Employers should prep for possibility federal COVID vaccination mandates pass legal muster, experts say

With all three federal COVID-19 vaccination mandate rules held up in court, employers are left in limbo.

Prior to the court injunctions, health systems, federal contractors and employers with 100 or more employees were obligated to have in place a mandate in place for their employees by Jan. 4. The Occupational Safety and Health Administration rule allowed employers to also install a weekly testing regimen for unvaccinated employees. The other two federal rules prohibit the testing portion.

But the finality of those rules have changed with judges in several states halting the implementation of those rules until they are sorted in a legal venue. A U.S. District Court judge in Missouri granted a preliminary injunction against the Centers for Medicare and Medicaid Services’ emergency mandate rule on Nov. 29.

“(The) CMS mandate raises substantial questions of law and fact that must be determined,” the judge wrote. “Because it is evident CMS significantly understates the burden that its mandate would impose on the ability of health care facilities to provide proper care, and thus, save lives, the public has an interest in maintaining the ‘status quo’ while the merits of the case are determined.”

Judges provided similar rulings for the emergency rules for federal contractors and companies with 100 or more employees.

But Southeast Michigan experts urge businesses to be prepared for implementation for if, or when, the rules pass Constitutional muster.

“These legal disputes will likely continue into 2022,” said Courtney Nichols, partner and co-leader of the labor and employment practice at law firm Plunkett Cooney PC in Bloomfield Hills. “But we are still advising clients to make sure they continue to collect data and information regarding the demographics of their workforce. They need to know how many employees are vaccinated or not vaccinated and identify the departments where there are higher rates of unvaccinated individuals. It’s very important to have a framework in mind for what obligations they might have if these mandates survive scrutiny.”

The CMS, federal contractor and OSHA rules require companies to log and maintain the vaccination status of employees so they may be reviewed by federal agencies if need be. For the OSHA rule, in which testing is permitted, companies are allowed to pass the cost of testing to employees.

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Nichols said it’s unclear when the courts will resolve the issue, but decisions could be made next month with implementation delayed from Jan. 4 to dates in February or March.

Many companies are likely celebrating the legal intervention on the mandate rules. According to survey data generated in November and provided to Crain’s from advisory firm Willis Towers Watson, 87 percent of Michigan respondents, who collectively employ 229,000 in the state, were not planning to mandate the vaccine for employees.

Of those respondents, 92 percent were either very concerned or somewhat concerned a vaccine mandate would lead to employees fleeing their organization — although it remains unclear where the employees would go given the federal rules cover a large portion of employers.

Of the 3 percent of respondents that did plan to mandate the vaccine regardless of federal rules, more than half felt the opposite, that a vaccine mandate would improve recruitment and retention.

However, 90 percent of respondents to the Willis Tower Watson survey in Michigan said they plan to adopt a testing strategy for unvaccinated employees moving forward.

Matthew Disbrow, partner and co-chair of the wage and hour practice at Honigman LLP in Detroit, said the legal hurdles and the rollout of the vaccination rules have once again left employers confused as how to proceed.

“As has been the case throughout the course of the pandemic, employers have been left scrambling on what they are supposed to be doing relative to employee protections. This is more of the same,” Disbrow said.

However, many companies are pushing toward determining the vaccination status of their employees and whether those employees may be exempt from any of the mandates should they go into effect.

As Crain’s reported last month, many companies are likely accepting reasonable religious exemptions to sidestep the rule.

Under federal law, employers are required to provide reasonable accommodations for employees who are exempt from mandatory immunization based on the Americans with Disabilities Act, Title VII of the Civil Rights Act and other federal laws that bar a mandate for medical or religious reasons.

Employers may be tempted to simply accept any and all religious exemption requests — some sects of the Dutch Reformed Church maintain an anti-vaccine stance — or medical exemption requests, such as severe but very rare allergies to vaccine ingredients.

Organizations are required under the rules to maintain records of why an exemption was granted for potential investigation. But federal regulators simply don’t have the resources to investigate most employers for exemption violations. Still, Nichols warns the exemptions need to stand up to scrutiny if the mandates push through the legal process.

“Companies have to ask themselves how these exemptions will look if they are scrutinized three or six months from now,” Nichols said. “Are they able to plausibly assert these exemptions are compliant with the spirit and intent of the rules?”

In the meantime, Disbrow urges employers to “be prepared” and “continue planning” for the potential mandates.

This story first appeared in our sister publication, Crain’s Detroit Business.