In a decision dated August 3, 2020, the federal court for the Southern District of New York held that the Department of Labor (DOL) exceeded its authority in aspects of its regulations implementing the Families First Coronavirus Response Act (FFCRA). The Court’s decision in State of New York v. United States Department of Labor, 2020 WL 4462260 (S.D.N.Y., 2020), is not legally binding on courts or employers in Wisconsin, however, it may signal coming changes to the FFCRA and its regulations.
The Court’s holding analyzes regulations implementing portions of the FFCRA’s two primary leave measures—the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA). Specifically, the Court invalidated the regulations relating to the work-availability requirement for paid leave, the definition of “health care provider,” the employer consent requirement for intermittent leave, and the documentation requirement for leave.
The Work-Availability Requirement
The EPSLA provides paid leave for employees who are unable to work or telework due to any one of six criteria involving COVID-19. Likewise, the EFMLEA provides leave for employees who are “unable to work (or telework) due to a need for leave to care for…[a child] due to a public health emergency.” The DOL’s implementing regulations require that an employee be offered work or telework by an employer in order to be eligible for leave benefits.
According to the Court, the work-requirement element of the regulations is inconsistent with the FFCRA, and, is “hugely consequential for the employees and employers covered by the FFCRA.”
Courts, when reviewing an agency’s regulatory action, first determine whether the law being implemented is silent or ambiguous on the subject issue, and, if so, whether the agency’s interpretation is reasonable. Agencies are typically afforded significant deference in the analysis of whether its interpretation is reasonable.
In this case, the Court found that the FFCRA is ambiguous as to when employees are entitled to pay for leave “due to” the public health emergency. The language did not clearly prescribe how to handle employee leave resulting from multiple causes (e.g., an employee who was off of work due to lack of child care and lack of work). The Court, asserting it afforded deference to DOL’s decision-making, nonetheless found that the regulations did not meet the required minimal standard of reasoned decisions-making.
The court gave two reasons for its decision on this issue. First, the court noted that the DOL’s work-availability requirement inexplicably applied to only three of the six criteria contained in the EPSLA provision. Second, the court found DOL’s explanation for including a work-availability to be “patently deficient.” Because the work-availability requirement has such a drastic impact on the number of employees who are eligible for leave benefits under the FFCRA, the court reasoned that the DOL should have provided a better explanation of its reasoning than the “ipse dixit” and “circular regurgitation” found in the regulations. The decision eliminates the work availability requirement as a prerequisite to EPSLA and EFMLEA eligibility.
The Definition of “Health Care Provider”
The Court also held that the regulation’s definition of “health care provider” exceeds the DOL’s authority under the statute. Employers may choose to exclude “health care providers” from the leave entitlements under the FFCRA. Therefore, the term’s definition “has grave consequences for employees.”
The FFCRA incorporates the Family and Medical Leave Act’s (FMLA) definition of “health care provider,” which includes in relevant part “any other person determined by the Secretary to be capable of providing health care services.” The DOL, utilizing the Secretary’s authority to determine who is included within the scope of the term, created an expansive definition for the term “health care provider.” Under that expansive definition, the court noted, that “an English professor, librarian, or cafeteria manager at a university with a medical school would all be ‘health care providers’” and could, therefore, be excluded from the FFCRA’s leave benefits. The DOL acknowledged that the Court’s analysis of the expansive nature of the regulatory definition was accurate.
The Court found the FFCRA’s language unambiguous in limiting the term “health care provider” to those employees capable of providing healthcare services. In instances where the statutory language is unambiguous, the agency does not have authority to implement regulations that deviate from that clear language. The DOL, therefore, exceeded its authority in crafting the expansive definition in the regulation which includes all employees of healthcare employers regardless of whether their role involves any aspect of patient care.
Intermittent Leave Requirement
The Court next considered whether the FFCRA regulation’s requirement of employer consent for intermittent use of leave benefits is consistent with the statutory language. The FFCRA does not address intermittent leave. The Court, therefore, acknowledged that the DOL has the authority to craft a rule that fills the statutory gap, and that any reasonable rule would be entitled to deference. In this case, however, the regulations provide no rationale for requiring employer consent prior to an employee using the EPSLA or the EFMLEA leave on an intermittent basis. The Court found that without any articulated rationale the employer consent provision is invalid even though the agency is entitled to deference in its determination.
The Documentation Requirement
The FFCRA provides that employers may not require employees to provide prior notice of the need for FFCRA where the need is unforeseeable. In cases where the need for leave is foreseeable, the FFCRA simply provides that employees should provide reasonable notice, or as much notice as is practicable. The DOL regulations require that employees provide documentation in support of their need for leave prior to taking such leave. The Court found these two provisions to be in conflict with one another. The notice provision, on the one hand, is found in clear and unambiguous language in the statute. The documentation requirement is, by contrast, a creation of DOL regulation. Therefore, the regulation’s requirement that documentation be provided before leave is taken is invalid due to the statute’s allowance of leave taken without advance notice if the need is unforeseeable.
Presumably, an employer may still require documentation, and would need to have such documentation if it were eligible for tax credits on the wages paid – it just cannot require the documentation be provided in advance of the need for leave.
It is important to reiterate that the court ruling discussed here does not change the state of the law for Wisconsin employers (it applies only to the federal district location in Southern New York). Wisconsin employers should continue to follow the DOL’s regulations implementing the FFCRA and should contact their Strang, Patteson, Renning, Lewis & Lacy, S.C. attorney with any questions on how to do so.
The case is noteworthy, however, because it provides the first indication of how courts analyze certain provisions in the DOL’s implementing regulations that are confusing or appear to be in conflict with the FFCRA. Whether or not the DOL revises any aspect of its regulations in response to this decision remains to be seen.
 The relevant portions of the definition of “health care provider” in the FFCRA’s implementing regulations that were cited by the court include the following: anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions, and any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility, [and] anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. 29 C.F.R. § 826.30(c)(1).