Federal Court Overturns Portions of FFCRA Rules
Last week, the Southern District of New York issued an opinion finding that the Department of Labor (DOL) exceeded its authority by issuing certain rules implementing the Families First Coronavirus Response Act (FFCRA). Specifically, the Court found to be invalid (1) the portions of the rules requiring employees to have work available to them to be eligible for leave, (2) the expansive definition of “healthcare provider”, (3) the requirement that the employer consent to intermittent leave, and (4) the timing of the documentation requirement.
Background
As addressed in our prior client alert, the FFCRA applies to employers with fewer than 500 employees and contains two components: paid sick leave and expanded FMLA leave – a portion of which is paid. Covered employers must permit their employees to utilize this leave when the employee is unable to work or telework for the reasons delineated in the statute. Specifically, employees may use paid sick leave when the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or 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 subject to a quarantine or isolation order or who has been advised by a healthcare provider to self-quarantine; the employee is caring for the employee’s son or daughter whose school, place of care, or childcare provider is closed or unavailable due to COVID-19 precautions; or the employee is experiencing “any other substantially similar condition” as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor. Expanded FMLA is only available for school closure and childcare reasons. On April 1, 2020, the Department of Labor issued its Final Rules on the implementation of the FFCRA. Shortly thereafter, the State of New York filed suit.
Litigation
New York challenged four main aspects of the regulations: the “work-availability” rule, the definition of “health care provider”, the provisions related to intermittent leave, and the documentation requirements. Each will be addressed below, in turn.
“Work Availability” Requirement
As discussed above, employees are permitted to use leave under the FFCRA if they are unable to work, or telework, due to a covered reason for leave. The Final Rules, however, require that employers have work available for the employee in order for the employee to be eligible for FFCRA leave. In other words, the FFCRA-qualifying condition must be the “but-for cause” of the employee’s inability to work. In the DOL’s view, employees who are furloughed or who have no workload are unable to work for that reason, not a covered reason, and should not receive leave.
The Court found this portion of the rule to be invalid, noting that the express language of the Final Rule applied the “work availability” requirement to only half of the qualifying conditions for sick leave. Although the DOL argued that the Court should impose the restriction on all covered reasons, the Court found no basis for doing so. Instead, the Court held that the requirement that the employee be unavailable for work “due to” or “because” of a covered reason was ambiguous and did not necessarily require “but-for” causation. Because the regulations offered no explanation for the work availability requirement, the Court concluded the requirement could not be justified, particularly considering the possible impact on the statute’s scope.
In light of this holding, it is now an open question as to whether FFCRA-covered leave applies to furloughed employees. Aside from the potentially significant monetary impact of such an interpretation, expanding FFCRA leave to furloughed individuals would lead to a number of administrative difficulties, including complications with verifying the individual’s eligibility for leave, as well as how such paid leave may impact the individual’s receipt of unemployment insurance benefits.
Definition of “Health Care Provider”
Health care providers may be excluded by their employers from emergency paid sick leave and expanded FMLA under the regulations. Unlike the definition in the standard FMLA, which limits “health care providers” to doctors or other persons deemed capable of providing health care services, the definition in the Final Rules is expansive, including employees of doctors’ offices, hospitals, health care centers, clinics, post-secondary educational institutions offering health care instruction, medical schools, retirement facilities, home health care providers, pharmacies, and others. The definition also includes workers who contract with any of those entities to provide services, or maintain operations, as well as employees who are involved in research, development, and production of equipment, drugs, vaccines, and other items needed to combat the COVID-19 public health emergency.
Again, the Court held that the DOL overreached with this expansive definition. The Court noted that the Secretary must determine whether the employee can provide healthcare services, which requires a role-specific determination. Instead, the Final Rule focused on the employer and was therefore overbroad, encompassing individuals who are decidedly not healthcare workers (e.g., English professors at a university). Until further clarifying regulations are issued, or until an appeal in this matter rules otherwise, employers may be wise to limit any exceptions to leave based on a designation as a healthcare provider to the more limited definition set forth in the FMLA.
Intermittent Leave
Under the Final Rules, paid sick leave and expanded FMLA can be used intermittently only if both the employee and employer agree. Additionally, the availability of intermittent leave depends on whether the employee is teleworking or working on site, as well as the reason for use: employees working on-site may only take intermittent leave if they are caring for a child whose childcare provider or school is closed. The DOL explained that for all other covered reasons, an employee may be sick or at high risk of exposure and infecting others. Therefore, employees who are reporting to the workplace must use such sick leave continuously, until they no longer have a qualifying reason for leave. Employees who are teleworking do not pose the same risks and can therefore use intermittent leave for any reason.
New York challenged this rule on several grounds. First, New York argued that the regulations meant that an employee who did not need to use all their leave at once (e.g., only needed to use part of it to obtain a COVID diagnosis) would forfeit the remainder of the leave. The Court disagreed, finding that the rule is clear that the leave must be taken consecutively until the need for leave abates, at which time the employee retains any remaining leave and can resume using it if another condition arises. Second, the challenge focused on the prohibition of certain intermittent leave for “in-office” work. The Court again sided with DOL, noting that the “conditions for which intermittent leave is entirely barred are those which logically correlate with a higher risk of viral infection.” However, the Court found no justification for requiring that the employer consent to intermittent leave and, as such, the consent requirement could not stand. Under the ruling, employees may therefore take otherwise permitted intermittent leave without first reaching an agreement with their employer. The opinion does not address whether the employer can set the minimum increment of use for such leave or how that would be determined.
Notice and Documentation
The final challenge was to the provisions in the Final Rule surrounding documentation of FFCRA leave. The Final Rule required employees to provide certain documentation to their employer “prior to taking” FFCRA leave. New York argued that this requirement was in conflict with the provisions for notice in the statute, which required notice for sick leave “[a]fter the first workday (or portion thereof)” that sick leave was used and for foreseeable expanded FMLA “as practicable”. The Court agreed that the documentation timing provisions were inconsistent with the notice requirements and struck them from the Final Rule, to the extent they are a precondition to leave. Thus, while employers can require the types of documentation listed in the Final Rule, they cannot require the documentation be provided before taking leave.
Takeaways
The scope of the Court’s decision is not entirely clear, as it is silent on whether it applies nationwide or simply within the Southern District of New York. In the interim, as we wait for a possible appeal or clarifying guidance from the DOL, employers should consult with counsel to determine how best to address the above areas in practice. Employers with questions about this decision should contact Kristina Grimshaw at kgrimshaw@fglawllc.com, or any other attorney at the firm.
DISCLAIMER: This alert is provided to clients and friends of the firm for informational purposes only and the distribution of this alert is not intended to, and does not, establish an attorney-client relationship. This alert also does not provide or offer legal advice or opinions on any specific factual situations or matters. This communication may be considered Attorney Advertising. Prior results do not guarantee a similar outcome.