Federal judge invalidates some FFCRA regulations, DOL ‘fixes’ them

Employers looking to comply with FFCRA have had a wild ride during the past several weeks.

Employers looking to comply with the Families First Coronavirus Response Act (FFCRA) have had a wild ride during the past several weeks. First, a federal judge in New York invalidated several parts of the U.S. Department of Labor’s (USDOL) regulations related to the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, which are critical components of the FFCRA. Then, with what passes in a bureaucracy for blinding speed, USDOL drafted and issued new emergency regulations designed to address the issues raised by the court. With only a little more than three months left for these two programs, employers can hope that these new rules will be the final word.

Related: FFCRA gets test in lawsuit over self-quarantine

In August, the court struck down (1) the provision that created a paid leave entitlement under certain circumstances for employees only if their employers had work available for them to do; (2) the expansive definition of an excludable “health care provider;” (3) the ability of an employer to withhold consent for intermittent leave; and (4) the requirement of advance documentation of the need for leave.

In response, the emergency rules, which are effective September 16, 2020, (1) reaffirmed and clarified the availability of work requirement; (2) narrowed the definition of an excludable health care provider; (3) reaffirmed that employer approval is needed for intermittent leave and explained why the USDOL imposed this requirement; and (4) clarified the timing and substance of the documentation required from an employee seeking leave. Employers will need to carefully review their policies as people continue to use both components of the FFCRA over the balance of 2020.

Background

The very first piece of legislation Congress passed in response to the COVID-19 pandemic was the FFCRA. Among other things, the FFCRA mandated Emergency Paid Sick Leave for certain COVID-19-related absences and expanded coverage (including by providing for partial pay) under the Family and Medical Leave Act (FMLA) for employees who could not work because school or child care had been disrupted. (See an outline of those laws.)

These two FFCRA programs require covered employers to pay eligible employees during certain COVID-19-related leaves of absence and then be reimbursed by the federal government through payroll tax credits or refunds. If an employer fails to provide the mandated paid leave, it can face legal action from the employee. On the other hand, if the employer provides payment when that payment is not required by the FFCRA, the federal government will not reimburse the employer.

Because the statute had been drafted and passed very quickly due to urgent needs created by the pandemic, it had some ambiguous provisions. In keeping with the urgency underlying the statute, the USDOL then quickly issued regulations interpreting the FFCRA (the “regulations”), which we previously summarized. The New York Attorney General soon thereafter filed suit challenging the validity of the regulations under the Administrative Procedures Act.

On Aug. 3, 2020, more than four months after the USDOL issued the regulations, a federal district court in New York declared that several important provisions of the regulations were invalid. On Sept. 11, 2020, the USDOL came out with new regulations to address the court’s concerns. As a result, employers covered by the FFCRA could face potential liability for past decisions made in reliance on the regulations, some significant uncertainty for the period of August and early September, and hopefully some final clarity for the remainder of the year.

The work availability requirement

The Emergency Paid Sick Leave Act requires employers to provide paid leave to employees who are “unable to work (or telework) due to a need for leave because of” six specific COVID-19-related reasons. Similarly, the Emergency Family and Medical Leave Expansion Act provides partial pay for an employee who “is unable to work (or telework) due to a need for leave to care for” the employee’s child whose school or day care is closed due to a public health emergency.

Under the regulations, an employee who satisfied certain of the eligibility requirements of those programs was nonetheless NOT eligible for paid leave “where the Employer does not have work for the Employee.” The regulations provided that when an employee was unable to work because he or she was (a) subject to a quarantine or isolation order, (b) caring for a relative or household member, or (c) caring for a child whose school or day care is closed, the employer did not have to provide leave if the employer did not have work for the employee. However, the regulations did not explicitly provide such a requirement where the employee was unable to work because he or she was (a) advised by a health care provider to self-quarantine or (b) seeking a medical diagnosis after experiencing COVID-19 symptoms. The regulations also applied this work availability requirement to expanded FMLA leave.

Thus, in the circumstances to which the work availability requirement applied, an employer that did not have available work for an employee because of a slowdown or a shutdown was not required to provide paid sick leave or expanded FMLA leave to an otherwise eligible employee. If the employer chose to provide such paid leave despite not being required to by the regulations, the federal government would not reimburse the cost of providing such paid leave.

Agreeing with New York’s attorney general, the district judge determined that the USDOL’s application of the work availability requirement in the regulations was invalid. In so holding, the court first concluded that the terms of the statute were ambiguous. One reasonable reading was that in order for the employee to be eligible for the paid or partially paid leave, the qualifying reason must be the reason for the employee’s inability to work—in other words, that where the employee would not be working anyway because work was unavailable, there was no occasion for leave.

But equally reasonable, the court believed, was the idea that if an employee were unable to work due to a qualifying reason, then the government, through the conduit of the employer, would pay the employee even if the employer did not have work for the employee.

Typically, where a provision of a statute is subject to two reasonable alternate meanings and Congress has authorized an agency like the USDOL to issue regulations interpreting the law, the agency can, through regulations, choose one of the competing reasonable interpretations. In such circumstances, when and if a court is ultimately forced to decide between reasonable interpretations, it will give significant deference to the interpretation of the agency Congress has charged with interpreting the statute.

