On August 3, 2020, U.S. District Judge J. Paul Oetken issued a decision in State of New York v. U.S. Department of Labor, et al., No. 1:20-cv-03020 (S.D.N.Y. Aug. 3, 2020), which vacated several portions of the Department of Labor’s (“DOL”) regulations concerning the Families First Coronavirus Response Act (“FFCRA”).
Specifically, the Court vacated the following: (1) the “work-availability” requirement; (2) the definition of “health care provider”; (3) the requirement that an employee secure employer consent for intermittent leave; and (4) the requirement that documentation be provided before taking leave. This decision impacts every employer covered by the FFCRA in significant ways.
The FFCRA and the DOL’s Final Rule
As we previously reported, the FFCRA, which went into effect on April 1, 2020, provides two forms of COVID-19 related paid time off – the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLA”) – to employees of businesses with fewer than 500 employees in the U.S.
Under the EPSLA, eligible employees are entitled to up to 80 hours of paid leave if they are unable to work (or telework) due to a need for leave because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to an order to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Under the EFMLA, eligible employees are entitled to take up to 12 weeks of leave if they are unable to work (or telework) due to a need to care for minor children if:
- A school or place of care has been closed; or
- The child care provider of such children is unavailable due to a public health emergency (defined as an emergency with respect to COVID-19 declared by a federal, state, or local governmental authority).
On April 1, 2020 – the same day the FFCRA took effect – the DOL issued a final administrative rule implementing and interpreting the FFCRA (the “Final Rule”). The Final Rule, which is effective through December 31, 2020, provides rules and guidance relevant to the administration of the FFCRA’s paid leave requirements.
The Litigation: New York Sues to Invalidate Several Portions of the Final Rule
On April 14, 2020, the state of New York filed suit in the U.S. District Court for the Southern District of New York (“SDNY”) against the DOL, claiming that several features of the Final Rule exceeded the agency’s authority under the Administrative Procedure Act (“APA”). In issuing its decision, Judge Oetken responded to competing motions for summary judgment, and generally aligned with the State’s position on the disputed issues.
The Court’s Decision Vacates Four Key Portions of the Final Rule
- The Court Struck Down the Final Rule’s “Work-Availability” Requirement
The Final Rule specified that employees are not entitled to FFCRA-paid leave benefits if the employee’s inability to work was due to their employer having no work available. The Final Rule’s limitation was largely consequential for employers and employees covered by the FFCRA, because the COVID-19 crisis has caused the temporary shutdown and slowdown of businesses nationwide, causing in turn a decrease in work immediately available for employees who otherwise remained employed.
In vacating the “work-availability” rule, the Court applied a two-part test articulated in the Supreme Court decision Chevron U.S.A. Inc., v. Natural Resources Defense Council, 467 U.S. 837 (1984), which established when courts should defer to an agency’s own answer or interpretation of its own rule. The first step under Chevron requires the Court to determine whether the statute at issue is ambiguous. The DOL argued that the terms “due to” (as it appears in both provisions at issue) and “because” compel the conclusion that an employee whose employer “does not have work” for them is not entitled to leave irrespective of any qualifying condition. The Court disagreed, finding that the statute’s text was ambiguous as to whether an employee’s inability to work could only be because of one of the EPSLA or EFMLA enumerated reasons. Specifically, the Court said that they cannot conclude that the terms “due to” or “because” unambiguously foreclose an interpretation entitling employees whose inability to work has multiple sufficient causes — some qualifying and some not — to paid leave.
Under the Chevron analysis, since the Court determined that the statute at issue is ambiguous, the Court then had to determine whether the agency’s interpretation of the ambiguous statute is reasonable. The Court determined that the DOL’s interpretation was unreasonable for two reasons: (1) the Final Rule’s “differential treatment of the six qualifying conditions is entirely unreasoned,” and (2) “the agency’s barebones explanation for the work-availability requirement is patently deficient,” because it “may considerably narrow the [FFCRA’s] potential scope.”
Under the Court’s interpretation of the FFCRA, employees may be eligible for FFCRA-paid leave even if there is no work for them to do. It is important to note that the Court did not address whether its ruling would require employers to provide FFCRA-paid leave to employees who have been furloughed.
- The Court Struck Down the Final Rule’s Broad Definition of “Health Care Provider”
The FFCRA enables employers to exclude, at their option, “health care providers” from paid leave benefits. The Final Rule broadly defined “health care providers” to encompass virtually any employee of an employer in the health care field. An English professor, librarian, or cafeteria manager at a university with a medical school would all be “health care providers” under the Final Rule’s definition.
The state of New York challenged this exception on the grounds that it exceeded the DOL’s authority under the FFCRA. The Court agreed, taking particular issue with the Final Rule’s focus on the identity the employer has as a health care provider, rather than whether the individual employee is capable of providing health care services. The Final Rule’s broad definition of “health care providers” allowed employers to deny FFCRA leave to a large number of employees who are not directly engaged in providing health care services.
