State of New York v. United States Department of Labor

Background

The Families First Coronavirus Response Act required covered employers to provide certain paid sick leave and emergency family leave to employees who could not work because of specified COVID-19-related conditions. The Department of Labor issued a Final Rule implementing those requirements. New York sued under the Administrative Procedure Act, arguing that several parts of the Final Rule exceeded the Department’s statutory authority.

The parties filed cross-motions for summary judgment, meaning they asked the court to decide the case without a trial because they contended that no material factual dispute required one. The Department also moved to dismiss for lack of standing, arguing that New York could not bring the lawsuit.

Standing

The court denied the Department’s motion to dismiss. It concluded that New York had constitutional standing because the Final Rule threatened a direct financial injury to the state through reduced tax revenue. The court reasoned that restricting paid leave could cause some employees to take unpaid leave, reducing taxable income and therefore New York’s tax revenue. Because the challenged rule allegedly caused that threatened injury and a favorable ruling could redress it, the court did not need to decide New York’s alternative theories involving health-care costs or quasi-sovereign interests.

Work-Availability Requirement

The Final Rule denied leave to employees whose employers did not have work for them, even if the employees otherwise met a qualifying condition. The court held that this requirement applied to only three of the six qualifying conditions under the Emergency Paid Sick Leave Act, as well as to emergency family leave under the Emergency Family and Medical Leave Expansion Act.

Applying the two-step framework commonly used to review an agency’s interpretation of a statute, the court found that the statute was ambiguous about whether an employee’s qualifying condition had to be the sole or “but-for” cause of the inability to work. But the court held that the Department’s explanation for imposing the work-availability requirement was inadequate. The Final Rule did not reasonably explain its different treatment of the six qualifying conditions and offered only a brief, circular explanation for a requirement that significantly narrowed the statute’s reach. The court therefore vacated the work-availability requirement.

Definition of “Health Care Provider”

The Final Rule defined “health care provider” broadly to include anyone employed by specified health-care institutions, organizations that contract with them, or entities involved in medical products and services. The Department acknowledged that the definition could include people such as an English professor, librarian, or cafeteria manager at a university with a medical school.

The court held that this definition exceeded the statute. The statute required the Department to determine that the person was capable of providing health-care services, while the Final Rule relied entirely on the identity of the person’s employer rather than the employee’s skills, role, duties, or capabilities. The court vacated the Final Rule’s definition.

Intermittent Leave

Intermittent leave means taking leave in separate periods rather than in one continuous period. The court interpreted the Final Rule to mean that an employee taking leave for a reason subject to intermittent-leave restrictions had to use the leave consecutively until that need ended, but did not forfeit unused leave and could later use it if another qualifying condition arose.

The court upheld the portions of the rule banning intermittent leave for qualifying conditions associated with a higher risk of spreading COVID-19. The court found that preventing potentially infected employees from repeatedly returning to the workplace adequately explained those restrictions.

The court nevertheless held that the rule’s requirement of employer consent for intermittent leave under other qualifying conditions was inadequately explained. The Department’s public-health rationale did not apply to those conditions, and the rule offered no alternative explanation for requiring employer consent. The court therefore vacated the employer-consent requirement. New York’s summary-judgment motion was granted in part and denied in part on this issue, and the Department’s motion was granted in part as to the intermittent-leave prohibition.

Documentation Requirements

The Final Rule required employees to provide employers with documentation about the reason for leave, the requested duration, and, when relevant, the authority for a quarantine or isolation order before taking leave. The court held that requiring documentation before leave conflicted with the statute’s notice provisions, which allowed notice when practicable for foreseeable family leave and allowed employers to require reasonable notice procedures only after the first workday of paid sick leave.

The court vacated the timing requirement—the requirement that documentation be provided before leave—but left the substance of the documentation requirement in place.

Disposition

The court held that the invalid portions of the Final Rule could be severed, meaning removed while leaving the rest of the rule operative. It vacated only the work-availability requirement, the definition of “health care provider,” the employer-consent requirement for intermittent leave, and the requirement that documentation be provided before leave.

The court denied the defendants’ motion to dismiss. It granted New York’s motion for summary judgment as to the work-availability requirement, the definition of “health care provider,” and the timing of the documentation requirements; granted in part and denied in part New York’s motion as to the intermittent-leave provision; and granted in part the defendants’ motion as to the intermittent-leave prohibition while otherwise denying it.