In the case of the work availability requirement, however, the court held that the USDOL did not act reasonably because it did not choose a single interpretation of the language but instead applied the work availability requirement to only three of the six qualifying reasons under the Emergency Paid Sick Leave Act. The court held that the USDOL could not interpret the same statutory language differently in the same act. Therefore, the court struck down the work availability requirement as it applied to those specific instances.

In response, the USDOL in the emergency rule clarified that the requirement that work be available for the employee to perform applies to ALL qualifying reasons to take paid sick leave and expanded family medical leave. The USDOL thus directly addressed the issue that troubled the District Court and corrected its prior, perhaps rushed, language. It should now be clear that if an employer does not otherwise have work for the employee to perform, then neither Emergency Paid Sick Leave nor Expanded Family Medical Leave is available.

BOTTOM LINE: In situations where there is no work available for an employee, Emergency Paid Sick Leave and Expanded Family and Medical Leave are not available under the new emergency regulations and an employer should not expect to receive reimbursement of any such payments that it may nonetheless elect to make in those circumstances.

“Health care provider”

Under the FFCRA, an employer may, if it chooses, exclude a “health care provider” from both the Emergency Paid Sick Leave and the Expanded FMLA programs. For purposes of certifying health-related issues in the FFCRA, only an individual who is authorized to practice medicine by the state in which he or she practices or some other person specifically determined to be capable of providing health care services qualifies as a “health care provider.” But for purposes of deciding whom an employer may exclude from eligibility for Emergency Paid Sick Leave or Expanded FMLA leave, the regulations were far more expansive.

The regulations provided that any person employed by any health care facility—such as a hospital, nursing home, or lab—and any person employed by any entity that contracts with a health care facility to provide services to maintain the operations of a health care facility is a “health care provider” subject to exclusion from the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act. To illustrate the breadth of the interpretation set forth in the regulations, the district court noted that the USDOL agreed that “an English professor, librarian, or cafeteria manager at a university with a medical school would all be ‘health care providers’ under the rule.”

The court had little difficulty concluding that the USDOL had overstepped its bounds with this broad definition. It held that the law required the USDOL to define “health care provider” only to include individuals capable of providing health care services, and invalidated the broad definition in the regulations.

The Department of Labor’s emergency regulations provide that for purposes of excluding “health care providers” from the FFCRA programs, the term “health care provider” includes those health care providers as defined under the traditional FMLA plus other employees who provide diagnostic services, preventive services, treatment services, or other services “that are integrated with and necessary to the provision of patient care.”

BOTTOM LINE: Employers who wish to exclude health care providers who do not fall within the traditional FMLA definition of “Health Care Provider” should proceed with some caution, but the new narrower regulations provide comfort when dealing with employees that fit within the new definition.

Intermittent leave

Under the FMLA, employees may in some circumstances take “intermittent leave”—leave in short bursts or a reduced schedule. The FFCRA did not address intermittent leave one way or another in the statute. The regulations provided that as a general matter leave could be taken intermittently if both the employer and the employee agreed. However, in those circumstances that, as the court said, “logically correlate with a higher risk of viral infection,” intermittent leave could not be agreed to if it required that the employee report to the employer’s work site.

Finding no rationale for the regulations to impose a blanket requirement of employer consent to intermittent leave, the court invalidated part of this regulation. Under the court’s ruling, employees would be entitled under both the Emergency Paid Sick Leave Act and the FMLA Expansion Act to take leave intermittently whether or not the employer consents, unless working intermittently would require reporting to the employer’s work site and the reason for leave is due to the employee:

In the emergency regulations, the DOL, however, reaffirmed its position that intermittent leave is available only if the employer and the employee agree to intermittent leave in any circumstance and provided a more robust explanation for its position.

Bottom Line: There remains some uncertainty with regard to intermittent leave. Employers who wish to deny a request for intermittent leave should do so with caution, but the Emergency regulations give employers a solid argument to use if they chose to deny intermittent leave requests.

Required documents

Finally, the court struck down the requirement in the regulations that employees provide advance documentation of the need for Emergency Paid Sick Leave or Expanded FMLA leave. The court noted that the statute requires only “reasonable notice” and held that a blanket requirement of advance documentation would, in some circumstances, not be reasonable.

The DOL’s Emergency regulations essentially codified the court’s holding and declared that notice should be given “as soon as practicable under the facts and circumstances of the particular case.”

Employees must still provide employers with reasonable notice and sufficient documentation, but the failure to provide documentation in advance of the leave will neither prevent leave nor interfere with reimbursement through tax credits.

Employers who are subject to the FFCRA should review their policies and practices in light of these new developments. And while we hope that the emergency regulations will be the last word regarding the FFCRA regulations, employers should also pay attention to additional changes that may come through legislation, new regulations, or appellate court decisions. And of course, both the Emergency Paid Sick Leave Act and the FMLA Expansion Act expire at the end of 2020.

Hugh F. Murray III and Thomas F. Doherty are partners at McCarter & English.

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