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Vaccine Development and Distribution: Legal Considerations for US Healthcare Providers and Other Employers

January 29, 2021

As the United States races to deliver safe and effective coronavirus (COVID-19) vaccines under the Biden administration, employers, healthcare providers, and many others are assessing what it means for their industries and organizations. It is difficult to capture the fast-moving developments around the vaccines and the issues and opportunities they raise in real time, but here we outline a selection of key legal considerations and updates as the rollout continues to take shape. They include the status of the US Food and Drug Administration’s (FDA’s) vaccine products, distribution, key legal issues at the state level, employer mandates and employee incentives, and important liability concerns.

Current Vaccines and FDA Approval

  • Under new leadership, FDA will need to continue to assess new vaccines and new vaccine dosing regimens based on science and data, but also within the context of evolving public health realities like vaccine reluctance, demand for access, and geographic disparities in vaccine implementation resources.
  • As the demand for prompt access to vaccines continues to build in the general population, there will be increased stress on the vaccine supply chain (syringes, wipes, packaging, coolant, storage) and on vaccine manufacturing capacity, which could prompt increased federal government intervention.
  • The science and research and development around COVID-19 vaccines will continue for many years beyond the initial contingent of vaccines, with resources directed to efficacy generally and against new variants, duration of response, second generation products in different delivery systems, and new and more cost-effective manufacturing technologies.

Vaccines Distribution

  • The biggest issue is still that demand for the vaccinations exceeds supply.
  • The implementation of phased distribution recommendations from the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices (ACIP) varies by jurisdiction, causing disparity among phases and some confusion.
  • A workforce capacity issue in administration may arise as the same healthcare organizations that are caring for COVID-19 patients are being used as vaccination hubs while new hubs and community centers are being conceived.
  • States are organizing distribution of vaccine through differing centralized teams requiring knowledge of each states’ processes and whether there is also a delegation to local health departments.
  • Through an Executive Order (EO) signed on January 20 the Biden administration intends to direct the Federal Emergency Management Agency with respect to dollars and personnel to create 100 community vaccination centers and pharmacy programs for the public. There is also a directive in the EO to ignite the public health service corps to expand the workforce to administer the vaccines.

Employer Vaccine Mandates – Federal Considerations

  • According to the Equal Employment Opportunity Commission (EEOC), a mandatory vaccination policy may be lawful under the Americans with Disabilities Act (ADA) and Title VII, provided that available reasonable accommodations are made for individuals with disabilities and those with sincerely held religious beliefs, practices, or observances; however, depending on the nature of an employer’s business, a host of practical issues must be considered before imposing a mandatory vaccine program, such as impact to employee morale and employee turnover.
  • Prior to excluding an employee who cannot receive the vaccine due to his or her disability from the workplace, the EEOC advises that an employer must demonstrate that the unvaccinated individual will expose others to the virus at the worksite and that no reasonable accommodation (absent undue hardship) exists that would eliminate or reduce the risk of the unvaccinated employee posing a direct threat.
  • Employers must engage in the interactive process to evaluate whether there are any reasonable accommodations (such as additional protective gear or moving an employee’s workstation) that would eliminate or reduce the risk of the employee posing a direct threat.
  • Mandatory vaccination programs should be undertaken with caution, given the lack of concrete substantive law (the EEOC’s guidance is simply guidance), state laws with different requirements, and the dearth of information regarding the safety of having some unvaccinated employees in the workforce.

Employer Vaccines Mandates – State and Local Considerations

  • Long before the COVID-19 pandemic occurred, varying state laws have addressed whether vaccines can be mandated and, in a parallel fashion, registries can be used by public health officials to see the coverage of vaccinations in each state.
  • The issues of religious or conscientious exemption differ among the states and in some cases, the conscientious exemptions can create such a hole that anyone can object to receiving a vaccination.
  • A broad federal regulation was published under the Trump administration to protect statutory conscience rights in healthcare that extends to vaccination. It has been temporarily restrained in two courts but would have to be rescinded in some form or fashion to be removed from the federal overlay in addition to state laws.
  • So far, three states have proposed laws regarding mandates: New York, New Jersey, and Tennessee.

Employer Vaccines Incentives

  • The legal issues surrounding what employers can do to incentivize employee vaccinations are complicated, and guidance from the EEOC is sorely needed.
  • For now, the safest approach for employers who wish to provide vaccines on site or by a vendor and incentivize vaccination is to provide only modest incentives, such as a water bottle or a gift card of modest value.
  • If an employer wishes to provide higher incentives, there is less legal risk if the vaccine is provided by an unaffiliated third party, such as a local public health agency or pharmacy.
  • With vaccine incentives in particular, consider careful messaging to employees to mitigate ER complaints and confusion.
  • Consistency is key, but differentiation in incentives is permitted where it is based on bona fide business reasons, such as offering incentives just to employees with public/customer contact.

Wage and Hour Concerns

  • An employer that provides an incentive which is not tied to hours worked does not need to include the value of the incentive in the employee’s regular rate calculation.
  • If the decision to get vaccinated is truly voluntary, employers do not need to provide pay for the time an employee spends getting vaccinated (though many will to encourage vaccination).
  • Whether a vaccine is mandatory, incentivized, or purely voluntary, employers can ask for proof of vaccination. However, questions about why an employee was not vaccinated can only be asked where they are job-related and consistent with business necessity.
  • Employers with a mandatory vaccine requirement for new hires can refuse employment for those who have not received a vaccine. But they need to provide accommodations to those who did not get vaccinated due to disability or religious needs. 
  • State and local guidance generally is not premised on vaccinations and does not sunset for vaccinated employees, especially given the possibility of transmission for vaccinated workers.
  • Potential liability exists if employers rely only on vaccines to prevent the spread of COVID-19 and remove other workplace safety measures.

Liability Protections for Employers

  • Two bodies of statuary law provide potential routes for liability protection for employers from claims by employees relating to vaccination: workers’ compensation coverage and the Public Readiness and Emergency Preparedness (PREP) Act.
  • Workers’ compensation coverage is dependent on state law and whether vaccination is mandated by the employer. If the vaccine is mandated by employers, employees’ liability claims would be compensable under workers’ compensation in most states.
  • The vaccines that are available now are under emergency use authorization (EUA) and the workers’ compensation bar may not apply if it is determined that use of a vaccine that was under an EUA constituted gross negligence or reckless conduct.
  • The PREP Act, which the US Department of Health and Human Services declared would apply to the COVID-19 pandemic, is the federal statue for pandemics and potentially provides very broad protection from liability for covered countermeasures such as a COVID-19 vaccine. If it applies, the PREP Act provides immunity from liability for claims of personal injury or monetary loss.
  • A detailed analysis of four factors must be done to determine if the PREP Act will provide protection: Is it a covered countermeasure? Does it fit within the definition of a recommended activity? Are you within the definition of a covered person? Do you fit within the limitations on distribution for the PREP Act?
  • With respect to private employer vaccination programs, a closed point of dispensing (POD) COVID-19 vaccination program operated and administered by an employer for employees can be structured in a way that will provide the benefit of PREP Act liability protection.

These insights and more were shared during our “COVID-19 Vaccines: Legal Considerations in Light of Latest Developments” webinar on January 21, 2021. Visit our Navigating the NEXT page for more COVID-19 news and thought leadership.