New York Federal Judge Strikes Down Portions of Dept. of Labor’s Emergency Paid Leave Rules

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On March 18, 2020, Congress passed the Families First Coronavirus Response Act (FFCRA), which provided up to two weeks of paid sick leave and an additional 10 weeks of paid family and medical leave to certain eligible employees affected by the coronavirus pandemic. Due to the obvious immediate need to provide legal guidance to employers faced with an entirely new federal entitlement, the Department of Labor (DOL) bypassed the normal notice and comment process for implementing regulations and issued rules interpreting the law on April 1, 2020 (final rule). The final rule was challenged by the state of New York, and U.S. District Judge Oekten of the Southern District of New York issued a decision on August 3, 2020, finding that four portions of the final rule exceeded the DOL’s authority and should be set aside as invalid.

AVAILABILITY OF PAID LEAVE TO EMPLOYEES ON FURLOUGH

One of the big questions in the aftermath of the passage of the FFCRA was whether employees out of work because of state and local orders restricting business operations would qualify for two weeks of emergency paid sick leave. Specifically, the statute provides that employees unable to work because of being subject to a “Federal, State, or local quarantine or isolation order related to COVID-19” would be eligible for two weeks of paid sick leave. The DOL interpreted this part of the law (and other parts as well) to mean that employees were only eligible for leave if the employer had work available for the employee. In other words, DOL’s guidance provided that an employee who was furloughed or otherwise not actively working would not generally be eligible to take paid sick leave.

The New York decision rejected this “work-availability” requirement from DOL and held that requiring “but for” causation exceeded the DOL’s authority. Under this decision, an employee could have multiple reasons for being out of work and if a furloughed employee otherwise met the eligibility requirements, he or she would be eligible for paid sick leave under the FFCRA.

SCOPE OF HEALTH CARE PROVIDER EXCLUSION

The second area of the final rule challenged by the state of New York was the DOL’s interpretation of “health care provider” for purposes of excluding employees from leave benefits. The final rule provided that any individual employed by a provider of health care services, or any individual employed by an entity that contracts with such an institution to support its operations would be covered by the exclusion. For example, a cafeteria worker or contracted janitor in a hospital would be excluded from paid leave benefits, even though they did not actually furnish health care services.

The New York court struck down DOL’s interpretation of the statute as being overly broad and contrary to the law’s unambiguous terms. According to the decision, DOL overstepped its authority in excluding employees whose duties bear no nexus to the provision of health care services.

INTERMITTENT LEAVE AND DOCUMENTATION REQUIREMENTS

Lastly, the New York decision struck down two other areas of the final rule that are important to employers. The judge held that DOL’s requirement for employees to obtain employer consent to take intermittent leave was unreasonable unless the reason for the leave implicated an employee’s risk of viral transmission. In addition, the court struck down the final rule to the extent it required employees to provide documentation in support of the reasons for the leave as a precondition to taking the leave. The court distinguished between the law’s requirement of notice, and the DOL’s arguable more onerous requirement of both notice and documentation.

WHAT DOES THIS DECISION MEAN FOR EMPLOYERS

Although the New York decision is an important one as it is the first real judicial test of the FFCRA, it is important to note that the decision is likely to be appealed. It is also very possible that the Second Circuit Court of Appeals will reinstate the final rule pending the review. At this time, it is just one lower court decision and it is too early to predict the future of the parts of the final rule that were vacated by the New York Court.

What is clear, however, is that the parts of the FFCRA identified in this decision are likely to be “hot spots” for future litigation. Employers should expect a wave of collective actions seeking double damages and attorneys’ fees against employers who are alleged to have violated the FFCRA, and companies should consider the advisability of taking more generous positions on eligibility due to the availability of the tax credit. For example, health care employers may want to consider adopting a more liberal approach to determining eligibility for employees who are not directly providing medical services. Similarly, employers who have a longstanding practice of freely granting intermittent leave for FMLA leave should consider whether the practice should be extended to requests under the FFCRA, irrespective of DOL’s position on whether the employer may lawfully withhold consent.

 
 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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