NY Federal Court Creates Uncertainty by Vacating Portions of USDOL's Final Rule Interpreting FFCRA

On August 3, 2020, Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York struck down four provisions of the Wage and Hour Division of the U.S. Department of Labor (USDOL) regulations (Final Rule) implementing elements of the Families First Coronavirus Relief Act (FFCRA). See our previous advisory on the Final Rule, promulgated on April 6, 2020, here.

The State of New York had brought suit under the federal Administrative Procedure Act, claiming that several features of the Final Rule "exceed the [USDOL]'s authority under the statute" and "unduly restrict[] paid leave." Judge Oetken agreed and granted the State's motion for summary judgment in substantial part.

The impact of this decision has yet to be determined, and has created uncertainty for employers in their administration of leave under the FFCRA that involves one or more of the four provisions in the Final Rule that Judge Oetken found invalid. While the order is silent as to the purview of its application, employers in the Southern District of New York (SDNY)¹ are certainly within that scope.

Employers outside the SDNY should proceed with caution since Judge Oetken's order, while not controlling precedent in other jurisdictions, is likely to be cited as persuasive authority. The four aspects of the USDOL Final Rule that have now been invalidated in the SDNY are discussed below.

"Work-Availability" Requirement

The FFCRA grants paid leave to employees who, in the case of Emergency Paid Sick Leave Act (EPSLA), are "unable to work (or telework) due to a need for leave" because of any of six qualifying conditions² or, in the case of the Emergency Family and Medical Leave Expansion Act (EFMLEA), are "unable to work (or telework) due to a need for leave to care for" a child due to COVID-19.

The Final Rule implementing both provisions excludes from these benefits employees whose employers "do[] not have work" for them—i.e., it imposes a "work-availability" requirement on those seeking to take paid leave for certain conditions. This is a particularly salient point for employers whose businesses have been shuttered during the pandemic, as the USDOL's "work availability" rule was a welcome relief to cash-strapped employers facing the prospect of paid leave requests from employees while their establishments remained closed.

Judge Oetken struck the "work availability" rule on the grounds that the Department of Labor had provided an insufficient justification for its inclusion in the Final Rule, and characterized the USDOL's "barebones explanation for the work-availability requirement" as "patently deficient." In support of his reasoning that an employee may need to take job-protected leave even when the employer has no work for that employee, Judge Oetken gave the example of "a teacher on paid parental leave [who] may still be considered on 'leave' even if school is called off for a snow day."

However, in this example, the employee is already on job-protected leave when the employer experiences an event which eliminates the need for that employee's work. In contrast, for many New York employers, the advent of the COVID-19 pandemic and the ensuing governor's stay-at-home orders eliminated the need for any employee to report to work.

This ruling is a radical departure from a fundamental presumption upon which the USDOL had predicated much of its guidance to employers and employees. For instance, the USDOL has stated that, "For purposes of the FFCRA, a Federal, State, or local quarantine or isolation order includes quarantine or isolation orders, as well as shelter-in-place or stay-at-home orders, issued by any Federal, State, or local government authority that cause [an employee] to be unable to work (or to telework) even though [the] employer has work that [the employee] could perform but for the order" (emphasis added).

Now that the "work availability" requirement has been stricken in the SDNY, it appears likely that every employee subject to a stay-at-home order that may be issued in the event of a second wave of COVID-19 would be eligible to take leave under the EPSLA—even if the employer's business is forced to suspend operations. Employers in New York are encouraged to review the policies and practices that they have implemented in response to the passage of the FFCRA to ensure compliance with this development.

Definition of "Health Care Provider" 

Under both the EPSLA and EFMLEA, an employer "of an employee who is a health care provider or emergency responder may elect to exclude such employee" from leave benefits. The FFCRA tracks the Family and Medical Leave Act (FMLA) definition of "health care provider," which includes any "person determined by the Secretary [of Labor] to be capable of providing health care services."

For purposes of the exclusion from the FFCRA's coverage, the Final Rule defines a "health care provider" as "anyone employed at any" of certain enumerated institutions that provide medical care, and "any individual employed by an entity that contracts with any of the [aforementioned] institutions." New York challenged the USDOL's definition as exceeding its statutory authority and Judge Oetken agreed, determining that this provision in the Final Rule was "vastly overbroad" in its exclusion of "health care providers" from eligibility for leave under the FFCRA.

Under the USDOL's regulation, virtually any employee of a health care provider—including administrators and janitorial staff—are excluded from coverage. This is based upon the presumption that every employee of a health care provider serves a vital role in the provision of health care services, and that any employee's absence from that workplace could have a negative impact on the provider's ability to deliver care.

