Ruling overturning provisions of family virus act murky

Last week’s ruling by a federal district court judge in New York that overturns provisions of the Families First Coronavirus Response Act leaves employers in New York and elsewhere with questions as to how to proceed.

While the ruling by Judge J. Paul Oetken of the U.S. District Court in New York in State of New York V. United States Department of Labor et al. clearly applies to employers within the district’s geographic territory, its applicability elsewhere, particularly in other states, is unclear.

The ruling, which some experts describe as poorly written and confusing, also raises questions as to how the Department of Labor, which issued the final regulation upon which Judge Oetken’s ruling is based, will eventually respond.

The FFCRA, which took effect April 2 and is set to expire Dec. 31, requires employers to give employees paid emergency family and medical leave and emergency paid sick leave. 

It covers private employers with fewer than 500 employees and certain other employers. Employers are given a payroll tax credit for paid leave provided under the act.

The decision says the final regulation “exceeds the (DOL’s) authority under the statute” with respect to whether employees can be denied leave under certain circumstances if there is no work available.

Among other aspects of the final rule, Judge Oetken’s ruling states its definition of health care providers, under a provision that excludes health care providers from having to provide leave benefits, is too broad.

The DOL said in a statement, “The Trump Administration disagrees with the district court’s ruling and is considering all available options. The Administration quickly responded to this pandemic and swiftly issued rules implementing the Families First Coronavirus Response Act that provided for new paid leave options and, at the same time, the need for health care providers to assist the sick.

“The balanced approach helped get both relief and care to Americans in need, and those goals remain as we move forward to combat the virus.”

No response to the ruling had been filed with the court by the DOL as of Monday afternoon.

New York State Attorney General Letitia James said in a statement the ruling “is an important win for the workers who are putting their health and their lives on the line as COVID-19 rages on.”

“It was an interesting opinion that left a lot of uncertainty in its wake,” Paul E. Starkman, a member of law firm Clark Hill PLC in Chicago, who represents employers, said.

The southern district’s jurisdiction includes Manhattan and the Bronx in New York City and Westchester, Rockland, Putnam, Orange, Dutchess and Sullivan counties in New York state.

Employers point out that even if appealed to the 2nd U.S. Circuit Court of Appeals in New York, whose jurisdiction includes New York, Connecticut and Vermont, the appeals court is unlikely to be able to respond in a timely manner, given the law’s Dec. 31 expiration date, unless an expedited ruling is requested.

Other possible options include the DOL issuing new regulations, although this is likely to be a time-consuming process as well, experts said.

Charles Jellinek, a partner and co-leader, employment and labor, at Bryan Cave Leighton Paisner LLP in St. Louis, said unlike the case with comparable decisions, Judge Oetken neither issued an injunction against the rule’s implementation nor stated it applied on a national basis.   

Observers generally say the ruling is unlikely to have a significant impact outside of the district court’s jurisdiction. “It’s a district court judge in New York, but there’s nothing binding for courts outside the Southern District,” said T. Christopher Bailey, an officer with Greensfelder Hemker & Gale P.C. in St. Louis, who represents employers. “It stirs up uncertainty,” he added.

Tracy M. Billows, a partner with Seyfarth Shaw LLP in Chicago, who represents employers, said, “I think what we’re going to see is in New York, people will be paying very close attention to the decision, and modifying their policies to ensure compliance. Beyond New York, I think the jury is still out.”

Susan K. Lessack, a partner with Troutman Pepper Hamilton Sanders LLP in Berwyn, Pennsylvania, who represents employers, said, “At least, employers in the 2nd Circuit should certainly follow the ruling, and employers elsewhere should take it as a persuasive authority.”

Experts say the ruling could continue to have relevance if Congress decides to extend the law beyond its current December expiration date.

Also, even if the law expires as scheduled without being extended by Congress, there may be other current lawsuits around the country on this issue. 

If a judge elsewhere “comes up with a different result, then you might have a conflict between the circuits, and it would set up some sort of appeal all the way up to the U.S. Supreme Court,” Lori Armstrong Halber, a partner with Reed Smith LLP in Philadelphia, said.