Key Takeaways

• A federal court has struck down parts of the DOL Final Rule interpreting FFCRA

• New York State challenged the Final Rule in a suit under the Administrative Procedure Act

• The court emphasized Congress’ determination to provide relief and cited adverse impacts of the DOL rule on employees and state resources

In a decision with far-reaching implications, U.S. District Judge J. Paul Oetken in the U.S. District Court for the Southern District of New York sided with the State of New York in striking down a U.S. Department of Labor (DOL) Final Rule limiting the circumstances under which employees can gain access to sick leave and emergency family leave benefits during the COVID-19 pandemic.

The State of New York brought a suit under the Administrative Procedure Act challenging the DOL’s Final Rule implementing the provisions of the federal Families First Coronavirus Response Act (FFCRA), which includes the Emergency Family and Medical Leave Expansion Act (E-FMLEA) and Emergency Paid Sick Leave Act (E-PSLA).

In, State of New York v. U.S. Department of Labor, 20-CV-3020 (JPO), entered August 3, 2020, the court analyzed the validity of four parts of the DOL’s Final Rule, which we reported on previously. The court’s analysis is pursuant to the seminal U.S. Supreme Court in Chevron U.S.A. v. NRDC, 467 U.S. 837 (1984) which institutes a two-part test. First, if the statute is absolutely clear, the regulatory agency must give effect to the unambiguous language. Second, if the statute does not directly address the issue or is ambiguous in relation to the issue, a court will determine if the regulation is “reasonable” and can therefore stand.

First, the court agreed with New York State that the DOL incorrectly limited paid leave to those whose employers “do not have work” for them. The court noted “the agency’s barebones explanation for the work-availability requirement is patently deficient.”

Second, under the Final Rule, intermittent leave is allowed for only certain of the qualifying FFCRA conditions, and even then, only if the employer agrees to permit it. The conditions for which intermittent leave is entirely barred are those which correlate with a high risk of infection (e.g., the employee is subject to government quarantine, has been advised by a medical provider to self-quarantine, is experiencing symptoms of COVID-19 and is taking leave to obtain a medical diagnosis, is caring for an individual under similar conditions, or is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services). However, the court’s decision holds that there was no justification for the portion of the Final Rule requiring employer consent—a blanket requirement for exercise of all FFCRA rights. Accordingly, the court struck down the part of the Final Rule requiring employer consent for intermittent leave to be granted in instances where the employee needs the leave to care for the employee’s child whose school or place of care is closed.

Third, the FFCRA states that an employer of an employee who is a “health care provider” or “emergency responder” may elect to exclude such employee from the benefits. The court noted the DOL’s concession that the Final Rule’s definition of “health care provider” is so broad that it would include an English professor, librarian, or cafeteria manager at a medical school. In striking down the Final Rule’s definition of “health care provider” it articulated that the definition includes employees whose role bears no nexus whatsoever to the provision of health care services, except the identity of their employer, and who are not even arguably necessary or relevant to the health care system’s vitality.

Fourth, the court determined that to the extent the Final Rule’s documentation requirement imposes a different or more stringent precondition to FFCRA leave, it is inconsistent with the statute’s unambiguous language, and therefore is invalidated.

“The Court acknowledges that DOL labored under considerable pressure in promulgating the Final Rule,” District Judge Oetken wrote in his decision. “This extraordinary crisis has required public and private entities alike to act decisively and swiftly in the face of massive uncertainty, and often with grave consequence. But as much as this moment calls for flexibility and ingenuity, it also calls for renewed attention to the guardrails of our government. Here, DOL jumped the rail.”

Outlook: New York State and Beyond

In striking down DOL rules interpreting the new statutes, the court emphasized Congress’ determination to provide relief to American workers and to promote public health. In analyzing the FFCRA, the court found that the DOL improperly sought to limit paid leave or burden its exercise, creating a strain on state resources, raising state health care costs, and increasing the administrative burden on New York by making employees place greater reliance on state-administered programs.

In so doing, the court highlighted an acknowledgment by the DOL that a dearth of paid leave will result in employees being “forced to choose between their paychecks and the individual and public health measures necessary to combat COVID-19.”

Employers and other states will have to pay heed to this determination, that of a federal court deciding the validity of a United States administrative agency rule, until and unless contrary precedent is developed in other jurisdictions.

For more information on this decision or for immediate guidance as to how this impacts your business, contact:

• Christopher P. Maugans
• Caroline J. Berdzik
• Peter J. Woo
• Kristin Klein Wheaton
• Or another member of Goldberg Segalla’s Employment and Labor practice