be filed this year pursuant to Article 129-B. A link to the portal, as well as instructions for using it, can be found on the Department's website. When making the required Article 129-B filings, institutions are instructed to submit only the documentation specified in the portal, and not copies of MOUs, training session rosters or other materials required or necessitated by Article 129-B's provisions. Rather, these documents should be retained by the institution as evidence of compliance and provided to the Department, upon request, in connection with compliance monitoring or auditing. All filings are due by July 1, 2016, (though institutions do not risk loss of State funding for failure to file until September 1).
June 23, 2016
Yesterday, the U.S. Supreme Court upheld the University of Texas at Austin’s use of race in its admissions policies and procedures by rendering a decision in the second case brought by Abigail Fisher, a white woman who was rejected for admission to UT Austin over eight years ago. In June 2013, the Supreme Court remanded Ms. Fisher’s case to the U.S. Court of Appeals for the Fifth Circuit so it could reconsider the constitutionality of the university’s race-conscious admissions policies and procedures under the strict scrutiny standard articulated in prior affirmative action Supreme Court decisions. In July 2014, the Fifth Circuit again held in favor of UT Austin, finding that its use of race in admissions was constitutional since the university had considered race-neutral alternatives in its admissions process and still could not achieve sufficient diversity. Dissatisfied, Ms. Fisher appealed to the Supreme Court again, arguing that UT Austin’s use of race in its admissions process disadvantaged her and other non-minority applicants. In yesterday’s Fisher v. University of Texas at Austin decision, the Supreme Court found that UT Austin’s use of race in its admissions process meets the strict scrutiny standard since the university’s goal to provide its students with educational benefits that result from having a diverse student body advances a compelling interest. Further, the Court found that UT Austin validly demonstrated that race-neutral alternatives (e.g., scholarships, outreach programs, etc.) were not sufficient to achieve a diverse student body, even when used in conjunction with Texas’ Ten Percent Plan which guarantees Texas students graduating in the top tenth of their class admission to a public college or university of their choice in the state. While this decision puts an end to Ms. Fisher’s case against UT Austin and appears to be a win for the use of affirmative action by colleges and universities in admissions, the Court’s decision did include a warning to UT Austin – and colleges and universities across the country -- that the need for race-conscious admissions processes may change over time. In the Court’s majority opinion, Justice Anthony M. Kennedy stressed that institutions must periodically reassess the constitutionality of their admissions processes and procedures. Specifically, he stated that the university “must continue to . . . scrutinize the fairness of its admissions program; to assess whether changing demographics have undermined the need for a race-conscious policy; and to identify the effects, both positive and negative, of the affirmative-action measures it deems necessary.” Given this charge, colleges and universities that use race as a factor in their admissions process should avoid complacency and periodically audit their policies and procedures to ensure compliance with the Court’s mandate.
New York Institutions: NYSED Posts Update on Status of Article 129-A and Article 129-B Filing System
June 16, 2016
In a new update posted to its website, the New York State Education Department has indicated that it is continuing work on its electronic system for the submission and recording of this year’s required certificates of compliance under Education Law Articles 129-A and 129-B, and the copies of written rules and polices required to be filed this year pursuant to Article 129-B. As before, the Department indicates that once the system is operational, information will be posted on its website on how to access the system and submit the required documentation. As institutions are aware, the statutory deadline for filing certifications, rules and policies is July 1 (though institutions do not risk loss of State funding for failure to file until September 1). However, all documentation must be submitted through the yet-to-be-released electronic filing system, and the Department will not accept, or record as received, hard copy documents or documents submitted via email. Consequently, institutions necessarily find themselves in a holding pattern until further notice.
June 8, 2016
On June 2, 2016, the New York State Education Department and the New York State Office of Campus Safety published a 52-page joint guidance document (“Guidance”) on New York Education Law Article 129-B (“the Law”), also often referred to as “Enough is Enough.” The Guidance is helpful in that it clarifies previously opaque points in the Law and acknowledges some of the practical problems faced by colleges and universities. The Guidance arrives in time to make adjustments before the July 1, 2016 deadline by which institutions are required to file their relevant policies and procedures with the State Education Department. Among the more interesting points in the 52-page Guidance are the following: When A Report is Received Section 6444(2) of the Law states that every institution must ensure that at the first instance of disclosure of an incident of domestic violence, dating violence, stalking, or sexual assault by a reporting individual, the recipient institutional representative presents the following information:
You have the right to make a report to university police or campus security, local law enforcement, and/or state police or choose not to report; to report the incident to your institution; to be protected by the institution from retaliation for reporting an incident; and to receive assistance and resources from your institution.
