Benefits and Compensation, Coronavirus (COVID-19)

New York Court Expands FFCRA Paid Leave, but Ruling May Not Be Last Word

The number of people entitled to paid leave under the Families First Coronavirus Response Act (FFCRA) will be expanded if a ruling from a New York federal judge holds.

Source: Vitalii Vodolazskyi / Shutterstock

A judge in the U.S. District for the Southern District of New York ruled August 3 that the U.S. Department of Labor’s (DOL) final rule implementing the FFCRA is too restrictive in four areas:

  • The DOL’s rule said employees aren’t entitled to paid sick or family and medical leave if their employer doesn’t have work for them. But the judge’s ruling said the rule’s interpretation of the language in the statute is “patently deficient.” The effect of the judge’s ruling is to allow paid leave for employees still employed but not working because the employer has no work for them to do as long as they have a need for leave under any of the 6 COVID-19-related criteria set out in the law.
  • The FFCRA excludes healthcare providers from the paid leave requirements, but the judge said the DOL’s definition of healthcare provider in the regulation is too broad and includes all employees of a healthcare organization even if they aren’t healthcare professionals.
  • The judge’s ruling partially vacates the DOL’s rule limiting intermittent leave under the FFCRA. The ruling allows employers to limit intermittent leave when the employee poses a threat of spreading COVID-19 in the workplace, but the judge says the DOL’s regulation went too far in not allowing employees to take FFCRA leave intermittently for reasons that don’t pose a risk of infection, such as to care for a child whose school or daycare is closed because of the pandemic.
  • The judge also said the DOL’s rule requiring documentation of an employee’s need for leave goes beyond the requirements in the statute.

The New York judge’s ruling doesn’t include a nationwide injunction, but it creates uncertainty for employers since other lawsuits may follow that might match the New York judge’s ruling. Also, the DOL is expected to appeal.

The FFCRA covers employers with fewer than 500 employees and allows employees up to 80 hours of paid sick leave and up to 12 weeks of family and medical leave. The first 2 weeks of the family and medical leave aren’t paid, but the remaining 10 weeks must be paid at two-thirds the employee’s regular rate of pay. The leave requirements extend through December 31.

Effect of Ruling

If the ruling stands and eventually applies nationwide, “it could upend employers’ previous expectations about when FFCRA leave is required,” according to Brad Williams, an attorney with Holland & Hart LLP in Denver, Colorado. “Most notably, employers could previously assume that if they were shut down due to governmental orders, that their employees had no ‘work’ from which to take ‘leave,’ and that they could deny paid FFCRA leave accordingly.” If the judge’s ruling holds, that’s no longer the case.

Williams says the ruling could mean that an employer closed because of the pandemic could “still be on the hook for paying its employees for FFCRA-qualifying leave,” which “could have the perverse incentive of encouraging terminations of employment rather than the furloughs we’re currently seeing.”

Paul Sweeney, an attorney with Coughlin & Gerhart, LLP in Binghamton, New York, says if the judge’s decision stands, it would have “a huge retroactive effect” if a covered employer previously denied an employee’s request for FFCRA benefits based on the DOL’s rule. Employers that relied on the DOL rule may have “widespread FFCRA exposure,” he says.

“This is not insignificant,” Sweeney says, since a wrongful failure to grant FFCRA benefits subjects employers to liability under the Fair Labor Standards Act (FLSA), which can include back pay, liquidated damages, civil fines, and attorneys’ fees.

Mark Adams, an attorney with Jones Walker LLP in New Orleans, Louisiana, points out that the state of New York, which brought the case, did not seek—and the court did not issue—a nationwide injunction against the DOL’s rule. “Thus, it is unclear at this time whether the court’s ruling extends to employers and employees or to the DOL’s enforcement of its rule outside of New York,” he says.

If the DOL appeals the judge’s ruling, it is likely to defend the rule in other jurisdictions across the country, Adams says.

“In the meantime, employers face a difficult choice: Follow the DOL rule and risk being sued by out-of-work employees who wouldn’t qualify for paid leave under the DOL rule, or follow the court ruling and provide paid leave to furloughed employees who experience an otherwise paid leave qualifying event,” he says, adding that granting the leave would be “the more conservative approach since the FFCRA allows employers to claim a dollar-for-dollar payroll tax credit for FFCRA leave payments.”

Another effect of the ruling relates to intermittent leave and means employers must allow employees to take intermittent FFCRA leave to care for children whose school or daycare is closed, Kristin M. Simpsen, an attorney with McAfee & Taft in Oklahoma City, Oklahoma, says.

Also, the healthcare provider part of the ruling may have a major impact in that healthcare organizations will have to consider the job duties of various employees, not just the fact that they work for a healthcare organization, Simpsen says.

Advice to Employers

Attorneys are advising employers to stay tuned to see what the effect will be.

“In the short term, employers will need to know whether this ruling will be appealed and whether it will be stayed during any appeal,” Williams says. “If it is not stayed, employers may need to drastically expand their grants of FFCRA paid leave—both to employees who may be furloughed due to lack of work and to employees who previously satisfied the expansive ‘healthcare provider’ exemption.”

Also, employers won’t be able to demand documentation from employees as a precondition to taking certain types of leave, Williams says.

Sweeney says the judge’s ruling certainly applies to the Southern District of New York and has persuasive authority throughout the Second Circuit Court of Appeals, which covers New York, Connecticut, and Vermont. Another district court may issue similar rulings, but employers outside the Second Circuit may not be immediately affected by the August 3 decision.

Sweeney says in the long term, he would not assume that the decision will be overturned in whole or in part. Since a failure to pay FFCRA benefits is treated like a failure to pay wages under the FLSA, “I would recommend that affected employers immediately adjust policies” to comply with the judge’s ruling.

Adams says unless the New York judge’s ruling is adopted by other courts or the DOL pulls back its rule, he is continuing to advise employers to follow the rule, “but to be aware that it has been called into question.” He is advising employers to monitor the DOL’s next steps, “which could include anything from seeking a stay, appealing the decision, or creating new rules or interim guidance.”

Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.

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