Client Advisory: Insurance Implications of the COVID-19 Mandate – The Emergency Temporary Standard

November 2021 

The U.S. Labor Department’s Occupational Safety and Health Administration (OSHA) has issued an emergency temporary standard (ETS) requiring tens of millions of workers at companies with 100 or more employees to be fully vaccinated by Jan. 4, 2022, or be tested weekly and wear a mask on the job. Disclosure 1 1 https://www.osha.gov/coronavirus/ets2

Companies that fail to comply will face fines of nearly $14,000 per “serious” violation. Employers found to be “willful” or repeat violators would be subject to fines of up to ten times that amount. The COVID-19 outbreak has killed 750,000 Americans and continues to spread.

Date

Ahead of the December 5 and January 4, respective responsibilities and obligations, employers are on the clock to meet ETS requirements. Disclosure 2 2 https://www.osha.gov/sites/default/files/publications/OSHA4162.pdf 

Current status

Although the regulation is being challenged in the courts, employers subject to the ETS should start planning for compliance.

Legal cases Disclosure 3 3 https://www.jdsupra.com/legalnews/the-osha-ets-mandate-has-been-stayed-by-1263028/

• On November 6, 2021, the U.S. Fifth Circuit Court of Appeals stayed OSHA’s emergency temporary standard (ETS) vaccine mandate pending expedited judicial review. The Fifth Circuit, in a case filed by staffing companies, determined that the vaccine mandate presented “grave statutory and constitutional issues” meriting the stay. Disclosure 4 4 https://www.jacksonlewis.com/publication/fifth-circuit-hits-pause-osha-covid-19-vaccine-or-testing-emergency-standard 
• On November 12, 2021, a U.S. appeals court upheld its decision to put on hold an order by the President for companies with 100 workers or more to require COVID-19 vaccines, rejecting a challenge by his administration. A three-member panel of the 5th U.S. Circuit Court of Appeals in New Orleans affirmed its ruling. "The mandate is staggeringly overbroad," the opinion states. Disclosure 5 5 https://www.reuters.com/world/us/federal-appeals-court-affirms-stay-biden-vaccine-mandate-2021-11-12/ 
• The U.S. Sixth Circuit Court of Appeals is considering an emergency motion to stay filed by seven states – Kentucky, Ohio, Tennessee, Kansas, Idaho, Oklahoma and West Virginia. Disclosure 6 6 https://fortune.com/2021/11/08/osha-biden-vaccine-mandate-businesses-supreme-court-lawsuits/
• The U.S. Seventh Circuit Court of Appeals is also considering a petition for review and motion to stay filed by two Wisconsin manufacturers.
• The U.S. Eighth Circuit Court of Appeals is considering a petition for review and motion to stay filed by Missouri, Arizona, Nebraska, Montana, Arkansas, Iowa, North Dakota, South Dakota, Alaska, New Hampshire, Wyoming and various private businesses and Catholic schools.
• The Eleventh Circuit is also considering a petition for review challenging the ETS filed by Florida, Alabama and Georgia, two private businesses, two private schools, and two business associations.

Key elements of the ETS Disclosure 7 7 https://www.federalregister.gov/documents/2021/11/05/2021-23643/covid-19-vaccination-and-testing-emergency-temporary-standard 

Which employers must comply? 

Feasibility: ‘‘capable of being done’’ (Am. Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 509–510 (1981)). OSHA finds no technological feasibility barriers related to compliance with the requirements in the ETS.

All employers with 100 or more employees on November 5, 2021, are covered:

• Full-time and part-time employees at any location count toward vaccinated or unvaccinated status
• Independent contractors do not count
• Franchisor and franchisee are separate for coverage (franchisor counts “corporate” employees; franchisee counts “franchise” employees)
• If “integrated” for safety purposes, separate companies could be subject to the ETS if they have 100 or more employees combined
• Staffing agencies count only their employees
• Host employer, general contractor, and subcontractors count only their total number of employees, but they must count across all work sites
• If an employer had 100 employees on November 5 or gets to 100 employees any time after that while the ETS is in effect, the employer is covered, even if they later drop below the 100-employee threshold
• There are exclusions for healthcare facilities and Safer Federal Workforce Task Force COVID-19 Workplace Safety

Steps a covered employer must take

Feasibility: Surveys and employer policies reviewed by OSHA all support the agency’s finding that it is feasible for employers to determine their employees’ vaccination status and collect proof of vaccination.

