In light of the financial impact and economic uncertainties caused by the global pandemic, many independent schools may be considering a loan under the Paycheck Protection Program (PPP) of the CARES Act. Before signing on the dotted line however, it is important for independent schools to fully understand and consider the potential consequences of accepting PPP loans. Schools accepting PPP loans will be considered recipients of federal financial assistance, imposing obligations under a number of federal civil rights laws, including Title IX, Title VI, the Age Discrimination Act and likely, Section 504 of the Rehabilitation Act of 1973. Though all independent schools have existing non-discrimination statements, policies and practices to comply with existing state and federal non-discrimination laws, such documents and practices are not necessarily co-extensive or compliant with the specific regulatory requirements under these laws.
Below are frequently asked questions to help guide independent schools as they consider potential implications of accepting PPP loan funds.
Questions and Answers:
- Will the school be considered a recipient of federal financial assistance if it accepts PPP loan funds?Yes. These loans are being provided from funds from the U.S. Department of Treasury through the Small Business Association (SBA). As a condition of receiving the loan, recipients are required to acknowledge and confirm that they will comply with various civil rights laws and any corresponding regulations as they relate to the SBA. Though written in the context of guidance for faith-based organizations, a recent FAQ from the SBA confirms that PPP loan recipients will be considered recipients of federal financial assistance.
- Do the loan documents explain what additional obligations might be imposed on a school as a recipient of federal financial assistance?No, at least not in clear, understandable language. The PPP application requires applicants to certify that they will comply, whenever applicable, with the civil rights provision described in the application form. Specifically, the civil rights provision on page 4 of the application form states:Civil Rights (13 C.F.R. 112, 113, 117) – All businesses receiving SBA financial assistance must agree not to discriminate in any business practice, including employment practices and services to the public on the basis of categories cited in 13 C.F.R., Parts 112, 113, and 117 of SBA Regulations. All borrowers must display the “Equal Employment Opportunity Poster” prescribed by SBA.The laws referenced in this provision of the application include Title VI, Title IX, the Age Discrimination Act, and to some degree, Section 504 of the Rehabilitation Act of 1973.
- What do each of these laws prohibit?Each of these laws is a federal civil rights law designed to prohibit discrimination on the basis of certain protected categories.
- Title VI of the Civil Rights Act of 1964 (“Title VI”) prohibits discrimination on the basis of race, color, or national origin.
- Title IX of the Education Amendments of 1972 (“Title IX”) prohibits discrimination on the basis of sex in any education program or activity.
- The Age Discrimination Act of 1975, not surprisingly, prohibits discrimination on the basis of age.
- Section 504 of the Rehabilitation Act of 1973 (“Section 504”) prohibits discrimination against qualified individuals with a disability (handicap).
- Aren’t independent schools already required to follow anti-discrimination laws?Yes. As a non-profit educational institution, an independent school would be expected to have a non-discrimination statement and related policies and procedures. However, such statement and policies are based on other state and federal laws that may not necessarily be co-extensive and compliant with the obligations that would be imposed under the SBA regulations.
- What do I need to know about compliance with Title VI?The SBA regulations import the general Title VI requirement that recipients ensure that no one, on the ground of race, color or national origin is excluded from participation in, denied the benefits of, or is otherwise subjected to discrimination by the recipient’s business or other activity. The regulations set forth numerous specific discriminatory actions that are prohibited and make clear that these protections extend broadly to applicants, employees, students, parents and others.To ensure compliance with Title VI, a school would need to have a complaint procedure that allows for the reporting and investigation of any complaint of discrimination or harassment on the basis of race, color, or national origin, and must permit the SBA to investigate such complaints. In ascertaining whether a school is in compliance with SBA’s regulations, schools may be required to permit SBA access to theirs books, records, accounts, and other sources of information, including its facilities to permit the SBA to determine if any unlawful conduct occurred.
- What happens if an independent school does not comply with the SBA’s Title VI regulations?The SBA has the authority to suspend or refuse any financial assistance not yet provided or to accelerate the maturity of the loan. The SBA may also make a referral to the U.S. Department of Justice. Individuals who believe they have been discriminated against on the basis of race, color or national origin could rely on Title VI to bring a private legal action against the school.
- I am familiar with Title IX in the athletics context, is there more to it?Yes. The plain language of Title IX is fairly straightforward, as it provides that “[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance . . . .” 20 U.S.C. § 1681. However, while many think of Title IX only in the context of athletic programs, it prohibits all forms of discrimination on the basis of sex, including sexual harassment, and applies broadly to all aspects of school operations, including employment, admissions, course offerings and other school programs, housing, and financial aid – in addition to requiring equal opportunites in athletics. SBA’s implementing regulations address all these areas, among others.
