Why the Flatiron School landed in hot water with the New York Attorney General

We recently reported that WeWork had acquired the Flatiron School. Our coverage regrettably left out a significant detail: just two weeks before WeWork’s announcement, the New York Attorney General’s office announced that it had reached a $375,000 settlement with the Flatiron School for operating without a license and making misleading employment and salary claims about its graduates.

The $375,000 settlement will fund restitution to eligible Flatiron School alums who file complaints with the Attorney General’s Office within three months of the announcement date — by mid-January, in other words. A spokesperson for the office told Technical.ly that it has indeed received such complaints, but could not disclose how many.

According to the Attorney General’s office, between October 2013 and September 2017, the school operated without a license from the New York Department of Education. That matter has since been rectified, a WeWork spokesperson told Technical.ly, and Flatiron is now licensed. Indeed, according to the state’s Bureau of Proprietary School Supervision database, the school received its license, which lasts for two years, on Sept. 29.

The Attorney General’s office also sanctioned the Flatiron School for what it deemed to be misleading claims regarding the employment and salary outcomes of its graduates. Here’s the specific claims with which it took issue, according to the office’s press release:

For example, between January and June 2017, Flatiron claimed that 98.5% of its students received employment less than 180 days after graduation and that Flatiron graduates had an average salary of $74,447. However, Flatiron did not disclose clearly and conspicuously that the 98.5% employment rate included not only full time salaried employees but also apprentices, contract employees and self-employed freelance workers, some who were employed for less than twelve weeks. Similarly, Flatiron failed to clearly and conspicuously disclose that its $74,447 average salary claim included full time employed graduates only, which represent only 58% of classroom graduates and 39% of online graduates.

As we previously noted, the Flatiron School’s outcomes report from July for its New York City programs included two significant caveats. Nearly half of the students represented in the report received job offers that were not for full-time positions. The average salary figure only applied to full-time employees. Though those caveats were included in the report, they weren’t highlighted in the summary found on the school’s website. That likely landed the school in hot water with the Attorney General’s Office.

Did the investigation raise a red flag during WeWork’s acquisition process? The company’s official line is no. The WeWork spokesperson provided the following statement to Technical.ly: “We’re glad this matter has been settled, and we are excited to welcome Flatiron to the WeWork family.”

In this reporter’s previous conversation with Adam Enbar, the Flatiron School’s cofounder, he noted that he first met WeWork cofounder Adam Neumann just before Christmas on an informal basis, and interest in a partnership between their respective companies developed soon thereafter. A spokesperson for the Attorney General’s Office told Technical.ly that the office’s investigation of the Flatiron School began in March. There’s a chance, then, that acquisition talks were well underway by the time it came to light.