Court Strikes Down DOL Interpretations Of FFCRA
A recent New York federal court reminds us that understanding employer obligations under the FFCRA is an ongoing process. In this case, the Court struck down certain regulations of the United States Department of Labor (“DOL”) as inconsistent with the statute. This decision has significant implications for employer leave policies and decisions in connection with employee requests for leaves of absence. With this decision, employers are on notice that they rely at their own peril on the DOL’s regulations that the Court held are inconsistent with the FFCRA.
When Congress passes laws, it typically delegates authority to administrative agencies, with subject matter expertise, to issue regulations providing clarity and guidance on the laws. At times, however, these regulations, which reflect the particular agency’s interpretation of the laws, do not pass muster under applicable legal standards and are subject to legal challenge.
In response to the COVID-19 pandemic, Congress acted swiftly to pass the Families First Coronavirus Relief Act (FFCRA) in late March of 2020, and the United States Department of Labor (DOL), tasked with administering the statute, issued regulations—known as the “Final Rule”—implementing the law’s provisions less than a month later. In a recent case, State of New York v. United States Department of Labor, 20-CV-3020(the “Action”) a New York federal judge ruled that certain of the DOL’s regulations were not entitled to deference and did not pass muster; others were entitled to deference but still did not pass muster, and a third group of regulations were consistent with the statute. On the whole, the Court struck down employer-friendly regulations that narrowed the FFCRA’s benefits to employees potentially placing a greater burden on employers across the country.
The FFRCRA and the DOL Regulations
The Action involves two key provisions of the FFCRA, applicable to certain public and private employers with fewer than 500 employees, the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act (“EPSLA”). The EPSLA grants paid sick leave to employees “unable to work (or telework) due to a need for leave because of” any of the following six qualifying conditions:
- The employee is subject to a federal, state, or local isolation order related to COVID-19;
- The employee has been directed by a health care provider to self-quarantine due to COVID-19;
- The employee has symptoms of COVID-19 and is seeking a medical diagnosis;
- The employee is caring for someone subject to a federal, state or local quarantine or isolation order or for someone who has been directed by a health care provider to self-quarantine due to COVID-19;
- The employee is caring for a child if the child’s school or place of care is closed or otherwise unavailable due to COVID-19; and
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of Treasury and the Secretary of Labor.
The EFMLEA similarly applies to employees “unable to work (or telework) due to a need for leave because” of any of these six qualifying conditions. Significantly, however, this provision also allows an employer to exclude “an employee who is a health care provider or emergency responder” from the benefits of the EFMLEA. See FRRCA § 3105.
On April 1, 2020, the DOL promulgated the “Final Rule” implementing the FFCRA. The Final Rule contains four provisions that the State of New York challenged in the Action, claiming they are inconsistent with the FFCRA and beyond the DOL’s authority. Those provisions are:
- The Work-Availability Requirement. The work-availability requirement excludes employees from the FFCRA’s benefits if employers do not have work for them, even if those employees satisfy the six qualifying conditions set forth above. In other words, under this DOL regulation, paid leave is only available under the FFCRA if a qualifying condition is the sole reason that the employee needs to take a leave of absence. If the employee’s leave is also caused by the unavailability of work—because of the pandemic or otherwise—then the FFCRA’s relief is unavailable to that employee. As written, the work-availability requirement applies to only three of the FFCRA’s six qualifying conditions, although the DOL argued in the Action that it applied to all six.
- The “Health Care Provider” Definition. The DOL’s definition of a health care provider is expansive, including any person employed at a facility offering health care instruction, which, in the Action, the DOL conceded would include “an English professor, librarian, or cafeteria manager at a university with a medical school.”
- The Intermittent Leave Prohibition. The prohibition on intermittent leave generally bars employees from taking leave intermittently—i.e, separate periods as opposed to one continuous period. Intermittent leave, however, is permissible under the DOL’s interpretation only if the employee and the employer agree and only for a subset of the six qualifying conditions. The Court explained that the limitations on intermittent leave under the regulations are most necessary where the risk of infection logically correlates with intermittent leave—i.e., leaving and coming back to work increases the risk of infection.
- The Documentation Requirements. The documentation requirements essentially require employees to submit documentation justifying their requested leave before they can take leave under the FFRCA.
In the Action, the State argued that these four provisions unduly restricted paid leave under the FFCRA.