As a result, the term “health care provider” is now limited to how the FMLA defines it, which is as: “(A) a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or (B) any other person determined by the Secretary to be capable of providing health care services.” 29 U.S.C. § 2611(6). This change significantly narrows the application of the “health care provider” exemption.
Health care industry employers should revisit prior leave denials to mitigate potential litigation risk and should assess, on a case-by-case basis, potential exclusions from FFCRA-paid leave in the context of an employee’s specific role and ability to provide healthcare services.
- The Court Struck Down, in Part, the Final Rule’s Intermittent Leave Provisions
The Final Rule restricts the use of intermittent leave unless the following two conditions are met: (1) the employee and employer agreed to the use of intermittent leave; and (2) if the employee continues to report to an employer’s worksite, then the use of intermittent leave is permitted solely to care for the employee’s son or daughter whose school or place of care is closed, or whose child care provider is unavailable, because of reasons related to COVID-19.
The Court agreed with the DOL that it is proper to restrict the use of intermittent leave to circumstances where there is minimal risk that the employee will spread COVID-19 to other employees at the employer’s worksite. The conditions for which intermittent leave is entirely barred are those which logically correlate with a higher risk of viral infection (e.g., leave because employees have been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19, are experiencing symptoms of COVID-19 and are taking leave to obtain a medical diagnosis, or are taking care of an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19).
However, the Court disagreed with the DOL regarding the requirement that employees obtain employer consent before taking intermittent leave. The Court found that the DOL failed to explain why a blanket requirement of employer consent would be needed. Given this lack of rationale, the Court vacated the Final Rule to the extent it requires employees to obtain employer consent to take intermittent leave.
The Court’s holding that employees are no longer required to obtain employer consent before taking intermittent leave will be of particular importance in light of several school district decisions to operate on a remote or hybrid remote schedule.
- The Court Struck Down the Requirement that Employees Provide Advance Documentation
The Final Rule requires that employees submit to their employer, “prior to taking [FFCRA] leave,” documentation indicating, inter alia, their reason for leave, the duration of the requested leave, and, when relevant, the authority for the isolation or quarantine order qualifying them for leave.
New York argued, and the Court agreed, that the Final Rule’s language that advance-documentation is required prior to taking leave, is inconsistent with the FFCRA. The EPSLA provides that “[a]fter the first workday (or portion thereof) an employee receives paid sick time under this Act, an employer may require the employee to follow reasonable notice procedures in order to continue receiving such paid sick time.” The EFMLA provides that, “[i]n any case where the necessity for [leave] is foreseeable, an employee shall provide the employer with such notice of leave as is practicable.” The Court determined that the Final Rule’s documentation requirement “imposes a different and more stringent precondition to leave” and “is an unyielding condition precedent to the receipt of leave,” compared to the EPSLA and EFMLA documentation requirements. Thus, employers cannot mandate that employees provide FFCRA documentation in advance of taking leave.
Implications and Employer Takeaways
Given the potentially expansive implications of the decision and as with all things COVID-19 related, this is unlikely to be the final word on the subject. The DOL has yet to announce its next steps, which could include anything from appealing the decision, seeking an emergency stay pending review, or creating new rules or interim guidance. Regardless of what the next steps are, many uncertainties remain regarding the decision’s scope and impact.
For example, it is unclear whether the Court’s decision to vacate certain portions of the Final Rule applies only to employers in New York or on a broader, possibly nationwide basis. Other federal courts may not take the same position as the SDNY when analyzing the Final Rule and other pertinent regulations. Other states will likely start bringing similar challenges to the Final Rule. Employers, regardless of location, should familiarize themselves with the changes articulated in this decision and should exercise caution in case this decision is later upheld or adopted in other jurisdictions.
Employers should also be cognizant of state and/or local laws that have been enacted in light of the COVID-19 pandemic, specifically those that have interpreted or adopted portions of the Final Rule. Additionally, employers that have prepared COVID-19 plans and policies based on the Final Rule should review these policies to make sure they are in compliance in light of this decision. Employers with questions about the impact of this decision should consult with experienced employment counsel.
As you are aware, things are changing quickly and there is a lack of clear-cut authority or bright line rules on implementation. This article is not intended to be an unequivocal, one-size fits all guidance, but instead represents our interpretation of where things currently and generally stand. This article does not address the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay and other issues.
Sheppard Mullin is committed to providing employers with updated information regarding COVID-19 and its impact on the workplace. Stay informed on legal implications with Sheppard Mullin’s Coronavirus Insights Portal which now aggregates the firm’s various COVID-19 blog posts.
*Jamie Moelis is a law clerk in the firm’s New York office.