Latest Update: September 10, 2021
President Issues Executive Orders Mandating Vaccines for Federal Employees and Contractors and Directs OSHA to Issue Emergency Temporary Standard for +100 EEs. What Does It Mean for PEOs?
Yesterday, President Biden issued two executive orders mandating that all federal employees and federal contractors be vaccinated against COVID-19 and ordered OSHA to issue an Emergency Temporary Standard (ETS) requiring employees of companies with 100 or more employees to either be vaccinated or be tested weekly for COVID-19 as part of his “Path out of the Pandemic.”
To assist you and your clients, we have prepared a summary of the OSHA mandate, with a focus of what it means for PEOs and their clients, and as much as we know about the EO on federal contractors. Given the newness of this, there are many unanswered questions, but we are hearing from many of you and wanted to get the information that we had out to you as soon as possible. We are closely monitoring these developments and will keep you apprised as new information is released.
OSHA Emergency Temporary Standard
Of most relevance to PEOs and their clients, President Biden has directed OSHA to develop a rule requiring employers with more than 100 employees to ensure that their workforce is either fully vaccinated or tested weekly. According to the White House:
The Department of Labor’s Occupational Safety and Health Administration (OSHA) is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. OSHA will issue an Emergency Temporary Standard (ETS) to implement this requirement. This requirement will impact over 80 million workers in private sector businesses with 100+ employees.
As of today, this is all we know about the substance of the forthcoming ETS. However, there are a few items that we are considering as we think about the ramifications of the ETS.
First, the ETS will likely be tied up in litigation almost immediately. The standard for issuing an ETS is very high: it requires a showing that employees are in grave danger and that the ETS is necessary to protect employees from such danger. Most ETSs are challenged in court and more than half have been stricken down as a result. Several governors have already stated that they would challenge the ETS when it is issued. Whether or not the plaintiffs are successful, you can be certain that there will be a multitude of lawsuits filed against its enforcement.
Second, an ETS goes into effect upon publication in the Federal Register, without comment. As such, NAPEO's ability to provide input on the ETS is severely restricted. Given the unique nature of an ETS, we have almost no information at this time about when it will be published, when the requirements will take effect, or what it will entail. One bit of insight we were provided today by Solicitor of Labor Seema Nanda, on a conference call for the business community organized by the US Chamber of Commerce, is that she expects the ETS to be issued “in weeks” and that the ETS will likely contain exemptions for religious and health reasons. We will continue to monitor these developments closely and keep you posted.
Third, given the above, there is no way of knowing at this time whether the 100-employee threshold will be viewed at the PEO level or the client level. If past is prologue, then PEOs can take some comfort in the fact that other federal mandates—such as ACA, FMLA, EEO-1s, and many SBA programs—do not count PEO co-employees in the aggregate. However, we simply cannot say that at this time with certainty.
Fourth, we do not yet know whether PEOs will share any responsibility for compliance with the ETS. However, the PEO industry has traditionally been successful in explaining to OSHA that responsibility for worksite safety under OSHA rests with the worksite employer and not the PEO. On the other hand, also traditionally, this analysis is fact specific and made on a case-by-case basis, so it is unlikely that PEOs will ever receive a blanket exemption from OSHA.
Fifth, further complicating things, 22 states regulate workplace safety and health through a state-run OSHA program. These “state plans” are required by OSHA to adopt an ETS that is at least as effective as the federal ETS. However, many of these state plans are in states governed by Republicans. Both the governors and the legislatures in these states are generally opposed to federal vaccine mandates, and so it is possible that these states will refuse to issue an ETS.
Finally, it is likely that employers (and not the employees) will be responsible for the cost of COVID testing under the ETS. However, what is less clear is whether the cost of weekly testing will be covered by health plans or if the employer must cover the testing costs out of pocket.
Executive Order on Federal Contractors
This order mandates that all employees of federal contractors and subcontractors must be vaccinated. It delegates the authority to set the specific requirements of this mandate to the Federal Acquisition Regulatory Council and the various government agencies by October 15. We will likely know more at that time.
NAPEO will continue to closely monitor this situation. As soon as OSHA issues an ETS, we will provide you with an analysis of the standard and its impact on both PEOs and PEO clients. You can find In the meantime, Fisher & Philips has been kind enough to provide its own summary on the OSHA ETS and the EO on federal contractors.