Judge's FFCRA Ruling Invalidates USDOL's "Health Care Provider" Definition and Raises Questions About Paid Leave Eligibility During Pandemic-Related Shutdowns

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On August 3, 2020, a federal judge in New York struck down two important limits regarding which employees are eligible for paid leave under the Families First Coronavirus Response Act (FFCRA). The judge found that the U.S. Department of Labor (USDOL) exceeded its authority by issuing regulations rendering workers who have no work available (e.g., due to a workplace closure) ineligible for paid leave. The judge also rejected the USDOL’s definition of “health care providers,” who are excludable from paid leave. This decision, if not appealed, applies nationally and creates uncertainty as to whether employers who experienced pandemic-related shutdowns or reductions in force might have to provide their employees with paid leave. It also requires employers in the health care industry to re-examine whether they must provide paid leave to certain of their employees.

Background

On April 1, 2020, the Families First Coronavirus Response Act (FFCRA) came into effect. As we previously explained, the FFCRA requires employers with fewer than 500 employees to provide paid leave to employees who are “unable to work (or telework) due to a need for leave because” of any of six coronavirus-related reasons, including (for example), up to 12 weeks of paid leave to care for a child due to pandemic-related unavailability of childcare.

With regard to the health care industry, the FFCRA allowed for an exemption of “health care providers” and allowed the USDOL to “issue regulations to exclude certain health care providers … from the definition of employee.”

On April 2, 2020, the USDOL issued regulations containing (a) an exclusion from leave entitlements for employees whose employer “does not have work” for them, and (b) a broad definition of “health care provider.”

With regard to health care providers, the USDOL defined that term to mean “anyone employed at” a wide variety of organizations, including (among others) hospitals and doctor’s offices, as well as universities with medical schools, nursing facilities, home health care agencies, labs and testing facilities, pharmacies, and any “similar institution.” The definition also includes individuals “employed by an entity that contracts with” the previously-mentioned institutions “where that individual’s services support the operation of the facility.” The definition further includes “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.”

Shortly after the USDOL issued its rules, the State of New York sued the USDOL contending that some of its rules were invalid and improperly limited the scope of employees entitled to the FFCRA’s benefits.

The Vacated Work-Availability Requirement

In its final rule, the USDOL interpreted the FFCRA as providing paid leave only when the employee had work to do but was unable to perform it due to a COVID-19-related reason. For example, if a workplace shut down due to a pandemic-related government order or lack of customers, an employee who contracted COVID-19 could not be considered as needing “leave” because there was no work for that employee from which to take leave.

The judge determined that the USDOL’s rule was invalid for two reasons. First, in examining the USDOL’s work-availability requirement, the judge noted that the USDOL only applied this requirement for three out of the six qualifying reasons for leave. This appears to have been unintended by the USDOL because it argued in the litigation that the judge should interpret that requirement as being applicable to all six reasons. The judge declined to do so and used the inconsistency as a basis for striking down the requirement. Second, the judge ruled that although the USDOL’s position was not inconsistent with the FFCRA, the USDOL failed to present sufficient evidence that its rule was the result of “reasoned decision-making.” 

The Vacated Definition of “Health Care Provider”

The judge ruled that the USDOL widely missed the mark in its definition of “health care provider” by using an employer-based definition rather than an employee-based definition. First, the judge noted that the FFCRA required the USDOL to specify the kinds of employees, not the kinds of employers, that may be defined as “health care providers.” Second, according to the judge, by using an employer-based definition, the USDOL included many categories of employees whose connection to healthcare is too attenuated. The judge noted that the USDOL conceded “an English professor, librarian, or cafeteria manager at a university with a medical school” would be considered “health care providers” under its rule. According to the judge the USDOL’s determination of who is a “health care provider” must be based on whether that person is “capable of providing health care services.”

Two Additional Rule Changes

The judge’s ruling makes two additional changes to the USDOL’s rules. With regard to whether employees can take FFCRA leave on an intermittent basis, the judge struck the USDOL’s requirement that the employer consent to an employee’s request to take intermittent leave. The judge, however, let stand the USDOL’s decision to disallow intermittent leave for certain leave (e.g., if the worker contracts COVID-19). Also, the judge struck the USDOL’s rule requiring certain employee documentation prior to taking leave, though employers can still require the specified documentation post-leave.

What’s Next

It is unclear whether the USDOL will appeal this decision or whether it will issue new rules. If the USDOL appeals the decision, it will likely request that its rules remain in effect pending the appeal. It will be up to the courts to decide whether to do so. As for the rest of the FFCRA regulations, they remain in effect.

In the meantime, employers who relied on the USDOL’s rules during pandemic-related shutdowns and reductions in force should consider the impact of this decision on requests by employees (including furloughed employees) for FFCRA leave. Also, employers in the health care industry must consider the impact of this decision on their application of the “health care provider” exemption contained in the FFCRA.

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