Employers Left in Limbo After New York Federal Court Strikes Down FFCRA Regulations

On March 18, 2020, the Senate passed the Families First Coronavirus Response Act (“FFCRA”) (See Gunster’s client alert discussing the FFCRA here: New Bill Requires Paid Leave for Employees Affected by Coronavirus), which, among other things, granted certain employees paid sick leave for COVID-19 related reasons. The U.S. Department of Labor (“DOL”) issued Regulations implementing the FFCRA. Among other things, the Regulations clarified that employees of “health care providers” were exempt from the FFCRA’s requirements, and that employees who were unable to work because there was no work available (e.g., due to employer closures) were likewise ineligible. For months following the start of the pandemic, employers relied on these Regulations in making business decisions regarding their operations. That reliance is now being called into question.

On August 3, 2020, the U.S. District Court for the Southern District of New York entered an order purportedly vacating certain of the Regulations (See SDNY’s Opinion here: Order Vacating Final Rule). The District Court’s ruling has called into question the following:

1. Definition of Health Care Providers: The Regulations state that virtually all employees of health care providers are exempt from the FFCRA’s paid leave entitlements. For example, under the broad definition in the Regulations, all employees of a medical facility, including administrative employees who themselves do not directly engage in the provision of heath care services, are exempt from the FFCRA. The District Court order, however, struck down this expansive definition, holding that the exemption only applies to those employees who are “capable of providing healthcare services”, and does not apply to non-medical employees whose work is only remotely related to someone else’s provision of healthcare services.
2. Work-Availability Requirement: The Regulations provide that employees are only permitted to take FFCRA leave when they were unable to work and their employers had work available for them. For example, under the Regulations, employers who are closed due to the pandemic would not be required to pay for FFCRA leave because, even if an employee was able to work, there was no work available for them to do. The District Court ruled, however, employees are eligible to take FFCRA leave even if their employer does not have work available for them, so long as they are unable to work due to a qualifying reason.
3. Mutual Agreement for Intermittent Leave: The Regulations provide that employees could only take intermittent FFCRA leave if their employer consented. The District Court ruled, however, that employees can unilaterally elect to utilize qualifying leave on an intermittent basis, so long as the employee’s reason for taking leave did not involve a COVID-19 diagnosis, the exhibition of COVID-19 symptoms, or a potential exposure to COVID-19.
4. Requiring Documentation Prior to Taking Leave: Under the Regulations, employers could require employees to provide documentation before taking leave. The District Court ruled, however, that employers cannot require documentation as a precondition to taking leave. Employers with questions as to how this impacts their ability to obtain a tax credit under the FFCRA (and this ability is potentially implicated by this ruling) should contact a tax attorney.

Does this apply to my business? For a number of reasons, it is unclear whether this order applies to employers outside the State of New York. For one, the order itself is silent as to its scope. However, the relevant claims did implicate the Administrative Procedure Act, which includes statutory language that may have the effect of imposing this order on a nationwide scale. We expect some clarification to be provided in the coming days or weeks from the DOL.

For now, employers should be aware of this potential change, and consider the possibility that the DOL’s existing guidance may not be as reliable as was once thought. If an employer gets a request for FFCRA leave involving one of the aforementioned issues, they should consider whether the cost of providing such leave is outweighed by the risk of uncertainty created by the District Court’s decision. Employers should also contact their employment counsel with questions, and to help them evaluate the risks associated with denying leave requests in light of the uncertainty.

Please direct any questions to Gunster Labor and Employment practice group leader Joseph G. Santoro.