United States: Update on COVID-19 Vaccine Mandates

In brief

On September 9, 2021, President Biden issued Executive Order 14042 and related guidance, requiring most government contractors and subcontractors who contract with federal agencies to impose a COVID-19 vaccine mandate on their employees. In the intervening months, the scope and significance of Executive Order 14042 have continued to change. As we near the end of 2021, we expect these shifts to continue at least until January 2022, but likely well afterward. The following are some of the key areas where we have seen changes and expect to see more:


Contents

 
Timing: The enforcement deadline for vaccination has moved and may move again, especially in light of the multiple lawsuits surrounding its implementation, including the nationwide injunction which was issued December 8 and the potential congressional response (see infra) The original deadline for employee vaccination was December 8, 2021, but the current deadline for employees to be "fully vaccinated" has been moved to January 18, 2022.[1] This additional time provides a small amount of breathing room for corporations, but it remains to be seen whether the extension will be enough or if more time will be allowed.[2] Unless and until a new deadline is issued, it is wise to treat January 18 as the target date. However, compliance teams should be alert to any extensions that would allow for a smoother transition.

Agency-Specific Regulations: The scope of the mandates have increased, as certain agencies have applied the mandate to contractors that provide only products. The Executive Order and guidance carved out contractors who solely provided products. However, the guidance left the door open for agencies to impose their own wider-reaching requirements, regardless of the types of contracts involved. Agencies have already begun imposing these separate requirements, further complicating the landscape and obligating contractors to carefully scrutinize any new bids or contract modifications lest their particular agency has included the FAR clause requiring compliance.[3] Accordingly, the intake process needs to remain diligent to both avoid agreeing to this significant commitment and seize on potential opportunities to try to negotiate delayed implementations or other concessions. By the same token, companies should be alert for changes to agency requirements in case an agency retracts or refines its treatment of product providers.

Legal Challenges: It remains an open question as to which (if any) of the restrictions will actually become effective for product or service providers, as multiple litigants have challenged various aspects of the mandate and have received substantial (albeit temporary) relief. The following are some key litigation challenges:

Large Company Restrictions:

On November 5, 2021, OSHA added an additional wrinkle to the compliance landscape when it issued an Emergency Temporary Standard ("ETS"), which required employers with 100 or more employees to take specific "necessary" steps to address the "grave danger" of the COVID-19 pandemic: either (i) implement a mandatory vaccination policy; or (ii) offer employees the choice to have regular COVID-19 testing and wear a face covering. Companies would have 60 days to implement testing and 30 days to implement all other requirements. The ETS contained a
carve-out for exclusively remote employees, employees who perform their jobs completely alone, and employees who work exclusively outside, unlike the Executive Order. 

The ETS met a mixed reception. Multiple political groups and corporations filed challenges throughout the country, with lawsuits pending in approximately 20 different courts. Pursuant to federal multidistrict procedures applicable to OSHA regulations, the various lawsuits were then randomly assigned by the Judicial Panel on Multidistrict Litigation to the Sixth Circuit Court of Appeal, with a Circuit Court panel scheduled to rule on whether previous grants or denials of temporary stays will stand, as well as to address the constitutionality of the ETS.

On November 6, 2021, and while the reassignment process was pending, the Fifth Circuit granted an emergency stay order in one of its cases. The three-judge panel explained that it was staying enforcement due to "grave statutory and constitutional issues" raised by the petitioners, ordering OSHA to respond by November 8, 2021. After an additional round of briefing, the Fifth Circuit upheld the original stay and ordered OSHA not to implement the ETS. The Fifth Circuit held there were a number of grounds for keeping the stay, including that OSHA did not show that COVID-19 posed such a grave danger that it warranted emergency relief.

Both sides have now asked the Sixth Circuit to address the Fifth Circuit's stay, with briefing scheduled through December 10. The outcome of this litigation could have immediate impacts for contractors who do not provide any sort of services, but that impact may become mooted (or even disappear) if agencies continue to impose the new FAR clause in all contracts. The direct effect on service providers is far less pronounced. Unless the courts find the executive branch has no authority to require vaccinations, the eventual fate of the ETS is not likely to impact the compliance space for contractors who provide services, as the Executive Order will apply to them regardless.

Healthcare Facilities:

The Centers for Medicare and Medicaid Services ("CMS") has issued a regulation requiring most employees, volunteers, and third-party contractors working at fifteen categories of healthcare facilities to be vaccinated against COVID-19 and to have received the first dose by December 6, 2021. Unlike the other mandate, this mandate applied to a narrow set of workers, i.e., those somewhat connected to healthcare. 

However, it met with the same fate (at least so far). On November 29, 2021, a federal district court judge in the Eastern District of Missouri issued a preliminary injunction preventing the rule from going into effect until after the matter has been heard on the full merits. The court reasoned that the nature of breadth of CMS's rule was so broad that it needed a clear statutory mandate from Congress, which the court found CMS did not have. This ruling is significant because it affects healthcare workers in ten separate states: Missouri, Nebraska, Arkansas, Kansas, Iowa, Wyoming, Alaska, South Dakota, North Dakota, and New Hampshire. However, this decision was quickly overshadowed the next day by a farther-reaching decision.

