When the Families First Coronavirus Response Act (FFCRA) was passed on March 18, 2020, it appeared to provide much of the American workforce with paid sick leave and paid FMLA leave for COVID-19-related absences. But it also left employers with many questions. The implementing regulations from the Department of Labor (DOL), issued on April 1, 2020, were supposed to answer those questions. However, with a recent New York federal court order vacating portions of the DOL’s regulations, it seems at least some of that uncertainty has returned.
Within weeks of the DOL’s promulgation of the implementing regulations, 85 Fed. Reg. 19,326 (Apr. 6, 2020) (the Final Rule), the State of New York (the State) filed suit in federal court arguing that the DOL exceeded its authority and violated the Administrative Procedure Act with respect to four regulations: (1) the work-availability requirement for the FFCRA’s paid sick leave and paid FMLA leave; (2) the definition of “health care provider”; (3) the prohibition on intermittent leave under certain circumstances; and (4) the documentation requirements for leave under the FFCRA. On August 3, 2020, the court largely agreed with the State and ordered that the invalid provisions be removed from the Final Rule so that more employees can access the emergency benefits provided under the FFCRA.
After finding the State had standing, the court addressed each of the components of the Final Rule at issue using the two-step Chevron analysis: (1) is the regulation silent or ambiguous with respect to the specific issue and (2) if so, is the DOL’s interpretation reasonable and based on a permissible construction. At nearly every turn, the court found the DOL’s interpretation of the relevant provision of the Final Rule to be unreasonable.
- Work-availability requirement: The Final Rule excluded from receiving FFCRA benefits employees whose employers do not have work available for them. Due to the widespread economic impact of COVID-19, the practical effect of this was to render ineligible a large number of employees who would otherwise qualify for FFCRA leave. Ultimately, the court found the DOL’s justification for this exclusion was “circular” and not “reasoned decision-making.” Accordingly, under the court’s ruling, whether work is actually available for an employee is irrelevant to whether the employee is entitled to FFCRA benefits.
- Definition of “health care provider”: Under the FFCRA, employers are permitted to exclude “health care providers” from leave benefits. However, the Final Rule’s definition of that term was extremely broad. In one instance, it would include “anyone employed at any . . . post-secondary educational institution offering health care instruction . . . or any similar institution.” The court noted that the DOL’s definition was based entirely on the identity of the employer or class of employers rather than the “skills role, duties, or capabilities of a class of employees,” which is what the FFCRA’s plain language requires. In vacating the DOL’s definition, the court stated that to be considered a “health care provider” and excluded from receiving FFCRA benefits, an employee must be “capable of providing healthcare services.”
- Intermittent leave: The Final Rule prohibited intermittent leave in situations that corresponded with an increased risk that the employee will spread COVID-19 (e.g., if the employee is experiencing symptoms and awaiting test results). And, even when permitted, the Final Rule required an employer to consent to the employee’s use of intermittent leave. While the court agreed with the DOL’s limitation on the use of intermittent leave in situations potentially involving an increased risk of exposure to COVID-19, it disagreed with the DOL’s position that employer consent first be obtained in other circumstances. As the court explained, this consent requirement was arbitrary and lacked any justifying rationale.
- Documentation requirements: Finally, the court agreed the DOL exceeded its authority in requiring employees to submit documentation justifying the need for FFCRA leave prior to taking it. Although the substantive requirements for documentation remain, the documentation cannot be required as a precondition to receiving leave.
It is important to note that, to date, the court has not issued a final judgment relating to Judge Oetken’s order. Until such judgment is entered, the provisions of the FFCRA vacated by the order will remain in full force. Once judgment is entered, only the four provisions discussed above will be vacated. The remaining provisions of the FFCRA will remain in effect. It is very likely the DOL will appeal the order and that the appellate court will reinstate the Final Rule pending resolution of the appeal.
On its face, the court’s ruling, if it stands, will have a significant impact on employers across the country that have already been greatly impacted by COVID-19. For instance, with COVID-19 surging in many areas, if stay-at-home orders are broadened or put back in place and prevent employees from coming to work (or teleworking), then employers will not be able to rely on the fact that they have no work available for employees to perform. Those affected employees will now likely be entitled to paid sick-leave benefits under the FFCRA. Similarly, many healthcare employers will need to reevaluate who they may have excluded from FFCRA benefits and, going forward, determine if an employee is “capable of providing healthcare services. Additionally, the question of the order’s potential retroactive effect and how it would affect employees that had been excluded from and deeded not to qualify for FFCRA benefits undoubtedly creates additional headaches for employers.
At least for now, employers should revisit their policies and practices relating to the FFCRA and, because this recent decision increases the availability of FFCRA benefits, comply with the Final Rule as modified by the court’s order. While the order certainly makes FFCRA benefits available to a larger amount of employees, it does not disturb the tax credit employers may claim under the FFCRA. That credit remains as an offset to the increased benefits employers may have to provide.