Federal Court Vacates Key FFCRA Regulations

August 10, 2020 - M&S Industry Alert

On August 3, 2020, a federal court in the Southern District of New York overturned key provisions of the Families First Coronavirus Response Act (FFCRA)—the federal law requiring certain employers to provide eligible employees with emergency paid sick leave (EPSL) and expanded family and medical leave (EFML) for specified reasons related to COVID-19—significantly broadening employee eligibility to receive emergency leave under the Act. The unexpected decision came in response to a challenge by the state of New York, which sought declaratory and injunctive relief with respect to four major restrictions put in place by the Department of Labor (DOL) to limit employees’ use of emergency FFCRA leave: (1) the work-availability requirement, (2) the broad exemption for health care providers, (3) the employer approval of intermittent leave and (4) the documentation requirement.1 Ultimately, the court sided with the state of New York, rejecting these restrictions as invalid on the basis that they exceed the authority of the DOL and unduly restrict paid leave under the FFCRA. The impact of this decision on each of the invalidated FFCRA provisions is discussed in turn below.

Significantly, the scope of the ruling is still unclear. The suit was brought under the Administrative Procedures Act (APA)—a federal law governing the process by which federal agencies develop and issue regulations. However, the court did not avail itself of a remedy under the APA that would have allowed it to vacate the regulations, nor did the court issue a nationwide injunction prohibiting enforcement of the regulations. The court’s decision itself is silent as to what the result of the decision is. At this point, the application of the decision outside of New York is unclear, and may well depend on how the DOL reacts to the decision. Employers should contact counsel to discuss the possibly application of the decision to their business.

The Court Rejects the DOL’s Work-Availability Requirement

Impact on the law – Perhaps most significant among those restrictions impacted by the court’s ruling is the work-availability requirement. The work-availability requirement of the DOL’s Final Rule excluded employees whose employers did not “have work” for them from receiving EPSL and EFML. In other words, while the FFCRA grants EPSL and EFML to employees who are “unable to work (or telework) due to a need for leave” because of any of six COVID-19-related criteria or to care for a child due to the COVID-19 pandemic, respectively, the work-availability requirement operates such that an otherwise eligible employee is not entitled to EPSL or EFML for three of the six listed reasons if their employer did not have work for them, irrespective of any qualifying condition for the leave. The DOL’s rationale for the restriction is that absence from work due to a lack of work is not “leave.” The court disagreed, holding that the work-availability requirement is not a “permissible construction” of the statute.

Impact on covered employers – As a result of the decision, furloughed and other employees who were not previously eligible for FFCRA leave due to a lack of work may now be entitled to such leave even if their employer has no current work for them. Employees must still have an FFCRA-qualifying reason for taking EPSL and EFML, but they may now be eligible for such leave even if their workplace has been closed or shut down due to the pandemic. Consequently, covered employers who previously relied on the DOL’s Final Rule to administer FFCRA leave to its workforce must now consider whether to grant requests for emergency paid leave fromall employees, and grant EPSL and EFML to any employee who meets the respective eligibility criteria for each type of leave, including employees on furlough and those currently without work.

The Court Narrows the Definition of “Health Care Provider”

Impact on the law – The FFCRA allows employers to exclude “health care providers” from the paid leave benefits provided by the Act, the rationale being that such workers are essential to maintaining a functioning health care system during the pandemic. While the FFCRA incorporates the definition of “health care provider” from the Family and Medical Leave Act (FMLA), the DOL interpreted the term much more broadly to include all employees of an organization providing health care services and even employees of certain entities that contract with any “health care provider.”2 The DOL defended its broad interpretation of the term on the ground that employees who do not directly provide health care services to patients—for example, lab technicians or hospital administrators—may nonetheless be essential to the functioning of the health care system. However, the court struck down the DOL’s definition as “vastly overbroad” and exceeding the DOL’s authority because it includes employees “whose roles bear no nexus whatsoever to the provision of healthcare services,” and held that employers can only exclude employees who are capable of providing health care services.