According to the Guidance, institutions may instruct employees to carry this paragraph with them for easy access, or, alternatively, allow employees to access the paragraph on a website and provide or read the information to reporting individuals. This second approach is only compliant if the institution trains those who are likely to receive a report on how to access the paragraph online. See pg. 19 of Guidance. An institution also must be neutral when explaining to students their options to notify law enforcement, request the assistance of campus authorities in notifying law enforcement, or to decline to notify law enforcement. See pg. 13 of Guidance. Institutions should review their policies to make sure that policy language discussing reporting options is absolutely neutral – i.e. does not recommend, suggest, or encourage any one option. Repetition of Report to Authorities The Guidance explains that the intent of Subdivision 7 of the Students’ Bill of Rights (the right to repeat an account to as few people as practicable) is to minimize impact so that students will not want to withdraw from the process. Subdivision 7 says “as few as practicable” not as “few as possible,” which, according the Guidance, affords institutions reasonable leeway to ask a student to repeat an account for legitimate reasons. See pgs. 14–15 of Guidance. For example, colleges may ask a student to repeat pertinent portions of an incident in a hearing or to a fact-finder. Emergency Access to Title IX Coordinator While the Law requires that reporting individuals have “emergency access to a Title IX Coordinator or other appropriate official trained in interviewing victims of sexual assault,” the Guidance clarifies that “emergency access” does not mean 24/7 access. See pg. 16 of Guidance. Amnesty The Law requires an assurance that students who make good faith reports of domestic violence, dating violence, stalking, or sexual assault will not be subject to disciplinary action for violations of alcohol and/or drug use policies occurring at or near the time of the reported incident. The Guidance clarifies that the mandatory amnesty provision does not, however, prevent an institution from removing students from clinical or residency programs where a drug or alcohol violation would indicate unsuitability to participate. See pg. 12 of Guidance. Explaining Standards of Proof Institutions are expected to educate students and employees who may receive a report about the differences between standards of proof in the criminal justice system (beyond a reasonable doubt) and the standard of proof used by the institution (preponderance of the evidence). The Guidance points out that SUNY has developed a document that may be helpful in explaining these differences: http://system.suny.edu/sexual-violence-prevention-workgroup/College-and-Criminal-Resource/. Charges The Law states that a student has the right to request that the institution bring disciplinary charges, but the Guidance clarifies that it is within the institution’s discretion to decide whether or not the evidence merits doing so. See pg. 25 of Guidance. Access to Case File The Law states that students have the right to review (and present) relevant evidence in the case file, or otherwise in the possession or control of the institution. The Guidance clarifies that this access requirement means reasonable, in person access at a time, place, and manner determined by the institution. Institutions are not required to provide the parties with copies of the case file. Further, this provision is not a generalized discovery requirement, in that the institution must only provide access to evidence that is “directly relevant to the specific case, as reasonably determined by the institution.” Institutions may restrict access to sensitive information in the file that is not directly relevant to the issues raised, as well as further restrict access if the institution determines that a student and/or advisor is merely engaged in a “fishing expedition.” See pg. 31 of Guidance. Response to Reports The Guidance addresses how charges may be adjudicated. It clarifies that while the Law refers to a “hearing,” institutions may opt for an investigator model in lieu of a traditional hearing format. Therefore, a college or university may rely on an investigator to gather the factual information, conduct interviews, summarize what is credible, and offer a determination as to whether the evidence supports the charges. Section 6444(5) does not require that evidence be offered during a hearing or in the presence of other parties or witnesses. See pg. 27 of Guidance. Advisors of Choice The Guidance contains helpful clarifications on the ability of institutions to place reasonable limits on the role of advisors, including (a) validation of rules restricting advisors from speaking during meetings or hearings; (b) a statement that institutions can prevent advisors from circumventing such restrictions, such as by writing questions that the advisee reads verbatim in real time; (c) authority to remove advisors who violate procedural rules without an obligation to adjourn the hearing or allow the student to replace the advisor; and (d) validation of institutional policies placing reasonable restrictions on scheduling accommodations for advisors (such as limiting requests for delays to allow for scheduling conflicts of advisors to a specified number of business days). See pgs. 28–29 of Guidance. Transcript Notations The Guidance notes that if a court vacates a college’s finding of responsibility for a violation of institutional policy, the corresponding transcript notation must be removed. The Guidance does not address, however, whether a transcript notation may be removed if the parties agree, as a condition of litigation settlement, to vacate a finding of responsibility. See pg. 37 of Guidance. Legal Resources The Law mandates that reporting individuals receive assistance from the institution “in initiating legal proceedings in family court or civil court,” but the Guidance confirms that this does not require that institutions bring actions on behalf of reporting individuals, provide attorneys, or provide actual direct support. Still, institutions should be able to direct individuals to resources. The Guidance cites another SUNY resource page on this topic: http://www.suny.edu/violence-response/. See pg. 18 of Guidance. Student Training The Guidance clarifies that that an institution need only offer onboarding training to all new students, and that there is no requirement, with the exception of student athletes and student leaders, that every student complete training in order for an institution to be in compliance with the onboarding training requirements. The Guidance does, however, prohibit, or at least strongly discourage, the use of online programs as the only component of onboarding training. Relatedly, the Guidance provides welcome flexibility as to the timing of the required training for leaders of student organizations and student athletes (who, unlike other students, must complete training). Specifically, the Guidance allows fall sport athletes to begin competition or student organization officers to begin their service prior to training, with an understanding that they will be trained within a short period thereafter. See pg. 45 of Guidance. Climate Surveys The Law’s climate survey requirement becomes effective in July 2016 and requires institutions to conduct surveys “no less than every other year.” However, the Guidance states that the first climate survey must be completed by July 2017. See pg. 39 of Guidance. Audits The Guidance notes that the State Education Department will conduct random audits, at any time after September 1, 2016, to ensure compliance with the provisions of the Law. See pg. 2 of Guidance. Therefore, institutions should revise policies as needed and review case handling protocols that are impacted by the Guidance.