Federal Court Throws Employers a Curve Ball on the FFCRA Paid Leave Provisions

By Sally Piefer  

A decision from a federal district court in New York may very well have changed several key regulations implementing the Families First Coronavirus Response Act (FFCRA). This decision could impact many employers across the country, right as schools are determining whether they will hold in-person class or whether they will remain virtual for the foreseeable future. The uncertainty for employers and employees continues.

By way of background, on March 18, 2020, President Trump signed the FFCRA into law. Two key provisions affect employers – the Emergency Family & Medical Leave Act (EFMLA) and the Emergency Paid Sick Leave Act (EPSLA). Together these Acts required employers with fewer than 500 employees to provide certain paid leave to employees. The EFMLA provided employees with up to 12 weeks of paid protected leave if unable to work because a dependent child’s school or day care was closed or where the child’s caregiver was unavailable due to COVID-19. The EPSLA also provided, among other things, up to two weeks of paid leave for a parent to care for a dependent child whose school day care is closed or whose caregiver was unavailable due to COVID-19. In April, the Department of Labor (DOL) released regulations applicable to the FFCRA.

The State of New York challenged several of the regulations, alleging that the DOL exceeded its authority under the Administrative Procedure Act. The district court agreed, striking down the following provisions.

Work Availability 

The EFMLA and EPSLA both provide paid leave to employees who are “unable to work (or telework)” because of a need to care for a child. The DOL’s final regulations indicated that employees were not entitled to the paid leave if the employer “does not have work” for the employee to perform. This provision was interpreted to mean that if a business had closed due to COVID or an employee was furloughed, he or she was not entitled to paid leave because the employer did not have work.

The district court concluded that the DOL’s regulations were inconsistent with the text of the law. First, the district court concluded that the DOL’s regulations treated the six qualifying reasons for EPLSA leave differently, and DOL failed to explain this anomaly. The court further concluded that the differential treatment was contrary to the language of the legislation. The district court concluded that the DOL’s regulation impermissibly narrowed the scope of the legislation. Accordingly, the district court determined that an employee is eligible for paid leave regardless of whether the employer has work available for the employee.

Health Care Provider Exception 

Both provisions of the FFCRA also allowed employers to exclude from coverage “health care providers.” The DOL’s definition of a “health care provider” that may be exempted was broadly defined to include “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” including “any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.”

In DOL’s Q&A, the broadly-worded definition includes:

  1. Any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility;
  2. 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; and
  3. Any individual that the highest official of a State or territory, including the District of Columbia, determines is a health care provider necessary for that State’s or territory’s or the District of Columbia’s response to COVID-19.

The State of New York challenged this provision because the DOL’s determination of whether an employee was excluded was based on what the employer’s business was, and not on the job functions of the employee. Again, the district court agreed, finding the DOL’s expansive definition impermissible.

Intermittent Leave 

Under the DOL’s regulations, employees were permitted to take intermittent leave for EFMLA with the consent of the employer. The regulations also allowed employees to take intermittent leave for some EPSL provisions—again with the consent of the employer.

The State of New York challenged the intermittent leave rules because Congress never mentioned intermittent leave in the legislation, and the constraints on intermittent leave in the DOL’s rules were inconsistent with the underlying intent of the FFCRA. The district court struck down the intermittent leave provisions because they applied only in certain conditions—and only if agreed to by the employer.

Advance Notice of Need for Leave 

The final challenge to the DOL’s regulations was to the requirement that prior to taking leave, the employee must provide the employer the reason for leave, the duration of the leave, and if applicable the authorized person who ordered isolation or quarantine. The State of New York argued that the advance notice provisions were inconsistent with the legislation. For example, the text of the EFMLA only required advance notice of leave “as is practicable.” Similarly, the text of the EPSLA allowed an employer to require employees to follow reasonable notice procedures.

The district court agreed and held that the DOL’s regulations required different and more stringent notice requirements, and that the regulation could not stand because it was inconsistent with the statute’s unambiguous notice provisions.

Employer Take-Aways

At this point it remains a bit unclear how this decision will impact employers outside the area covered by the Southern District of New York. Generally, decisions from a district court create precedent in that district—but not in other parts of the county. If the decision is strictly limited to the Southern District of New York, it could, however, pave the way for similar lawsuits challenging the DOL regulations throughout the country. A court in Wisconsin need not follow a New York court’s lead, so there is uncertainty as to whether other courts will reach the same decision as the Southern District of New York.

The DOL has not yet indicated whether it will challenge the decision, and if it does, whether it will seek a stay of the district court’s decision pending resolution in the Court of Appeals. It is also possible that DOL could amend the regulations or modify its guidance. Finally, if the legislature believes the district court got it wrong, it is possible that the legislature could amend the FFCRA to specifically overrule the district court’s decision.

What is clear at this point is that the decision leaves employers across the country (other than those in the Southern District of New York) in a state of uncertainty. Employers will need to determine whether they will follow the district court’s decision or whether they will continue to follow the DOL’s regulations.

We will continue to monitor these important issues. Should you have any specific questions that are not addressed, please contact your Lindner & Marsack attorney or the Firm at (414) 273-3910 to seek counsel.

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