Impact on covered employers – In light of the court’s decision, many employees who were previously categorized as “health care providers” and excluded from the leave benefits of the FFCRA based on the DOL’s broad definition of the term may therefore be entitled to EPSL and EFML so long as they meet the respective eligibility criteria and otherwise qualify for the leave. For many employers, the hardest part about this ruling will be figuring out which of their workers would qualify as a health care provider for purposes of FFCRA leave, because the court failed to specifically redefine the term “health care providers” or elaborate on what it means to be “capable of providing healthcare services.” As such, covered employers may need to reassess whether they still qualify as a “health care provider” under the court’s tapered interpretation and make individualized determinations as to whether employees requesting leave are capable of providing health care services before excluding anyone from leave benefits under the FFCRA.

The Court Eliminates Employer Consent as a Prerequisite for Intermittent Leave

Impact on the law – The DOL regulations provide that EPSL and EFML may be taken intermittently in various blocks of time for separate qualifying conditions, but only with employer consent. The court’s August 3 decision left this rule largely intact regarding employees’ ability to use FFCRA leave intermittently, and the court agreed with the DOL’s interpretation that intermittent leave should be limited to situations where there is no risk that the employee might spread the virus to others. However, the court invalidated the part of the rule requiring employers to consent to intermittent leave requests, holding that the DOL failed to explain why employer consent is required for the remaining qualifying conditions, which do not implicate the same public health considerations.

Impact on covered employers – Given the court’s ruling, employer consent may no longer be required as a prerequisite to take certain leave intermittently, including EPSL and EFML to care for the employee’s son or daughter whose school or place of care is closed. As a result, covered employers should review requests for EPSL and EFML to determine whether the leave should be granted in light of the court’s decision.

The Court Strikes Down Documentation Requirements as a Precondition for Leave

Impact on the law – Under the DOL’s Final Rule, employees must submit to their employer, prior to taking FFCRA leave, documentation indicating their reason for the leave, the duration of the requested leave and, when relevant, the authority for the isolation or quarantine order qualifying them for leave prior to taking the leave. However, the court rejected this regulation, concluding in its decision on August 3 that such a “blanket” regulatory requirement that employees furnish documentation before taking FFCRA leave is not only more of a burden on employees than the statute intended, but also that it “renders the (statutory) notice exception for unforeseeable leave and the statutory one-day delay for paid sick leave notice completely nugatory.”

Impact on covered employers – While the ruling left intact the DOL’s overall documentation requirement, employers may be prohibited from requiring documentation verifying the need for FFCRA leave before taking leave. In situations where the need for leave is not foreseeable, such as illness, neither documentation nor prior notice may be required as a precondition to leave. On the other hand, where the need for leave is foreseeable (i.e., a scheduled doctor appointment), advance notice and supporting documentation can both be required before taking leave. Covered employers should consider updating any existing policies requiring prior notice and/or documentation as a precondition for taking FFCRA leave consistent with the court’s decision.

Where We Go from Here

Whether the DOL will appeal this judgment remains to be seen. If the DOL does appeal, the U.S. Court of Appeals for the Second Circuit would have the ability to stay the August 3 order pending appeal, which would temporarily mitigate the impact of the decision on employers. In the meantime, absent further clarification regarding the scope of the decision or the decision being overturned, covered employers everywhere should take a conservative approach in administering FFCRA leave and consider all employee requests for leave related to COVID-19, even if there is no work available, lest the decision applies nationally. Employers should also consult legal counsel before making decisions regarding the administration of FFCRA leave. In addition to keeping an eye out for a possible appeal, employers should continue to watch for similar—or contrary—rulings from courts in other parts of the country that may be inclined to follow the reasoning of the U.S. District Court for the Southern District of New York or uphold the DOL’s original restrictions.

1  These restrictions were among a number of rules and directives relevant to the administration of the FFCRA’s paid leave requirements that were included in a final administrative rule promulgated by the DOL implementing the FFCRA’s provisions (the “Final Rule”). 

2  Specifically, the Final Rule’s definition of “health care provider” includes: “anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions,” as well as “any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility, [and] anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.”

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