On Monday, August 3, 2020, the U.S. District Court for the Southern District of New York issued a significant ruling vacating, or at least partially vacating, four provisions of the U.S. Department of Labor’s (DOL) “Final Rule” used to guide employers on administering the Families First Coronavirus Response Act (FFCRA). The court’s ruling did not specify whether or not the ruling would be enforced nationwide or if it would be limited in geographical scope to the Southern District of New York. Most employment attorneys, however, agree that the ruling will impact employers nationwide because the legal challenge relied on the Administrative Procedure Act (APA) which would allow for the court’s decision to be imposed nationwide.
The DOL is expected to appeal the ruling to the Second Circuit, which may reinstate the Final Rule, pending its review. In the meantime, it is suggested that employers heed the court’s interpretation of the Act to limit the possibility of noncompliance. That being said, employers may want to consider consulting their local legal counsel before making any decisions.
The court vacated four key aspects of the Final Rules. Below, we’ve outlined the changes employers should be aware of.
Work Availability Provision
What the provision said: The work availability provision was the most controversial part of the final rules that were released by the DOL. Many congressional leaders saw the rule as violating the intended spirit of the law as it was written, making this provision the driving force behind New York’s lawsuit. The provision dictated that an employee had to have work available that they could perform if not for one of six specific reasons listed in the bill. The DOL’s interpretation meant that employees who were furloughed or unable to work due to a slowdown or shutdown of business due to COVID-19 were ineligible for FFCRA benefits.
What the court said: The court disagreed with the DOL’s interpretation that an employee needed to have work available to them to be “unable to work due to one of the six listed reasons.” The court, therefore, found the work availability requirement to be impermissible, declaring that the DOL’s “barebones explanation” for the requirement was “patently deficient.”
What this means for employers: Essentially, this opens up FFCRA benefits to a whole new class of employees — those who have been furloughed. The employee must still be unable to work due to one of the six specific reasons listed in the bill; however, they no longer need to have work available to them to claim the benefit. For example, if an employee’s child’s school is closed due to COVID-19, they would potentially qualify for FFCRA, regardless of whether or not the employer has work available for them.
Definition of a Healthcare Provider
What the provision said: The DOL’s FFCRA implementation granted sweeping power to employers to deny FFCRA benefits to employees who were deemed to be “healthcare professionals.” The DOL intended to ensure that resources were available during the pandemic and that there was no shortage of essential medical workers. The DOL, though, did not narrowly define who was considered a “healthcare professional” and it was written so broadly that almost anyone in the healthcare industry could potentially be denied leave.
What the court said: The court took issue with the DOL’s rule because it appeared to rely on the “identity of the employer” rather than whether or not a particular employee’s role had some “nexus to the provision of healthcare.” For example, the DOL argued that a surgical center could deny leave to its employees, even if some of those employees – such as the receptionist– were not directly involved in critical patient care of healthcare activities.
What this means for employers: Employers in the healthcare field will need to revisit how they are determining who is, and who is not, excluded from FFCRA leave benefits. The court struck down the DOL’s definition but did not provide an alternative. At this point, it is up to employers to make their own determinations as to who should be considered a healthcare professional.
Intermittent Leave Prior Approval Requirement
What the provision said: The final DOL rules for FFCRA leave stated that employees could receive FFCRA paid benefits for intermittent leave with several conditions. Firstly, it stated that employees physically reporting to a worksite could only take intermittent leave for purposes of caring for a child whose school or place of care was closed due to COVID-19. Teleworking employees, however, were allowed to take intermittent leave for any of the six listed reasons so long as the employee and employer agreed to the arrangement in advance.
What the court said: The court agreed with the distinction in employees working remotely versus those who are physically reporting to the worksite and they did not raise any objections there. While the court agreed with the distinction between remote employees and those reporting to a worksite, there was no reason as to why an employee should be required to have pre-approval from an employer before taking intermittent leave.
What this means for employers: The court has vacated the need for employees to gain consent for intermittent leave. Employers can no longer deny FFCRA paid leave due to not having an agreement in place and will need to honor intermittent leave requests. This is a critical development as schools return, some of which are relying on a hybrid model where students will oscillate between virtual and in-person education, necessitating intermittent leave.
What the provision said: Per the DOL’s final rules, employees were required to provide documentation before taking FFCRA leave.
What the court said: The court found that the advance-notice requirement was inconsistent with the Act as it was written and determined that the employees do not need to provide substantiating documentation in advance of FFCRA leave.
What this means for employers: This only changes the timing of the documentation requirement, it does not erase it. Employees will still be required to substantiate the leave as they would have before this ruling. Nonetheless, employers should take care that they are not denying any FFCRA leave requests because of missing documentation or substantiation. Instead, employers should request and collect substantiating documentation either after the leave has been approved or upon the employee’s return.
The DOL recently announced that if a school, or place of care, has moved online and the child is expected to learn from home, then the school or place of care will be considered “closed” for purposes of FFCRA leave.
Aldrich is Here to Help
As always, your Aldrich Benefits team is here to provide support for you however we can. For further information, please contact your advisor. For more resources to help you navigate the developing impact of coronavirus on your business and employees, visit our COVID-19 Resource Center.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.
Meet the Author
VP, Business Development
Aldrich Benefits LP
Evan Cole partners with his clients to advise and assist them with their employee benefit plans, specializing in group and association plans. Prior to joining Aldrich, Evan was a top producing employee benefits representative for one of the nation’s largest life, disability, and dental carriers. He holds licenses for life and health in the states... Read more Evan Cole
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