Court vacates “health care provider” exclusion from federal paid leave law: What does that mean for the industry?

By Robin E. Shea, Esq.

Some health care employers may have to take a crash course on the Families First Coronavirus Response Act (FFCRA), which requires covered employers to provide paid leave to employees for reasons related to COVID-19.

The FFCRA says that “health care providers” can be excluded from the paid leave requirement. The U.S. Department of Labor (DOL) issued regulations in April that interpreted “health care provider” very broadly. As a result, health care employers may not have had to actually provide paid leave, even if they were covered by the law.

But in early August, portions of the regulations were struck down by Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York. Among the provisions that were vacated in State of New York v. United States Department of Labor was the sweeping definition of “health care providers” for whom employers were not required to provide paid leave.

Right now, Judge Oetken’s decision applies only within the Southern District of New York, which includes two boroughs of New York City (Manhattan and the Bronx), as well as Westchester, Putnam, Rockland, Orange, Dutchess, and Sullivan counties. However, other courts may be influenced by the decision and may choose to follow it. If the DOL does not appeal, it is possible that it will issue amended regulations that conform to the ruling. If so, then the amended regulations would apply nationwide.

The FFCRA in a nutshell

The FFCRA was enacted by Congress in March in response to the COVID-19 crisis. Among other provisions, the law requires covered employers to provide paid leave to eligible employees who are out of work for the following reasons:

1. The employee is under a federal, state, or local quarantine or isolation order because of COVID-19,
2. The employee is advised by a health care provider to self-quarantine because of COVID-19,
3. The employee has symptoms of COVID-19 and is seeking a medical diagnosis,
4. The employee is caring for an individual who meets one of the first two conditions, above,
5. The employee is caring for a son or daughter whose school or “place of care” is closed because of COVID-19 precautions, or whose care provider is unavailable for the same reason (I will refer to this as “Reason No. 5”), or
6. “The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”

Employees who are out of work for reasons related to Reason No. 5 are entitled to a total of 12 weeks of paid leave at a two-thirds rate. Employees who are out of work for Reason No. 4 also receive pay at a two-thirds rate, but only for two weeks. Employees who are out of work for any of the other reasons may receive two weeks of paid leave at their full applicable pay rates.

The FFCRA leave provisions apply to private sector employers with fewer than 500 employees, and to virtually all public sector employers, regardless of size. Private sector employers who are covered are eligible for payroll tax credits for the full amount of paid leave provided. The law will expire on December 31, 2020.

“Health care provider” exclusion

The FFCRA gives the U.S. Department of Labor authority to issue regulations “to exclude certain health care providers and emergency responders” from the paid leave requirements. 

The DOL issued regulations on April 6, which included a very broad definition of “health care provider.” Under Section 825.30 of the regulations, virtually any employee of a health care employer can arguably be denied paid leave – even cafeteria workers, custodians, administrative assistants, attorneys, and accountants:

[A] health care provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions. 

This definition includes any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility. This also includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. This also includes any individual that the highest official of a State or territory, including the District of Columbia, determines is a health care provider necessary for that State’s or territory’s or the District of Columbia’s response to COVID-19. 

*Emphasis added; subsection numbering omitted.

According to Judge Oetken, the DOL’s definition of “health care provider” is “vastly overbroad.” He said the excluded employee must be “capable of providing healthcare services,” rather than “remotely related to someone else’s provision of healthcare services.” Although the DOL is not required to make these determinations on an “individual-by-individual” basis, the court said, “the statutory text requires at least a minimally role-specific determination.” The court noted that the DOL conceded “that an English professor, librarian, or cafeteria manager at a university with a medical school would all be ‘health care providers’ under the Rule.”

Implications for health care employers

As noted above, Judge Oetken’s decision does not apply outside the Southern District of New York. The Department of Labor could appeal the decision to the U.S. Court of Appeals for the Second Circuit, and the appellate decision – whatever the outcome – would apply only in the Second Circuit states of Connecticut, New York, and Vermont. Federal courts in other parts of the country are free to follow or decline to follow the decision.

The decision should have no impact on large private hospitals because employers with 500 or more employees aren’t “covered employers” under the FFCRA. However, the “under-500-employee” threshold does not apply to most public sector employers, so a hospital or other large health care employer that is considered a “public agency” may be affected. In addition, some medical practices and clinics have fewer than 500 employees.

“Covered employers” who had not concerned themselves with the FFCRA because their employees fell within the “health care provider” exclusion may need to quickly educate themselves about their obligations under the law. For health care employers who have fewer than 500 employees or who are “public agencies” of any size — and who are in the Southern District of New York — the safest course appears to be to allow employees who do not provide patient care to take FFCRA leave.

Covered employers in other locations should be aware of the possibility that other courts may agree with Judge Oetken, and should consider amending their practices accordingly. 

What will the DOL do in response? Time is certainly going to be a factor. Because the FFCRA is set to expire on December 31, an appeal or issuance of amended regulations might be difficult, if not impossible. (The DOL could request an expedited appeal.) Or the DOL might do nothing, leaving the regulations in place until the FFCRA expires but not applying the portions vacated by Judge Oetken in the Southern District of New York.

Robin Shea is a partner at Constangy Brooks, Smith & Prophete in the firm’s Winston-Salem office. She has more than 30 years’ experience in employment litigation, and she provides preventive advice to employers and conducts training for human resources professionals, management, and employees on a wide variety of topics. She may be reached at [email protected] or by phone at (336) 721-6854.