Employer Next Steps After Court Guts DOL Virus Leave Rule

By Susan Harthill
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Law360 (August 6, 2020, 1:37 PM EDT) --
Susan Harthill
Susan Harthill
More employees are eligible for up to 12 weeks' COVID-19-related emergency paid sick leave and emergency paid Family and Medical Leave Act leave after the U.S. District Court for the Southern District of New York invalidated significant parts of a U.S. Department of Labor rule on Aug. 3.

Employers should consider whether they need to adjust their leave determinations in light of the court's decision.

The state of New York on April 14 brought a lawsuit under the Administrative Procedure Act against the DOL challenging the agency's regulation governing the implementation of the Families First Coronavirus Response Act. The FFCRA requires private employers with less than 500 employees and government employers to provide up to 12 weeks of emergency paid sick leave and emergency Family and Medical Leave Act leave to employees for reasons related to the coronavirus.

On Aug. 3, the Southern District of New York ruled largely in favor of New York, first finding that New York had standing to sue, and then invalidating four major provisions of the regulation: (1) the DOL's so-called work availability requirement; (2) the DOL's health care provider definition; (3) the requirement of employer consent to intermittent leave; and (4) the requirement that employees provide notice of leave prior to taking the leave.

The court's ruling on the DOL's work availability limitation is consequential for the employees and employers covered by the FFCRA because numerous businesses nationwide have either shut down or slowed down operations as a result of state or local shutdown orders and/or a loss of business due to the COVID-19 pandemic.

In turn, this has led to a decrease in work immediately available for employees who otherwise remain formally employed — under the DOL's rule these employees were not eligible for FFCRA leave. Further, many employers have already relied on the DOL's rule to grant or deny leave, as well as the DOL FAQs that preceded the rule and have continually been updated to provide additional guidance on numerous questions.

Under the court's ruling, employees must still have an FFCRA-qualifying reason for leave, but they may now be eligible even if the employer has no current work for them.

Employers should carefully review instances where employees come forward to complain that they were improperly denied leave prior to the New York court's decision. Going forward, employers should also consider whether they need to adjust their leave determinations even if employees have no work available due to a shutdown or other lack of work.

For the health care exemption, employers may now need to make an individualized determination of whether the employee requesting leave is capable of providing health care services. As for intermittent leave and documentation, employers should check their policies and practices to ensure that they do not require prior notice and that intermittent leave does not require employer consent.

Work Availability Requirement

The court invalidated a fundamental feature of the regulatory scheme, the work availability requirement.

By way of reminder, the FFCRA's Emergency Paid Sick Leave Act grants paid leave to employees who are "unable to work (or telework) due to a need for leave because" of any of six COVID-19-related criteria.[1] The Emergency Family and Medical Leave Expansion Act similarly applies to employees "unable to work (or telework) due to a need for leave to care for . . . [a child] due to a public health emergency."[2] The DOL's rule, however, excludes from these benefits employees whose employers do not have work for them.[3]

The court first concluded that the statute's text is ambiguous as to whether it requires that the employee's COVID-19-qualifying condition must be the but-for causation in all circumstances — which the DOL argued — or instead whether some other causal relationship satisfies its eligibility criteria — which New York argued.

Because of this ambiguity, the court therefore reviewed whether the DOL's interpretation was reasonable and found the DOL's interpretation arbitrary or capricious, in part because the DOL only applied the work availability rule to three of the six qualifying conditions without explaining the differential treatment.

But the court then summarily found the more fundamental deficiency to be that "the agency's barebones explanation for the work availability requirement is patently deficient." Therefore, under the court's reading of the FFCRA, an employee may be entitled to leave even if the employer has no current work for her due to some other reason.[4]

Definition of Health Care Provider

Under the FFCRA, employers may elect to exclude health care providers from leave benefits, and the DOL interpreted the term broadly, including:

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, [e]mployer, or entity.

The DOL also included other similar institutions, and individuals employed by an entity contracting with those institutions. As such, the rule gave employers wide latitude to exclude employees in a broad array of facilities and positions.

The DOL had interpreted the term "health care provider," in accordance with the FFCRA's purpose, to exempt employees who are essential to maintaining a functioning health care system during the pandemic. The court noted that, as the DOL urged, a broad definition of the term operationalizes that goal because employees who do not directly provide health care services to patients — for example, lab technicians or hospital administrators — may nonetheless be essential to the functioning of the health care system.

