Federal District Court in New York Holds that Portions of the FFCRA Regulations Exceeded the USDOL's Statutory Authority

August 7, 2020

By: Mary E. Aldridge and Subhash Viswanathan

On August 3, 2020, the United States District Court for the Southern District of New York held that the U.S. Department of Labor (DOL) exceeded its statutory authority by promulgating certain regulations implementing the Families First Coronavirus Response Act (FFCRA). The FFCRA, which was enacted on March 18, 2020, is one of the major relief statutes passed by Congress in response to the COVID-19 pandemic. It contains two major provisions: (1) the Emergency Family and Medical Leave Expansion Act (EFMLA), which grants paid leave to employees who are unable to work because they must care for a dependent child due to the closure of the child's school or place of child care; and (2) the Emergency Paid Sick Leave Act (EPSLA), which requires covered employers to provide paid sick leave to employees for one of six qualifying COVID-19-related reasons.

The State of New York brought suit against the DOL pursuant to the Administrative Procedure Act, challenging several features of the DOL's regulations on the ground that they unduly restricted the paid leave available to employees under the statute. The Court, in large part, agreed with the State.

The Work Availability Requirement

First, the State challenged the DOL's rule that an employee is not eligible for paid leave pursuant to the EFMLA or for three of the six qualifying reasons under the EPSLA if the employer does not have work available for the employee. This limitation on the use of paid leave is significant because the COVID-19 pandemic has resulted in a decrease in work and temporary furlough of numerous workers who technically are still considered employees.

The Court recognized that the statute grants paid leave to employees who are "unable to work (or telework) due to a need for leave because" of one of the six qualifying reasons under the EPSLA or are "unable to work (or telework) due to a need for leave to care for" a child whose school or place of child care has closed due to COVID-19. The DOL argued that these statutory provisions unambiguously preclude employees from being eligible for paid leave if the employee is out of work due to a lack of work. The State argued that the statute does not necessarily preclude an employee from being eligible for leave if there are multiple reasons why the employee is out of work and one of those reasons is a qualifying reason under the EPSLA or EFMLA.

The Court agreed with the State that the statute is ambiguous on this issue, and further held that the work availability requirement was arbitrary and capricious for two reasons: (1) the DOL had no rational basis for applying this requirement only to three out of the six EPSLA qualifying reasons; and (2) the DOL provided only a "barebones explanation" for the work availability requirement that was "patently deficient."

The Health Care Provider Exclusion

Next, the State challenged the DOL's definition of "health care provider" for purposes of implementing the statutory provision allowing employers to exclude health care providers from eligibility for paid leave. The FFCRA permits the DOL to designate any "person . . . capable of providing health care services" as an employee who may be excluded from eligibility for paid leave.

The DOL defined a "health care provider" broadly as "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," as well as individuals employed by employers who contract with those institutions 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." Many health care institutions, in reliance on this broad definition, excluded all or a substantial number of their employees from eligibility for paid leave.

The Court held that the DOL's definition of "health care provider" is contrary to the statute because it focuses entirely on the identity of the employer rather than whether the employee is "capable of providing health care services." The Court pointed out that the DOL's broad definition could lead to absurd outcomes. For example, the DOL conceded during the litigation that an English professor, librarian and cafeteria manager at a university with a medical school would all be considered "health care providers" under the rule. Accordingly, the Court found this definition to be invalid.

Intermittent Leave

Next, the State challenged two aspects of the regulations relating to an employee's ability to take intermittent leave: (1) the DOL's rule permitting intermittent leave only for the purpose of caring for a child whose school or place of child care is closed; and (2) the DOL's rule allowing intermittent leave only with employer consent.

On the first issue, the Court held that the DOL had a rational basis for permitting intermittent leave only for the purpose of caring for a child whose school or place of child care is closed because the other qualifying reasons for which intermittent leave is prohibited logically correlate with a higher risk of viral infection. However, the Court held that the DOL failed to provide a sufficient rationale to justify its rule requiring employer consent and held that portion of the rule to be invalid.

Documentation Requirements

Finally, the State challenged a provision of the regulations that requires employees, prior to taking leave, to submit documentation indicating the reason for leave, duration of leave, and, where applicable, the authority for an order of quarantine or isolation. Under the statutory text, an employee must provide the employer with "notice" of leave as soon as practicable. However, the statute contains no requirement to provide documentation prior to taking leave.

Accordingly, the Court held that to the extent that the documentation requirement imposes a different and more stringent precondition to taking paid leave, it is inconsistent with the statute and is invalid.

What Does This Decision Mean for Employers?

At this point, the impact of this decision is largely dependent on whether the DOL chooses to file an appeal and seek a stay of the decision pending appeal.

Employers who have already denied leave to certain employees in reliance on one or more of the rules that have been invalidated may have a defense that they relied in good faith on the administrative regulations and guidance issued by the DOL in making decisions regarding employee eligibility for leave. Employers who receive inquiries or complaints from employees who were denied leave but believe they should have been eligible for leave based on the Court's decision should consult with their legal counsel to craft an appropriate response.

Any future requests for leave that may implicate a rule that has been found to be invalid should be evaluated carefully and the risks should be discussed with legal counsel before making a decision regarding the leave request.