Government Contracts & Investigations

Supreme Court Set to Hear Oral Argument on OSHA Vaccine Rule – What Will This Mean for Government Contractors?

By | December 23, 2021

In the latest round of litigation on the rules being rolled out to implement the Biden Administration’s Path Out of the Pandemic, the Supreme Court signed orders yesterday to hold oral argument on January 7th, 2022 on the Sixth Circuit’s decision to dissolve the Fifth Circuit’s national stay of the Occupational Safety and Health Administration (OSHA) emergency  rule mandating that companies with 100 or more employees must vaccinate or test employees for COVID.  As Stinson reported last week, the Sixth Circuit, which is handling the consolidated complex litigation of OSHA’s authority to issue that emergency rule, issued a split decision to dissolve the national stay of the rule pending resolution of the litigation challenges to the rule and OSHA’s authority.  While the majority of two found that the rule was within OSHA’s reasonable exercise of its emergency authority, the dissent filed by the remaining judge took strong exception to the standard and decision to lift the stay, stating that “a multitude of petitioners—individuals, businesses, labor unions, and state governments—have levied serious, and varied, charges against the mandate’s legality. They say, for example, that the mandate violates the nondelegation doctrine, the Commerce Clause, and substantive due process; some say that it violates their constitutionally protected religious liberties and the Religious Freedom Restoration Act of 1993. To lift the stay entirely, we would have to conclude that not one of these challenges is likely to succeed. A tall task. To keep the stay, however, there is no need to resolve each of these questions; the stay should remain if we conclude that petitioners are likely to succeed on just one ground. In my view, the petitioners have cleared this much lower bar on even the narrowest ground presented here: The Secretary of Labor lacks statutory authority to issue the mandate.”

Pending the Supreme Court’s hearing on the Sixth Circuit’s decision, OSHA has extended the date for enforcement of the emergency rule:

OSHA is gratified the U.S. Court of Appeals for the Sixth Circuit dissolved the Fifth Circuit’s stay of the Vaccination and Testing Emergency Temporary Standard. OSHA can now once again implement this vital workplace health standard, which will protect the health of workers by mitigating the spread of the unprecedented virus in the workplace.

To account for any uncertainty created by the stay, OSHA is exercising enforcement discretion with respect to the compliance dates of the ETS. To provide employers with sufficient time to come into compliance, OSHA will not issue citations for noncompliance with any requirements of the ETS before January 10 and will not issue citations for noncompliance with the standard’s testing requirements before February 9, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard.  OSHA will work closely with the regulated community to provide compliance assistance.”

Government contractors need to consider what to do pending the litigation of this OSHA rule and the Executive Order 14042 (the “EO”) government contractor vaccination rule.  The current national stay decision and other decisions in other Circuit Courts of Appeal staying implementation of the EO vaccination rules indicate that the Administration’s attempts to insert the clause into Government-funded agreements was indeed very broad.  Whether the clauses inserted were expressly required under the EO or the agencies’ extensions of the EO were beyond its scope, and whether contractors and grant holders voluntarily agreed or were forced to accept the clause as a condition, contractors are left in a position where the clause has not been removed from their contracts, and the Government may still be attempting to insert these clauses into procurements, contracts, and grants, pending its efforts to overturn the stay or prevail on a decision on the merits of the litigation.

The Safer Workforce Task Force Guidance has been revised to state that the Government will not “enforce” the rule in states covered by the stay:

For existing contracts or contract-like instruments (hereinafter “contracts”) that contain a clause implementing requirements of Executive Order 14042: The Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is in a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order (hereinafter, “Excluded State or Outlying Area”). In all other circumstances, the Government will enforce the clause, except for contractor employees who perform substantial work on or in connection with a covered contract in an Excluded State or Outlying Area, or in a covered contractor workplace located in an Excluded State or Outlying Area.

Contractors that have not accepted the EO clause may not be considered subject to the EO scheme at the present time.  Will OSHA consider them covered by their emergency rule if they meet the applicable employee standard?  And for contractors that do have the clause, do they continue to pursue implementation of a “vaccination unless there is a legal exception” policy in light of the stay and OSHA litigation, which currently calls for a “vaccination or test” policy?  This effort at rulemaking has been costly in many ways, beyond just time and money. Employers have contractual requirements to perform and employees are making decisions with their feet.  Contractors at all tiers need answers.

Stay tuned.  We continue to follow developments in this area.

Contact Susan Ebner for more information.