The court, however, found that even accepting that rationale, the rule was overbroad by including employees whose roles bear no nexus to the provision of health care services, ruling that employers can only exclude employees who are capable of providing health care services.

Intermittent Leave

The court's ruling on when employees can take intermittent leave was mixed, partly in favor of the DOL and partly in favor of New York. The DOL rule permits "employees to take Paid Sick Leave or Expanded Family and Medical Leave intermittently (i.e., in separate periods of time, rather than one continuous period) only if the Employer and Employee agree," and, even then, only for a subset of the qualifying conditions.[5]

The court agreed that because the FFCRA is silent on intermittent leave, the DOL could fill the gap. And the court agreed with the DOL's interpretation that intermittent leave is allowed for only certain of the qualifying leave conditions because the conditions for which intermittent leave is entirely barred are those that logically correlate with a higher risk of viral infection.

But the court held that the DOL failed to explain why employer consent is required for the remaining qualifying conditions, which do not implicate the same public health considerations.[6]

Documentation Requirements

The DOL rule requires that employees submit to their employer, prior to taking FFCRA leave, documentation indicating, among other things, their reason for leave, the duration of the requested leave, and, when relevant, the authority for the isolation or quarantine order qualifying them for leave.[7] The court held that this requirement conflicted with the FFCRA's "reticulated scheme governing prior notice."[8]

Under the Emergency Family and Medical Leave Expansion Act, an employee must provide "such notice as is practicable" where the need for leave is foreseeable.[9] Under the Emergency Paid Sick Leave Act, "[a]fter the first workday (or portion thereof) an employee receives paid sick time under this Act, an employer may require the employee to follow reasonable notice procedures in order to continue receiving such paid sick time."[10]

Thus, the court invalidated the DOL's requirement that an employee furnish documentation before taking leave, holding that it renders the statutory notice exception for unforeseeable leave and the statutory one-day delay for paid sick leave notice "completely nugatory."[11]

DOL's Next Steps and Implications for Employers

Employers' options will be dictated to a large extent by what the DOL does next. If the DOL decides to defend the current rule, it will need to appeal the decision and could also move to stay the district court's ruling pending appeal.

Administrative agencies also sometimes follow a nonacquiescence policy, i.e., the DOL could announce that the agency does not agree with the court's ruling and refuse to follow it, or only follow it in New York.

If instead the DOL decides to comply with the court's decision, the DOL could issue an emergency direct final rule addressing the deficiencies in the invalidated provisions. More immediately, the DOL could issue a nonenforcement policy for past or even current leave denials taken in reliance on the DOL's rule, meaning it would not enforce the FFCRA against those employers that, for example, exempted health care providers or did not grant leave to workers who did not have work available.

All of these possible actions will take time. Meanwhile, employers should review past denials of leave to assess whether there may be a good faith reliance defense under the Portal-to-Portal Act.[12]

Going forward, employers will need to assess whether to grant leave even if employees have no work available due to shutdowns or other lack of work, and for the health care exemption, employers may want to make a determination of whether the employee requesting leave is capable of providing health care services.

As for intermittent leave and documentation, employers should check their policies and practices to ensure compliance with the court's decision, even if that decision is challenged or not enforced by the DOL.



Susan Harthill is a partner at Morgan Lewis & Bockius LLP. She previously served as deputy solicitor for national operations at the DOL.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] FFCRA § 5102(a).

[2] FFCRA § 101(a)(2)(A).

[3] See 29 C.F.R. §§ 826.20(a)(2), (6), (9), (b)(1).

[4] State of New York v. U.S. Department of Labor, et al. , No. 1:20-cv-03020 at 17 (S.D.N.Y. Aug. 3, 2020).

[5] See 29 C.F.R. §§ 826.50(a)-(c).

[6] State of New York, No. 1:20-cv-03020, at 22-23.

[7] See 29 C.F.R. § 826.100.

[8] State of New York, No. 1:20-cv-03020, at 23.

[9] FFCRA § 3102(b) (adding FMLA § 110(c)).

[10] Id. § 5110(5)(E).

[11] State of New York, No. 1:20-cv-03020, at 24.

[12] 29 U.S.C. § 259.

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