By Vin Gurrieri

Law360 (August 5, 2020, 9:35 PM EDT ) A New York federal judge's decision this week to invalidate parts of a U.S. Department of Labor rule detailing who qualifies for coronavirus-related emergency paid sick leave raised a host of questions that employers, the agency and courts will soon have to address.

U.S. District Judge J. Paul Oetken held Monday that certain parts of the Labor Department's April 1 "temporary" rule went too far beyond the text of the Families First Coronavirus Response Act, which Congress passed in March. The law generally applies to businesses with 500 or fewer employees and includes two key paid leave components: the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.

Among the faults that Judge Oetken found with the DOL's rule implementing the FFCRA was that it improperly cut off too many workers from taking leave by having an overly expansive definition of "health care providers," and an onerous requirement that employers must consent to workers taking "intermittent" leave.

The ruling is a win for New York Attorney General Letitia James, who challenged a few parts of the DOL's regulation. But lawyers say it opens the door to a range of questions about the order's applicability and the practical impact it will have on businesses and workers struggling to cope with the virus.

"This brings us back to square one and the early days of the act when we were trying to figure out the scope of the statute and the application of it before we had DOL rules," Richard Meneghello of Fisher Phillips said. "This feels very much like the early days of the FFCRA."

Does the Ruling Apply Everywhere?

Although judges that hear challenges to federal agencies' regulatory moves often issue sweeping nationwide injunctions once those rules are invalidated, attorneys say Judge Oetken's ruling was unclear about its reach, leaving employers outside New York in a state of limbo about whether the stricken aspects of the DOL's rule still apply to them.

"This decision is only binding in the Southern District of New York," Paul Hastings LLP partner Marc Bernstein said. "You have a conflict between a lower court in New York saying one thing, and the U.S. Department of Labor saying another, and employers are left to wonder which one will prevail."

Similarly, Brian Murphy of Sheppard Mullin Richter & Hampton LLP, who recently co-authored a book for employers that discusses various issues related to COVID-19 in the workplace, said it's "unclear for a couple reasons" whether or not the ruling has effect nationwide, including because the order itself is "silent" about its intended impact.

"I think right now it's an entirely open question as to the scope," Murphy said. "What we might see to get a little clarification on that is potentially how the DOL reacts."

Will the DOL Challenge the Order?

The agency's reaction — which could take several forms — will go a long way toward shaping employers' understanding of exactly what FFCRA rules apply to them going forward.

For example, the DOL might choose to fight in court, appealing Judge Oetken's decision directly or trying to convince judges in other jurisdictions that its interpretation of the law is correct.

Bernstein noted that while the ruling could be cited by employees in other states as persuasive authority, it can't be cited as controlling authority.

"In other words, other judges throughout the country will have to decide for themselves whether or not to follow this judge's decision," Bernstein said.

Another route the DOL may take is to simply revise its rule with Judge Oetken's ruling in mind.

"It is possible that the Department of Labor could 'take a mulligan' and issue a new rule that provides a sufficient rationale that might satisfy the court," Bernstein added.

But regardless of which path the DOL chooses, Murphy said that employers outside of New York "have to tread very carefully" and "assume for present time that it does have nationwide impact" so as not to run afoul of the FFCRA.

Will More Health Care Workers Take Leave?

One of the ways that the DOL exceeded its authority, according to Judge Oetken's order, was by crafting a definition of "health care providers," whom the FFCRA explicitly excludes, that encompassed too many types of workers.

For example, the DOL's lengthy definition included anyone employed at hospitals, medical schools and a range of other places "where medical services are provided." The agency's definition also encompassed any employee of a contractor at one of those facilities or anyone employed by a business that produces medical equipment, among others.

But the judge — using the example of an English professor at a university with a medical school who would fall under the exception if the DOL's definition were applied — said the agency's definition is "vastly overbroad" and can't stand.

As a result, the ruling potentially allows huge swaths of the workforce that were blocked from accessing FFCRA leave under the rule to do so going forward.

"The court limited the definition of the health care worker exception," Bernstein said. "It could well have the effect of placing more health care workers out on leave."

Meneghello noted that after the rule was issued, attorneys advising health care companies shifted their advice, since the rule's health care exemption was broader than the language in the statute. But it remains to be seen how much of an impact the court's ruling will have in the health care field.

"The question is how many employers were reading the regulation as broadly as the rule permitted them to," he said. "There may have been some that just felt hesitant to take advantage of that exemption in such a broad manner given that it seemed inconsistent in some ways with the statute. But I think from a numerical standpoint ... absolutely there'll be more folks covered under the FFCRA if the rule [remains] struck down."

How Will Employers Approach Intermittent Leave?

In another part of his order, Judge Oetken partially vacated provisions of the DOL's rule that limited workers' ability to take so-called intermittent, or periodic, leave if their employer didn't agree to let them.

Intermittent leave is a concept that has given employers fits over the years in part because the short time frames that workers take as unpaid leave — potentially only an hour or two, periodically — can be an administrative hassle to track.

Randi May, a partner at Hoguet Newman Regal & Kenney LLP, noted that the ruling actually puts the expanded FMLA portion of the FFCRA in line with the classic FMLA when it comes to intermittent leave, meaning that employers should generally approach intermittent leave under both statutes the same way.

"The 'employer consent' part of intermittent leave is not present in any part of the FMLA. By striking that, [the court] made the emergency federal medical leave expansion act consistent with the regular FMLA," which allows employees to take FMLA leave intermittently without consent from their employer, May said. "It was an unusual requirement."

But she cautioned that it would be risky for employers to take the position that the ruling doesn't apply to them and, for example, continue to bar employees from taking intermittent leave absent the employer's consent.

"I think that would be a foolish stance to take and full of risk," May said, adding that she expects further guidance from the DOL.

How Do Employers Deal With the Shifting Legal Landscape?

Given the temporary nature of the FFCRA and the DOL's rule, on top of the constantly evolving nature of virus-related legislation, employers will have their hands full going forward when it comes to managing their legal obligations.

Judge Oetken's order and the questions it raises adds another layer of uncertainty, attorneys say.

Murphy for one said the legal landscape when it comes to the FFCRA and virus-related legislation more generally amounts to a "minefield" that employers should not try and navigate on their own.  

"The very generic phrase is consult with legal counsel," he said. "Because it's really not just at the federal level — the changes are happening at the state and local levels with just as much frequency."

He noted that some states have enacted what amount to "mini-FFCRAs" that adopt the core federal FFCRA requirements and expand them in certain ways.

"It really is a minefield, and consultation with counsel in each of those jurisdictions is appropriate," Murphy said.

The case is State of New York v. U.S. Department of Labor, case number 1:20-cv-03020, in the U.S. District Court for the Southern District of New York.

--Editing by Breda Lund and Emily Kokoll.

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