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New Vaccine Requirements for Covered Federal Contractors and Private Employers with 100+ Employees

September 10, 2021

President Joseph Biden on September 9 announced his new Path Out of the Pandemic: President Biden’s COVID-19 Action Plan, which describes the president’s six-pronged strategy to fight the pandemic. This sweeping action plan relies heavily on employer vaccine mandates and testing programs, including mandatory vaccination for federal employees and contractors and vaccination or weekly tests for private employers with 100 or more employees.

The initiative with the most immediate impact is the Executive Order (EO) mandating federal contractors and subcontractors to require their employees to be fully vaccinated against COVID-19. This Executive Order only applies to employers working pursuant to contracts issued on or after, or for which options to extend are exercised on or after, October 15. This EO goes beyond prior orders by including contractors working on or in connection with a federal contract at any contractor facility and not just contractor employees working on-site at a federal facility. The EO also appears to eliminate the “test out” option for federal contractor employees. White House Press Secretary Jen Psaki said that federal employees (and, therefore, presumably federal contractors) will have 75 days to get fully vaccinated. The White House also stated that the Centers for Medicare and Medicaid Services (CMS) will require that certain healthcare workers at facilities receiving Medicare or Medicaid funds be fully vaccinated.

The White House also directed the Occupational Safety and Health Administration (OSHA) to develop and issue an emergency temporary standard (ETS) mandating that employers with 100 or more employees require employees to be fully vaccinated or submit to weekly testing. Under the anticipated ETS, employers must provide paid time off to employees for receipt of the vaccine or recovery from post-vaccination symptoms. Employers violating the rule could face fines of up to $13,653 per violation, which possibly could increase to $136,532 per violation for repeat offenders. It is unclear exactly when this rule will be published, but reports indicate that it should be released later this month. The rule would be effective upon release.

Implications for Employers

These initiatives represent a major escalation in the White House’s efforts to increase vaccination rates and signal that the federal government will continue to rely on employers and other institutions, such as schools and universities, to incentivize and verify receipt of the COVID-19 vaccine.

Federal contractors and healthcare providers receiving Medicare and Medicaid funds will face the most immediate impacts. Specifically:

  • Federal Contractors: The Executive Order released by the White House covers all federal contractors and subcontractors working under federal agreements or solicitations issued on or after, or for which options to extend are exercised on or after October 15. The requirements will apply to contracts for (a) services, construction, or leasehold interest in a property; (b) services covered by the Service Contract Labor Standards (formerly known as the Service Contracts Act); (c) concessions; and (d) work relating to federal property or lands and related to offering services for federal employees, their dependents, or the general public. The requirement does not apply to (a) contracts or subcontracts below the simplified acquisition threshold (currently $250,000); (b) subcontracts solely for products; (c) employees who perform work outside of the United States; and (d) contracts or agreements with Indian Tribes.

    The EO does not address many relevant details – it instead states that covered employers must comply with guidance to be issued by the Safer Federal Workforce Task Force on or before September 24, 2021. According to President Biden’s Action Plan, however, this guidance will require covered federal contractors and subcontractors to mandate COVID-19 vaccination for covered employees, “to the extent permitted by law.” Thus, we presume that only workers who are unable to be vaccinated due to disability or religious beliefs will be exempted. Unlike the directive announced on July 29, 2021, this mandate does not appear to allow covered employees to opt out through testing.
  • Healthcare Providers: The White House’s action plan also states that the Centers for Medicare and Medicaid Services (CMS) will require most health care settings receiving Medicare or Medicaid funds to verify that employees are fully vaccinated against COVID-19. Covered employees will include nursing home staff, home healthcare staff, hospital staff, and staff in other CMS-regulated settings such as clinical staff, persons providing services under arrangements, and volunteers. The CMS action will also cover staff not involved in direct patient, resident, or client care.

Next, OSHA’s anticipated ETS will broadly require all private employers with 100 or more employees to mandate COVID-19 vaccination or “at least” weekly testing for all employees. Covered employers will have to provide paid time off for “the time it takes for workers to get vaccinated or to recover if they are under the weather post-vaccination.” According to the action plan, this requirement will impact over 80 million workers in the private sector.

The details of OSHA’s anticipated ETS, however, are not yet clear. For instance, the White House has not issued guidance on whether the “100+” employee count will be companywide or based on subdivisions or location. Given the announced anticipated coverage of more than 80 million workers, employers should be prepared for broad coverage based on company-wide numbers. It is also unclear who will have to pay for the cost of employee testing (along with the time it takes to be tested) under the ETS, though the White House did state in Part 4 of its action plan that it was working with industry to make at-home tests more affordable. Another open legal question is whether the ETS will preempt state and local laws that prohibit discrimination on the basis of vaccination status. Employers will need to wait to see the substance of the ETS before determining the rule’s full effect.

In terms of compliance costs, covered federal contractors, healthcare providers, and employers who have not yet implemented vaccine mandates will face the largest burdens. These entities will need to develop policies and procedures for covered employees to submit proof of vaccination and request exemptions (if available). In addition, private employers covered by OSHA’s anticipated ETS will have to implement regular COVID-19 testing procedures for those employees who decline to be vaccinated. Alternatively, private employers can consider avoiding the administrative burdens of large-scale weekly testing required by the ETS altogether by rolling out a “strict” vaccine mandate (without a “test out” option) where allowed by state law and subject to accommodation requirements. Employers should speak to counsel about all available options and potential legal pitfalls.

Employers that have already issued vaccine mandates also will need to re-examine their programs to ensure compliance with the new standards. For example, a number of employers implemented vaccination or testing programs earlier this year in response to directives from state or local governments. The federal contractor EO and announced CMS proposal, however, do not appear to contain the “test out” option that was commonplace in prior government directives on this topic. These employers will need to resurvey their workforces to determine who must receive the vaccine pursuant to the EO and who qualifies for an exemption (if available).

These announcements are yet another example of the increasing pressure on employers to mandate COVID-19 vaccination. Employers should continue to closely monitor developments at the federal, state, and local levels related to this issue.

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Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Dallas
Sheila A. Armstrong

Houston
Susan Feigin Harris

Los Angeles
Jason S. Mills

New York
Daniel A. Kadish

Orange County
Daryl S. Landy

Philadelphia
A. Klair Fitzpatrick

Washington, DC
Sharon P. Masling
Jonathan L. Snare
E. Pierce Blue
Kaiser H. Chowdhry
Alana F. Genderson