However, this rule failed to take into account that a "health care provider" employer may also employ individuals wholly disconnected from the provision of health care. In fact, the USDOL conceded "that an English professor, librarian, or cafeteria manager at a university with a medical school would all be 'health care providers' under the Rule."

Judge Oetken reasoned that, because the FFCRA's exclusion of "health care providers" was limited to certain employees who provided health care services, the USDOL overstepped by creating a definition that "hinges entirely on the identity of the employer," and thereby covering employees whose "work is remotely related to someone else's provision of health care services," e.g., a librarian at a university with a medical school. Judge Oetken found that the USDOL's interpretation of this term could not stand.

Similar to his analysis of the work-availability requirement, Judge Oetken emphasized that an overly broad definition of "health care provider" has grave consequences for employees, in that it bars their access to paid leave. Here too, covered employers should review their policies and practices to ensure that exclusion of any employee is limited in scope to those who are essential to the provision of health care, and does not include employees unrelated to that care.

Employer Consent to Intermittent Leave

The FFCRA does not address intermittent leave. The USDOL's Final Rule permitted employees to take EPSLA and EFMLEA leave on an intermitted basis, provided that such usage did not pose a public health risk³—and subject to the employer's agreement.

Judge Oetken found that while the prohibitions on intermittent leave for conditions "which logically correlate with a higher risk of viral infection" are sound, they do not justify conditioning intermittent leave on employer consent for the remaining qualifying conditions (e.g., situations where a parent must stay home because their child's school is closed), "which concededly do not implicate the same public-health considerations." Judge Oetken thus held that this part of the Final Rule is void "[i]nsofar as it requires employer consent for intermittent leave" for a reason that does not "implicate an employee's risk of viral transmissions."

Judge Oetken's decision effectively aligns the FFCRA with the non-emergency federal FMLA, which allows eligible employees to take leave intermittently without employer consent. Employers in the SDNY should modify their leave policies and practices as needed to remove any imposition of a consent requirement.

Documentation Requirements

The FFCRA provides that an employee seeking leave under the EFMLEA, where the need for leave is foreseeable, "shall provide the employer with such notice of leave as is practicable." For leave under the EPSLA, "[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."

Beyond these dictates, 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." Judge Oetken found that, "[t]o the extent that the Final Rule's documentation requirement imposes a different and more stringent precondition to leave, it is inconsistent with the statute's unambiguous notice provisions" and cannot stand.

As with intermittent leave, employers should review their leave policies and practices to ensure that the notice requirements they've imposed are not "more onerous" that those enumerated in the FFCRA.

Going Forward

As a matter of law, the practical impact of this opinion remains to be seen. If the USDOL elects to appeal Judge Oetken's decision to the U.S. Court of Appeals for the 2nd Circuit, the provisions will remain in effect as drafted, at least within the SDNY, until an appellate decision. A 2nd Circuit decision—either affirming or reversing Judge Oetken—would then provide definitive guidance to employers in Connecticut, New York, and Vermont (those states within the 2nd Circuit).

Should the USDOL choose not to appeal Judge Oetken's decision, it might instead simply avoid pursuing alleged violations of these particular provisions within the SDNY. Another option for the USDOL is to update its guidance so that it is consistent with Judge Oetken's decision. It is relatively unlikely that the USDOL will revise the Final Rules at this stage, in light of the fact that the FFCRA is scheduled to expire on December 31, 2020.

As a practical matter, employers in New York now face yet another layer of ambiguity as they confront the unprecedented challenges of reopening workplaces and responding to employees' requests to continue to work from home.

Employers are encouraged to consult counsel as they confront the unique challenges of managing a workforce during COVID-19 and as they consider policy changes necessary to comply with legislation on the federal, state, and local levels.

The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.

DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.

FOOTNOTES

1  The SDNY encompasses the counties of New York, Bronx, Westchester, Rockland, Putnam, Orange, Dutchess, and Sullivan.
2  An eligible employee qualifies for EPSLA leave if the employee is (1) subject to a government-imposed COVID-19-related quarantine/isolation order; (2) advised by a health care provider to self-quarantine; (3) experiencing symptoms of COVID-19 and seeking a medical diagnosis; (4) caring for an individual subject to a quarantine/isolation order by government or health care provider; (5) caring for a child whose school/place of care is closed or whose childcare provider is unavailable; or (6) experiencing any other substantially similar condition.
3  Intermittent leave is barred where employees are subject to a government-imposed COVID-19-related quarantine/isolation order; have been advised by a health care provider to self-quarantine; are experiencing symptoms of COVID-19 and seeking a medical diagnosis; are caring for an individual subject to a quarantine/isolation order by government or health care provider; or are experiencing any other substantially similar condition.