- What are some of the things a school would need to do to comply with the SBA’s Title IX regulations?In addition to ensuring that its programs do not discriminate on the basis of sex, there are a number of procedural requirements imposed by SBA’s Title IX regulations. While not an exhaustive list, some of the key compliance requirements include:
- Appointing a Title IX coordinator to receive and investigate complaints;
- Providing notice to all students and employees of the name and contact information for the coordinator;
- Adopting Title IX compliant grievance procedures for the “prompt and equitable resolution” of complaints;
- Providing notice of a Title IX compliant non-discrimination statement to all applicants for admission and employment, students, parents and employees, which comply with the regulations and including such notice in all school publications, admissions, and employment materials, as prescribed by the regulations.
- What are the requirements under Title IX for athletics?In general, Title IX requires schools to provide equal athletic opportunities for members of both sexes in compliance with Title IX’s regulations. In evaluating whether offerings provide “equal athletic opportunities,” schools would need to look at the nature and number of athletic offerings, which may include comparing enrollment with participation, as well as consider all other ancillary issues related to athletics such as comparative quality of fields, facilities, uniforms, equipment, locker rooms, coaching and the scheduling of games and practice times.
- My school is a single- sex school. Would Title IX require us to become co-ed?No. Although Title IX prohibits a broad range of discriminatory actions, the SBA regulations make clear that it does not apply to admissions to nonvocational elementary or secondary schools, nor does it apply to certain institutions of undergraduate higher education that have historically and continuously operated as single-sex schools. In short, Title IX still permits the operation of private single-sex elementary and secondary schools.
- How are SBA’s Title IX regulations enforced?The regulations provide that the investigative, compliance, and enforcement procedural provisions of Title VI (see Questions 5 and 6, above) are also applicable to SBA’s Title IX regulations.
- What does the Age Discrimination Act of 1975 require from schools?This law prohibits discrimination on the basis of age in programs and activities receiving federal financial assistance and while it applies to all ages, it does permit the use of certain age distinctions and factors other than age that meet law’s requirements.The regulations require specific procedures for responding to complaints and effecting compliance. As with the enforcement of the other laws discussed, if any noncompliance cannot be resolved by informal means, the SBA can suspend, end or refuse to provide further financial assistance, or require immediate repayment.
- What do the SBA regulations say about Section 504?The SBA regulations do not explicitly address Section 504 in the same way that they incorporate regulations related to Title VI, Title IX and the Age Discrimination Act. However, given that the SBA regulations reference to Section 504 generally, it is likely that an independent school would need to comply with the basic obligations under Section 504 as a recipient of federal financial assistance. At minimum, the regulations prohibit discrimination “with regard to goods, services, or accommodations offered or provided by the aided business or other enterprise, whether or not operated for profit, because of race, color, religion, sex, handicap, or national origin of a person, or fail or refuse to accept a person on a nonsegregated basis as a patient, student, visitor, guest, customer, passenger, or patron.” (Emphasis added). Independent schools already have an obligation under the Americans with Disabilities Act (ADA) (which shares the same definition of “disability”/”handicap” with Section 504 and the applicable SBA regulations) not to discriminate on the basis of a disability. The extent to which Section 504 may impose requirements above and beyond existing ADA obligations will depend on how broadly the SBA regulations pertaining to Section 504 are interpreted. Right now, the U.S. Department of Education has regulations explaining how private schools that receive federal financial assistance from the U.S. Department of Education must comply with Section 504, but given that the PPP loan is governed by SBA rules, it remains unclear if the rules from the U.S. Department of Education will be imported into the SBA requirements.
- If a school accepts PPP funds, does this mean it will need to comply with these laws forever?No. In general, legal obligations that a school incurs through its receipt of a PPP loan are not permanent, and once the loan is paid or forgiven, those nondiscrimination obligations will no longer apply.That said, the Title IX regulations suggest that the duration of any obligations may be extended depending on the purpose for which the financial assistance was extended. For example, if the funds are used in connection with real property or structures, such obligations may extend as long as the property or building is used to provide educational programs or activities.
The above information represents a broad overview of the civil rights obligations associated with the receipt of PPP loan funds. Please continue to monitor ctschoollaw.com for updates concerning COVID-19. If you have specific questions regarding independent schools’ obligations as recipients of federal financial assistance, please contact Julie C. Fay at firstname.lastname@example.org or Tyler J. Bischoff at email@example.com or any member of our School Law Group.