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investigate it yourself and warn the the prinicple about the consequences
Mostly schools avoid to break the law but if a school was found doing so and I was an employee. I'll try to investigate the matter at my own. If it was intentional and with the support of administration than I'll check the level of law breaking. If it is harmful to the students or its effects can reach to my person I'll definitely resign otherwise I'll continue as it's not my concern.
If I knew that I can survive even without this job then i'll resign soon after becoming aware of the lawbreaking.