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Essential Elements of Independent School Agreements

By Net Assets posted 01-31-2018 08:42 AM

teacher and students

Enrollment & Financial Aid |

Independent schools are increasingly adopting evergreen agreements for employees, students and sometimes both. While these arrangements can ease administrative burdens, they also come with risks. Attorneys Charla Stevens and Susan Schorr of McLane Middleton addressed essential elements of agreements that protect all parties in an NBOA webinar, “Is the Grass Greener? Evergreen Employment and Enrollment Contracts,” earlier this month.

Employment Agreements

Without an employment agreement, employment is at-will. This means “an employee can be dismissed from employment for a good reason, a bad reason or no reason at all, and without any warning or due process,” said Stevens. “Similarly, the employee can leave employment at any time and is not held to remain in that position for a term of employment.” Adopting any other type of arrangement negates at-will status, Stevens explained.

Other types of employment include:

  • Appointment letter (most common at independent schools): letter outlining terms of employment for one upcoming school year without guarantee of renewal.
  • Employment contracts (common): an agreement that an employee will be hired and agrees to work in a particular job.
  • Collective bargaining agreement (less common): employees are members of a union.
  • Implied contracts (less common): employee handbooks and other policies that imply an employee has been hired for a particular term for a particular reason.

Whereas most businesses prefer at-will employment, schools tend to prefer an alternative arrangement. Why? “Having appointment letters or employment agreements creates a culture of stability for the employees, and that usually creates a culture of stability for the students and the rest of the school community,” said Stevens. Furthermore, contracts or letters are sometimes part of the school’s culture and very difficult to change.

Stevens recommended considering the following for inclusion in an appointment letter:

  • Job title and responsibilities
  • Position term
  • Compensation: Is there a base salary plus incentive?
  • Benefits, including school credit card, tuition remission, housing
  • Termination by either party: Does it have to be for a good reason or good cause? How does it happen? Is there a notice period?
  • Impact of death or disability on compensation
  • Post-employment obligations such as return of school property, non-disparagement requirements and confidentiality requirements
  • Reference to the employee handbook and school policies
  • Clause claiming the right to rescind the appointment if enrollment is not as expected
  • Provision for early termination for a cause such as willful material and persistent failure, gross misconduct, knowing violation of school’s written policies or fiduciary duties, acts of moral turpitude, conviction of a felony, failure to cooperate in an internal investigation

Enrollment Contracts

Writing a strong enrollment contract is equally important. “It really is the foundational contractual arrangement you have with your family, so make sure that it covers more than just tuition payments,” said Schorr. She recommended including the following:

  • Reference to the student handbook: Within the student handbook, include a paragraph that gives the school the flexibility to update its policies throughout the school year and to deviate from its policies when circumstances require.
  • Tuition payment terms, including amount, deadlines, additional fees, tuition refund insurance
  • Information sharing related to issues of student health, safety and welfare
  • Terms of notice
  • Relief or waiver language (see caveats below)

Schools may also wish to include provisions in case a family does not pay tuition. Withholding a transcript is not legal in some states, Schorr advised. If that’s the case, considering stamping the words ‘tuition due’ on it to signal to the next school that there’s been an issue. Some states require that contracts use larger bold typeface to state terms of liquidated damages, if a family withdraws after a stated deadline. Any claim that the school is not liable for student injury may also need to be in bold, she explained. Schorr doubts the enforceability of these clauses and recommends separate forms and waivers for trips, sports and activities.

The most important element to include in an evergreen contract, said Schorr, is qualifying language that indicates students must be in good academic and behavioral standing as determined by the school and that families must comply with all the terms and conditions of the enrollment contract and the student/parent handbook.

While evergreen contracts can help schools save time and money and encourage reenrollment, schools should be aware that “state law, with respect to evergreen contracts, is really out there to protect consumers. The parts of the contract that refer to automatic renewal generally have to be clear and conspicuous,” Schorr said.

Electronic signatures

Electronic signatures are the future of contracts, said Schorr. “The key takeaway here is that you need to ensure that the electronic signature is valid,” she stipulated. Although it may seem cumbersome, she also advised schools to issue distinct log-ons for each parent signing the contract, to ensure that both parents have read and acknowledged it and to make it more likely to stand up in court. Shore also recommended including boilerplate signature block language that acknowledges that the electronic signature has the same validity as a paper-and-ink signature and that no other validation is necessary.

View the webinar video, slides and transcript in the NBOA webinar archive for more, including indefinite versus definite employment agreements, the difference between a contract and a letter, nonrenewal versus termination and transitioning from contract to at-will status.

This information is for general educational purposes only. It should not be relied upon as, or in place of, legal advice. The author, webinar presenters and reader do not have an attorney/client relationship. Readers are encouraged to work with their legal counsel when addressing specific issues. 

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