The Chevron Two-Step
Chevron U.S.A. Inc. v. Natural Resources Defense Council (“Chevron”) established that if a statute is silent or ambiguous on a particular point, courts “will defer to an agency’s interpretation as long as it is reasonable.” Thus, there are two steps to a Chevron analysis. First, a court must examine whether the statute is silent or ambiguous on the particular point? If not, the court must apply the unambiguous statutory requirement. If so, then the court proceeds to the second step and, giving the agency’s interpretation deference, the court must determine whether the regulation is reasonable. If the court finds that the agency interpretation is reasonable, the court must enforce it.
The Court’s Decision
Applying Chevron to the four provisions of the DOL regulations identified above, the court concluded that each of them violated the FFCRA.
- The Work-Availability Requirement. The Court held that the DOL’s rule requiring the employee to have work available from their employer in order to take paid leave violated the FFCRA. The Court first noted that the work-availability requirement applied to only three of the six qualifying conditions under the FFCRA, and that, in the Action, the DOL asked the Court to apply it to all six qualifying conditions to save the provision—a request the Court declined to accept. Then, applying Chevron analysis, the Court found that the statute was ambiguous as to whether a qualifying condition (related to the pandemic) had to be the only reason that an employee could not work in order to receive any relief under the FFCRA, as the DOL contended.
Proceeding to Chevron’s second step, the Court found the work-availability requirement to be unreasonable for two reasons. First, there was no basis to apply it to only three of the six qualifying conditions. Second, the Court found the DOL’s “barebones explanation for the work-availability requirement is patently deficient.” Given the enormous consequence of the work-availability requirement on coverage under the FFCRA, the Court concluded a fuller rationale for the work-availability requirement was necessary.
- The “Health Care Provider” Definition.
The DOL conceded in the Action that its broad definition of “Health Care Provider” captures employees, employed by health care providers, who do not provide any health care services. The Court held that this broad definition violated the FFCRA at the first step of Chevron: “the statute requires that the Secretary determine that the employee be capable of furnishing healthcare services.” Emphasizing the breadth of the DOL’s definition, the Court opined: “Think, again, of the English professor, who no doubt would be surprised to find that as far as DOL is concerned, she is essential to the country’s public health response.”
- The Intermittent Leave Prohibition.
The Court concluded that the intermittent leave restrictions were largely, though not entirely, consistent with the FFCRA. Noting that the statute is silent with respect to intermittent leave, the Court explained that filling in this gap through administrative regulation is entirely consistent with the DOL’s rule, at Chevron step one.
At Chevron step two, the Court agreed that imposing restrictions on intermittent leave where such sporadic and non-continuous leave would logically correlate with a higher rate of infection at the workplace was permissible. The Court explained, however, that the regulation faltered by requiring employer consent.
- The Documentation Requirements.
The Court held that the DOL’s requirement that employees submit documentation regarding the reason for and duration of the requested leave (and, where relevant, the authority for the isolation or quarantine order qualifying them for leave) “prior to taking [FFCRA] leave” violated the FFCRA, which does not require paid leave until after the leave has commenced. Specifically, the EPSLA provides that “[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.” (Emphasis added). The EFMLEA provides that “[i]n any case where the necessity for [leave] is foreseeable, an employee shall provide the employer with such notice of leave as is practicable.” The Court concluded that “[t]o the extent that the [DOL’s documentation] requirement imposes a different and more stringent precondition to leave, it is inconsistent with the statute’s unambiguous notice provisions [and] fails at Chevron step one.
While finding that the DOL’s Final Rule violated the FFCRA as set forth above, the Court upheld the remainder of the Final Rule. Noting that the Administrative Procedure Act “permits a Court to sever a rule by setting aside only the offending parts of the rule” the Court permitted the remainder of the Final Rule to stand.
Key Employer Takeaways
Following the Court’s decision, Employers should revisit their policies and procedures that relied on the DOL’s interpretation of the FFCRA that the Court held violated the statute.
Moritt Hock & Hamroff’s COVID Litigation Task Force will continue to monitor this case and other developments that impact employer practice in the context of the COVID-19 pandemic.
We are available to advise you on COVID-19 litigation related issues. For more information contact either Jonathan Trafimow at email@example.com or (516) 880-7283 or James P. Chou at firstname.lastname@example.org or (212) 239-5523.