On August 3, 2020, U.S. District Judge J. Paul Oetken issued a New York State judgment against the U.S. Department of Labor et al., No. 1: 20-cv-03020 (SDNY, August 3, 2020). that repealed several portions of the Department of Labor (“DOL”) regulations relating to the Families First Coronavirus Response Act (“FFCRA”).

In particular, the Court of Justice repealed: (1) the job availability requirement; (2) the definition of “health care provider”; (3) the requirement that an employee obtain the employer's consent to temporary leave; and (4) the requirement that documentation be presented prior to vacation. This decision has a significant impact on every employer covered by the FFCRA.

The FFCRA and the final rule of the DOL

As previously reported, the FFCRA, which went into effect April 1, 2020, offers two forms of paid time off related to COVID-19 – the Emergency Paid Leave Act ("EPSLA") and the Family and Family Extension Act Sick Leave ("EFMLA") – to employees of companies with fewer than 500 employees in the United States

According to the EPSLA, eligible employees are entitled to up to 80 hours of paid vacation if they are unable to work (or telework) due to a need for vacation because:

  1. The employee is subject to a federal, state, or local agency quarantine or isolation order related to COVID-19.
  2. The employee was advised to self-quarantine by a health care provider due to concerns about COVID-19.
  3. The employee has symptoms of COVID-19 and is seeking a medical diagnosis.
  4. The employee cares for someone who is subject to a quarantine or self-isolation order, or has been instructed to self-quarantine by a healthcare provider due to concerns about COVID-19.
  5. The employee will take care of that employee's son or daughter if the son or daughter's school or care location has been closed, or that son or daughter's childcare provider is unavailable due to COVID-19 precautions. or
  6. The worker suffers from another substantially similar condition established by the Minister of Health and Human Services in consultation with the Minister of Finance and the Minister of Labor.

Under the EFMLA, eligible employees are entitled to up to 12 weeks of vacation if they are unable to work (or telework) due to the need to care for underage children if:

  1. A school or care facility has been closed; or
  2. Such children's caregiver is unavailable due to a public health emergency (defined as a COVID-19 emergency declared by a federal, state, or local authority).

On April 1, 2020 – the same day the FFCRA came into force – DOL issued a final administrative rule to implement and interpret the FFCRA (the “Final Rule”). The final rule, which will go into effect by December 31, 2020, contains rules and guidelines for managing the FFCRA's paid leave requirements.

The litigation: New York is suing for the invalidation of several parts of the final rule

On April 14, 2020, New York State filed a lawsuit against DOL in the US District Court for the Southern Borough of New York ("SDNY") alleging that several features of the Final Rule exceeded the Agency's powers in the administrative proceedings Act ("APA"). Judge Oetken's decision was a response to competing requests for summary judgment and was generally consistent with the state's position on the controversial issues.

The decision of the Court of Justice removes four essential parts of the final rule

  1. The court rejected the request for the final rule on job availability

The final rule stipulated that employees would not be entitled to vacation benefits paid by the FFCRA if the employee's incapacity for work was due to the fact that their employer had no work available. Limiting the final rule has been largely logical for employers and workers covered by the FFCRA as the COVID-19 crisis has caused the temporary shutdown and slowdown of businesses across the country, which in turn has resulted in a decline in immediately available work for workers who otherwise remained busy.

In repealing the job availability rule, the Court applied a two-part test set out in the Supreme Court decision of Chevron USA Inc. v. Defense Council for Natural Resources, 467 US 837 (1984), which stated when courts should defer an agency's own response or the interpretation of their own rule. The first step after Chevron is for the court to determine whether the law in question is ambiguous. The DOL argued that the terms “due to” (as stated in both provisions in question) and “because” force the conclusion that an employee whose employer “has no job” is not entitled to the company regardless of any qualifying condition to leave . The Court disagreed and found that the text of the law was not clear as to whether a worker's incapacity for work could be due to any of the reasons listed by EPSLA or EFMLA. In particular, the Court found that they could not conclude that the terms "because" or "because" clearly preclude an interpretation that entitles workers whose incapacity for work has several sufficient reasons, some legitimate and others not, to paid leave to have.

After the Chevron analysis, since the Court found that the statute in question was ambiguous, the Court had to determine whether the Agency's interpretation of the ambiguous statute was appropriate. We found that the interpretation of the DOL was inadequate for two reasons: (1) The “different treatment of the six qualification conditions by the final rule is totally inadequate” and (2) “The agency's barebones statement for the work availability requirement is obviously inadequate, "Because it" can significantly limit the potential scope of application (FFCRA). "

According to the court's interpretation of the FFCRA, workers may be entitled to FFCRA paid vacation even if they have no work to do. It is important to note that the Court did not consider whether its decision would require employers to grant paid leave to FFCRA-paid workers.

  1. The Court of Justice has put down the broad definition of the definitive regime for “healthcare providers”.

The FFCRA enables employers to exclude “health care providers” from paid vacation benefits at their own discretion. In the final rule, “health care providers” were defined broadly to include virtually every employee in a health care employer. An English professor, librarian or cafeteria manager at a university with a medical faculty would all be “health care providers” according to the definition of the final rule.

