Well, of course it is not appropriate. Sadly it happens in a lot of daycare and schools. We pulled our child from school when we saw that the sibling of a teacher was bullying the other children. The second teacher commented "isn't it interesting to watch the pecking order?"

This type of favoritism flows from the top down and as parents we need to call notice to it and take action to remove our children from that type of surrounding. It causes inferiority complexes that can last a lifetime.

Don't deal with the staff, make the director aware of the situation.

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