Contractors wait for more clarification in wake of Supreme Court's vaccine mandate decision

In my December opinion, I discussed the vaccination mandate for most federal contractor employees and its rejection by two federal district courts. Since then, one of those court’s ruling was upheld by a federal appeals court, with other appeals pending.  The U.S. Supreme Court will likely hear the case.

Compare the contractor mandate with a separate vaccination requirement imposed last November by the Occupational Safety and Health Administration (OSHA). This mandate applied to all of the nation’s private employers with 100 or more employees – some 84 million Americans. Not unlike the more narrowly applied contractor mandate, the OSHA mandate faced a flurry of lawsuits filed by various business groups and state governments challenging its enforceability, to include petitions before all of the nation’s 12 regional federal appeals courts.  Two of those courts issued conflicting opinions, one upholding and the other rejecting the OSHA mandate. When that happens, you can also count on the case reaching the Supreme Court. Which it did.

In a 6-3 decision issued last week, the Supreme Court concluded that the OSHA mandate likely exceeded the president’s legislative authority because COVID was not the workplace danger or occupational hazard that OSHA was created to remedy.  In other words, the statute authorizing OSHA to address workplace dangers did not authorize an unprecedented vaccination mandate more intended to address a public health concern not directly related to workplace conditions.

Put another way: the president’s job is to enforce the law; not make it. He’s authorized to implement federal statutes but only to the extent they authorize him to act. Here, the president, through the Secretary of Labor (i.e., OSHA), issued the vax mandate for most private employers, claiming that a federal statute governing OSHA authorized him to do so. “It does not” – so says the court, stating that the statute empowers OSHA to set workplace safety standards and not impose public health measures to include a vaccination mandate.

In short, the court is saying that under the OSHA statute COVID is not an occupational hazard that can be addressed by a widely-applied vaccine mandate. And the argument that the mandate is indeed addressing OSHA covered work-related dangers to include COVID fell on supreme deaf ears.

Fair enough. A government rule that forces almost a third of the nation to receive a vaccine or undergo regular testing may make practical sense given that this is a pandemic that has killed almost a million Americans in the last two years, but under our constitution the power of the president is limited to what Congress allows, and OSHA and the statute that created its powers governing workplace hazards simply does not authorize a non-work related vaccine mandate.

But let’s look at what this Court decision doesn’t mean:

• It does not – and very well may not – affect the separate contractor vaccine mandate because that mandate was issued under the authority of a different federal statute. The OSHA mandate was imposed under a single provision of the Occupational Safety and Health Act (which the Supreme Court just decided did not so authorize) and the contractor mandate arguably under more inclusive provisions of the Federal Property and Administrative Services Act (which hasn’t yet reached the high court). Different statutes have various levels of authority granted to the president. And suffice it to say that the authorities granted under each of these statutes are very different and distinct.  Because of this, the contractor mandate may still be upheld.
• The Supreme Court’s decision suspending the OSHA mandate is only an interim one pending further review by the lower appeals court as well as additional consideration by the Supreme Court. So by no means is this over yet, especially if OSHA finds a way to revise the mandate in a way that might pass the Court’s muster. A careful reading of the decision reveals that not all OSHA-based vaccinations will be rejected. Here, the Court specifically acknowledged that OSHA may impose COVID-related measures regulating, for example, “researchers who work with the COVID-19 virus,” as well as “risks associated with working in particularly crowded or cramped environments” – whatever that may mean. So, it’s possible that a more narrowly tailored OSHA vaccination mandate may be permissible.  
• The decision doesn’t mean that other COVID vaccination mandates issued pursuant to other statutes will not be upheld. In fact, in another decision on a separate case also released the same day last week, the Supreme Court (in a 5-4 vote) let stand a vaccination mandate for healthcare personnel working at hospitals, nursing homes and other healthcare facilities, which was issued under yet a different statute authorizing conditions to receiving Medicare/Medicaid reimbursements.  Note that this particular mandate may encompass those government contractors in the healthcare sector.

For the government procurement community, it may help to see the primary differences between the OSHA and federal contractor mandates:

• The OSHA mandate applies to any private employer having 100 or more employees. The contractor mandate applies to most federal government contractor employees regardless of employee count. Again, different standards under different statutes for different classes of workers.
• The OSHA mandate is for unvaccinated employees but allows an option for an employee to be tested each week (at their own expense and on their own time) and wear a mask each workday, although employers are not required to offer this option. Thus, the OSHA mandate is strictly a vaccine or test-and-mask requirement with no other exceptions. The contractor mandate requires a vaccination regardless of tests and masking, and has essentially two exceptions: religious and medical.
• Violation of the OSHA mandate would have carried “hefty fines:” $13,653 for each violation and up to $136,532 for willful violation. There are no such fines with the contractor mandate although if finalized through the various court proceedings companies may face contractual consequences for failing to comply.

I point out these differences because if the OSHA mandate is ultimately upheld (or if a different more legislatively more supportable mandate is later issued) then different government contractors would be subject to different mandates, depending on employee count. That would make many contractors subject to the OSHA vax-or-test/mask requirement and some contractors subject to the contractor vax only requirement, and with different consequences for non-compliance. Now that would be a challenge to follow not alone enforce.

But as with the contractor mandate, this latest decision, even if later finalized, won’t prohibit any employer from implementing vaccination policies and mandating vaccinations on its own. The decision would only eliminate the federal mandate for such vaccinations, basically leaving it up to the employer and whatever state laws may apply.

My inclination is that, because of these court decisions and their resulting confusion, many businesses will continue to wait for all the cases to come to some kind of finality, although several large companies have decided not to wait and have imposed the mandate on its employees and subcontractors. And at least one very large contractor, Citibank, has suspended its previously imposed vax mandate because of the Court’s latest decision. Citibank also has government contracts.

Whether or not you impose this requirement at your company and at this point will depend on your business activities, workplace facilities, employee concerns and attrition issues, prime contractor-imposed vaccination requirements, cost of implementation and any explicit or implicit signals coming from your government customers.  To that end, due to the current state of confusion and the resulting court-induced legal limbo, it may be a good idea to wait it out. After all, even lawyers get exhausted, and sooner or later the matter will be resolved one way or another.  Until then, the January 18 deadline is today, and agencies have refrained, at least officially, from pressuring contractors to meet that deadline. There are also the implementation costs from developing policies to handling exemption requests to having to employ additional HR, legal and other personnel, which may or may not be well spent if a vax mandate fails and you decide not to impose one in any event. It may also help that for the most part both federal and contractor employees are still working remotely, and apparently separated from the fray of the vax mandate debate.

On the other hand, a contractor heavily dependent upon subcontracts may still feel pressured by its prime to adopt a mandate. Moreover, because the mandate for federal employees has not been universally challenged while that same mandate may not apply to contractors, especially where federal and contractor employees are located in the same government facility, employee clashes may occur along with expensive and migraine-inducing government customer relationship issues.  This may especially arise with many high security-cleared and other essential federal and contractor employees being required to work on government sites despite the pandemic, and may exacerbate itself as the pandemic subsides and the federal and contractor workforces start creeping back to their jobsites. And if and when the contractor mandate is validated, be prepared to implement it. At that point we can discuss who pays the costs.

But until all these cases are fully litigated, the fragile waiting game continues.

Stay safe.