New York State contested the exception on the grounds that it exceeded DOL's powers under the FFCRA. We agreed and looked in particular at the final rule's focus on the identity of the employer as a health care provider and not on whether the individual worker is able to provide health care services. The broad definition of the final regime of “health care providers” allowed employers to deny FFCRA leave to a large number of workers who are not directly involved in the provision of health services.

As a result, the term “health care provider” is now limited to the FMLA definition. It is as follows: “(A) a medical or osteopathic physician authorized by the state to practice medicine or surgery (if any) in which the physician practices; or (B) any other person designated by the secretary to provide health services. "29 U.S.C. Section 2611 (6). This change significantly restricts the application of the “health care providers” exemption.

Healthcare employers should reconsider the denial of prior vacation to reduce potential litigation risk and, on a case-by-case basis, assess possible exclusions from FFCRA's paid vacation in the context of a worker's specific role and ability to provide health services.

  1. The Court of Justice has partially deleted the provisions on the temporary leave of absence of the final rule

The final rule limits the use of temporary leave unless the following two conditions are met: (1) The employee and the employer have consented to the use of temporary leave. and (2) if the employee continues to report to an employer's construction site, the use of the temporary leave is only permitted to care for the son or daughter of the employee whose school or childcare facility is closed or whose childcare provider is not available for reasons in connection with COVID-19.

The Court agreed with DOL that it was appropriate to limit the use of temporary leave to circumstances where there is a minimal risk of the worker spreading COVID-19 to other workers on the employer's site. The conditions under which temporary vacation is completely excluded are those that logically correlate with a higher risk of viral infection (e.g. vacation because employees were advised to self-quarantine by a healthcare provider due to concerns about COVID-19, are experiencing symptoms of COVID-19 and are taking vacation to receive a medical diagnosis or caring for someone who is either on a quarantine or isolation order related to COVID-19, or has been advised to self-quarantine by a health care provider due to concerns in connection with COVID-19).

However, the Court disagreed with the DOL on the requirement that workers obtain the consent of the employer before taking temporary leave. We found that DOL did not explain why a blanket requirement for employer consent was necessary. In view of this lack of justification, the Court has repealed the final rule insofar as workers must obtain the employer's consent in order to take temporary leave.

The Court's finding that workers no longer need to obtain employer consent prior to taking temporary leave will be of particular concern in light of several school district decisions to work on a remote or hybrid long-distance schedule.

  1. The court has denied the requirement that employees provide advance documentation

According to the final rule, employees must submit documents to their employer "before leave (FFCRA)", including the reason for the leave, the length of the leave requested and, if applicable, the authority for the isolation or quarantine order that qualifies them for the leave.

New York argued, and the court agreed, that the language of the final rule that prior documentation is required before vacation is inconsistent with the FFCRA. The EPSLA provides that “(a) after the first working day (or part thereof) on which an employee receives paid sick leave under this Act, an employer may require the employee to comply with appropriate termination procedures in order to continue to receive this paid sick period EFMLA provides that “(i) in any event where the need for (leave) is foreseeable, an employee provides the employer with a workable leave notice.” We found that the documentation requirement of the Final rule compared to the EPSLA and EFMLA documentation requirements "is a different and stricter condition for vacation" and "is an unrelenting condition for obtaining vacation". Therefore, employers cannot require workers to provide FFCRA records prior to vacation.

Implications and employer takeaways

Given the potentially expansive impact of the decision, and as with anything COVID-19 related, this is unlikely to be the last word on the matter. The DOL has yet to announce its next steps, which can include anything from invoking the decision to finding an emergency stay to reviewing to creating new rules or provisional guidelines. Regardless of the next steps, there are still many uncertainties about the scope and implications of the decision.

For example, it is unclear whether the court's decision to repeal certain parts of the final rule applies only to employers in New York or on a broader, possibly statewide basis. Other federal courts may not share the same position as the SDNY in analyzing the Final Rule and other relevant regulations. Other states are likely to begin confronting the final settlement with similar challenges. Regardless of location, employers should familiarize themselves with the changes made in this decision and exercise caution if this decision is later confirmed or adopted in other jurisdictions.

Employers should also be aware of the state and / or local laws that have been enacted in the light of the COVID-19 pandemic, especially those that interpreted or enacted parts of the Final Rule. Additionally, employers who have created COVID-19 plans and guidelines based on the Final Rule should review these guidelines to ensure that they are followed in light of this decision. Employers who have questions about the implications of this decision should consult an experienced employment advisor.

As you know, things change quickly and there is a lack of clear authority or rules to implement it. This article is not intended as a clear, uniform guide, but represents our interpretation of the current and general state of affairs. This article does not address the potential impact of the numerous other local, state, and federal orders issued in response to the COVID-19 pandemic, including, without limitation, the potential liability in the event that an employee becomes ill, Requirements related to family vacation or sick pay and other issues.

Sheppard Mullin is committed to providing employers with updated information about COVID-19 and its impact on the workplace. Find out about the legal implications of Sheppard Mullin's Coronavirus Insights portal, which now brings together the company's various COVID-19 blog posts.

* Jamie Moelis is a clerk in the firm's New York office.

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