Opinions and Legal Insights

The Southern District Of New York Vastly Expands Employee Paid Leave Due To COVID-19

By Gerald L. Maatman, Jr., Alex S. Oxyer, andPaul M. Waldera

Seyfarth Synopsis: In New York v. Department of Labor, the U.S. District Court for The Southern District of New York recently invalidated large sections of the U.S. Department of Labor’s rule regarding paid sick time and paid family medical leave under the Families First Coronavirus Response Act, thereby expanding employees’ ability to take paid leave and potentially subjecting employers to more requests for paid leave.

As we discussed in April, the State of New York filed a lawsuit earlier this year against the U.S. Department of Labor (the “DOL”) challenging the DOL’s recent rule interpreting the paid sick time and paid family medical leave provisions of the Families First Coronavirus Response Act.  The rule restricted the circumstances in which employees could take paid leave due to issues caused by the COVID-19 epidemic.  New York challenged four provisions of the rule, which it argued would exclude millions of workers from paid leave who would otherwise be eligible.

Background

On March 18, 2020, the U.S. Congress enacted the Families First Coronavirus Response Act (“FFCRA”).  The FFCRA has two main provisions. First, the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) requires that employers with fewer than 500 employees provide up to twelve weeks of leave for employees unable to work or telework because they have to care for a dependent child due to COVID-19.  Second, the Emergency Paid Sick Leave Act (“EPSLA”) requires employers with fewer than 500 employees to provide employees two weeks of paid sick time, which employees can use for any of six qualifying COVID-19-related conditions.  Both provisions allow the Secretary of Labor to exclude healthcare providers and emergency responders from the requirement.

On April 1, 2020, the DOL released a final rule with regulations relative to both provisions of the FFCRA (“Final Rule”).  On April 14, 2020, the State of New York filed a lawsuit and simultaneously moved for summary judgment, arguing the rule conflicts with the plain language and purpose of the statute.  Specifically, New York challenged four provisions of the Final Rule: (i) the DOL’s new “work-availability” requirement, (ii) the DOL’s definition of “health care provider,” (iii) the provisions limiting intermittent leave, and (iv) the Final Rule’s documentation requirements.  On April 28, 2020, the DOL filed a cross-motion for summary judgment.

The Court’s Ruling

The Court’s ruling first examined the DOL’s argument that New York lacked standing to bring its lawsuit and so its claims should be dismissed.  In the case, New York alleged two constitutional injuries relative to the DOL’s Final Rule: a proprietary injury to its tax revenue, and a “quasi-sovereign interests” injury for the health and well-being of its residents.  New York v. U.S. Dept. of Labor, Case No. 20 Civ. 3020, at 6(S.D.N.Y. Aug. 3, 2020).  The DOL’s primary argument relative to New York’s standing was that the State failed to provide an exact cost the Final Rule might impose on New York.  The Court rejected this argument and held that New York had standing because “all New York must show is that it will be injured, not the magnitude of its injury,” which the Court found it did.  Id. at 7.

Work Availability Requirement

The Court then turned to New York’s arguments relative to the “work-availability requirement” imposed by the Final Rule. In short, the Final Rule added an additional requirement that prevented employees from taking EFMLEA or EPSLA provided leave if their employers did not have work for them.  The Final Rule imposed the “work availability requirement” relative to only three of the six qualifying reasons for leave, but during the briefing of the case, the DOL more expansively argued it should apply to all six.  The Court dismissed this argument, as the plain language of the DOL’s own Rule only applied to three enumerated reasons.

Next, the Court examined the DOL’s authority to enact the Final Rule. Concluding that the language of the FFCRA was ambiguous, the Court sought to determine whether the Final Rule was “based on a permissible construction” of the FFCRA.  Id. at 16.  The Court found the Final Rule failed this factor for two reasons.  First, the DOL provided no explanation for why the Final Rule imposed a “work availability requirement” on three reasons for leave and not all six.  More importantly, the Court held the DOL’s “barebones explanation” for the work-availability requirement was “patently deficient.” Id. at 17.  Accordingly, the Court declared the work-availability requirement invalid.

Health Care Provider Definition

The Court also addressed New York’s challenge to the Final Rule’s definition of “health care provider,” as employers could elect to exclude “health care providers” from leave benefits.  While the statute defines health care provider as those individuals who are capable of providing health care services, the Final Rule’s definition looked at whether the employer itself provided health care services.  Notably, the DOL conceded, “that an English professor, librarian, or cafeteria manager at a university with a medical school would all be ‘health care providers’ under the Rule.”  Id.  Based on the discrepancy between the statutory definition and the definition in the Final Rule, the Court held that the Final Rule was overbroad and could not stand, as the statute itself unambiguously foreclosed the DOL’s definition.

Limitations On Intermittent Leave

While the FFCRA is silent on whether employees can take intermittent leave, the Final Rule only permits intermittent leave if the employer and employee agree on the leave and, even then, only under a subset of conditions.  The Court invalidated the provisions of the Rule requiring employer consent, as “[t]he conditions for which intermittent leave is entirely barred are those which logically correlate with a higher risk of viral infection.” Id. at 22.  However, the Court upheld provisions of the Final Rule, which banned intermittent leave based on qualifying conditions that implicate an employee’s risk of viral transmission.

Documentation Requirements For Employees

Finally, New York challenged the Final Rule’s broad documentation requirements for employees seeking to take leave.  The Final Rule required that employees provide a multitude of documents before taking FFCRA leave, such as documents regarding 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.  However, the plain language of the EFMLEA only requires employees to provide notice of leave “as practicable” and where the need is foreseeable, and the EPSLA only requires employees “to follow reasonable notice procedures.”  Therefore, the Court ruled that to the extent the Final Rule conflicted with the language of the FFCRA, it could not stand.

Implications For Employers

This opinion, and its invalidation of many limiting regulations contained in the DOL’s Final Rule, vastly expands employees’ ability to take paid leave under the FFCRA and leaves employers holding the bag.  The Final Rule from the DOL greatly limited when an employee could take paid leave by increasing the restrictions on how they could qualify for the leave.  With the removal of these provisions, we anticipate more claims from employees for paid leave as schools re-open and new cases of COVID-19 are discovered.  Employers should consider working with counsel to update their policies and procedures relative to the FFCRA and would be well-served to read up on the tax implications for employees taking paid leave under the FFCRA