On November 30, 2021, a federal district court judge in the Western District of Louisiana broadened this order, stating that there "is no question that mandating a vaccine to 10.3 million health care workers is something that should be done by Congress, not a government agency." The court further highlighted the uncertainty that "even an act of Congress mandating a vaccine would be constitutional" and noted that the Plaintiff States were likely to succeed on their claim that the Government exceeded its authority.

It is important to emphasize that the courts granted only temporary relief, and the administration can (and likely will) appeal to a higher court, which could choose to act promptly through an emergency order or summary decision. Further, there is an emerging split across the court system. For instance, the Eleventh Circuit recently found that the regulation was sufficiently tailored to the agency’s authority, and it denied Florida’s request for a preliminary injunction against the same regulation. However, the language in these rulings does call into question an arguably narrower and more targeted vaccine requirement that specifically addresses healthcare workers, suggesting that the broader mandates may face even more significant pushback.

Contractors and Subcontractors:

Even more recently, EO 14042 itself has been stayed by two separate federal district courts. A federal district court judge in the Eastern District of Kentucky granted a preliminary injunction on November 30, 2021, barring the vaccine mandate for federal contractors from being implemented in three states: Kentucky, Ohio, and Tennessee, all of which had previously challenged the order. The court reasoned that the vaccine mandate likely exceeded President Biden's authority over federal procurement, which is broad but "not absolute".
 
On December 7, a federal district court judge in the Southern District of Georgia went a step further, halting enforcement in “all covered contracts in any state or territory of the United States of America.” Acknowledging the seriousness of the COVID-19 pandemic, the court nevertheless held that the challenging states and industry groups had shown a likelihood of success on the merits because the President had exceeded the scope of this authority when the issued the Executive Order. Thus, as it currently stands, the Executive is unable to enforce the Executive Order.
 
State-Specific Issues:

The administration has also seen pushback from the states. Several of which have implemented laws that contradict the vaccine mandate, adding their own wrinkles to the only complicated patchwork of restrictions. Specifically, many states have prohibited either vaccine mandates or required proof of vaccination for public employees, such as Texas, Georgia, and Michigan. However, certain states have exemptions for health care providers, such as Michigan and Arizona. Many states have also created exceptions for the vaccine mandates for private employers. In some of these states, including Texas and Utah, employers are required to relieve an employee from the vaccine requirement for specific reasons, such as health issues, religious beliefs, or if doing so would conflict with a "sincerely held personal belief" or "personal conscience." These, too, have their nuances. For instance, Utah has carved out "federal contractors" from the definition of employer".

Congressional Response:

On December 8, the US Senate voted to end at least some aspects of the vaccine mandate by a margin of 52 to 48.[1] However, it appears unlikely that the Democratic-led House of Representatives would follow suit, and several sources speculate that President Biden would exercise veto rights if that occurred.[2] Nevertheless, this push highlights the significant headwind facing this requirement and underscores the importance of continuous monitoring.

Impact and Litigation Risks: Unfortunately, to date, the only thing constant about COVID compliance has been change, but the impact to your organization can be profound. Depending upon your position, you may face heightened litigation risks in the following areas:

State and Federal False Claims Act litigation, primarily stemming from improper certifications regarding mandate compliance and monitoring, as well as the specific nature of services (or products) provided;

Supply chain litigation claims associated with delays in production as a result of compliances issues. The risks are especially pronounced when dealing with prime-rated orders or downstream rated orders, which command prompt fulfillment;

Bid protests from losing parties claiming that your company will not be able to comply with the potentially upcoming mandate;

Breach of contract claims, which may be ancillary to or in lieu of the False Claims Act litigation discussed above;

Suspension and debarment actions based on the above violations or simply an inability or unwillingness to continue production or services in light of the changes; and

Employment-related litigation from employees claiming unfair treatment as a result of a mandate, the denial of accommodation requests, or privacy-related claims.


In this uncertain landscape, we advise that you keep a careful watch on executive orders, agencies' rules and regulations, and recent court rulings. We also strongly suggest working with your contract review teams to ensure they understand not only the current requirements, but also how your contracts and modifications fit in with your particular agency's current trends and enforcement priorities. At the same time, we suggest a renewed focus on litigation preparedness, as the recent preliminary injunctions have taught us that prompt action may yield positive results in this environment.

We look forward to advising you further on these matters.

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[1] Of course, many of the other COVID-related requirements, such as masking, physical distancing, and the election of a safety officer, have already lapsed and immediate compliance is already required.
[2] Somewhat relatedly, the administration has recently announced that it would delay until 2022 any suspensions or other serious penalties for members of the federal workforce who were not fully vaccinated or secured a religious or medical exemption by November 22, 2021.
[3] The Administration's recent pronouncement extending that deadline to January 4, 2022, likely provided contractors with much-appreciated breathing room.


 


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