Determining employee vaccination status:

• Implement a written vaccination mandate policy or, alternatively, a policy allowing employees to choose to get a vaccination or wear a face covering in the workplace and have weekly COVID-19 testing. Employers do not need to submit the plan to OSHA, but OSHA can request employers to produce it within 4 business days
• Create a vaccination status roster for all employees
• Develop a procedure for collecting vaccination status information and testing information

Section V. details the management of confidential medical records. These records must be maintained as confidential medical records and must not be disclosed except as required or authorized by the ETS or other federal law. The records are not subject to the retention requirements of 29 CFR 910.1020(d)(1)(i) but must be maintained and preserved while the ETS is in effect.

Testing for employees who are not fully vaccinated

• Employees who are not fully vaccinated by January 4, 2022, must undergo testing every seven days
• Employees who fail to meet testing requirements must be removed from the workplace, subject to certain limited exceptions
• Employees who telework or do not otherwise work in a physical location where others are present can be exempted from vaccination and testing requirements. But they must test negative within seven days of entering a physical workplace where others are present
• Employees who get COVID-19 do not have to test for 90 days from the diagnosis and must test negative, be released by health care provider, or meet CDC guidelines
• Employers are not required to pay for testing (subject to Wage and Hour Laws)

Employee records

• Employers must produce an employee’s vaccination or testing records within one business day to an employee or person authorized by an employee who requests them
• Employers must produce aggregate vaccination status data to requester by the next business day of the request
• Employers must provide a written vaccination mandate policy and the aggregate vaccination status data to OSHA within four business days of a request
• Employer must produce all other records required by the ETS to OSHA by the next business day after the request

Under paragraph 1910.501(l)(1) and (2) of the ETS, availability of records, by the end of the next business day after a request, the employer must make available, for examination and copying, the individual COVID-19 vaccine documentation and any COVID-19 test results for a particular employee to that employee and to anyone having written authorization.

OSHA does not believe that access to these records raises any serious confidentiality or privacy concern since the aggregate totals of fully vaccinated employees and total employees made available by request in paragraph (l)(2) do not contain any personal identifiable information or personal medical information.

Exceptions

Employers may make exceptions for employees who do not report to a physical workplace where others are present; show that they are medically contraindicated for vaccination; show that they medically require vaccination delay; or that they are legally entitled to reasonable accommodation.

Under the Americans with Disabilities Act and Title VII, employers are obligated to accept requests and engage in an interactive process with employees who have requested reasonable accommodations.

Insurance coverage implications

Should the ETS become effective on December 5th and January 4th, potential claims that we could see include:

Employment practices violations

United Airlines employees in Texas filed a suit alleging the company unlawfully denied religious and medical exemptions protected by federal law. Disclosure 8 8 https://www.reuters.com/business/aerospace-defense/us-judge-upholds-united-airlines-covid-19-vaccine-mandate-2021-11-08/  According to United, over 97% of its U.S.-based employees are vaccinated, and employees had clear deadlines to request religious and medical exemption. Disclosure 9 9 https://www.reuters.com/world/us/united-says-more-than-97-us-employees-are-vaccinated-2021-09-22/

Considering that a claim could be, among other things, a written demand for monetary or non-monetary relief, an Insured could receive a Claim for Loss by an employee for a Wrongful Employment Practice alleging:

• Wage and hour claims
• Violation of any federal, state or local laws (whether common-law or statutory) concerning employment or discrimination in employment
• Wrongful discipline
• Retaliation
• Failure to adopt adequate workplace or employment policies and procedures
• Employment-related libel or slander, humiliation or invasion of privacy

Directors & Officers

Directors have a duty to act in the best interest of the company. Depending on the context and situation, this duty can include acting and making decisions in the best interests of employees. Failure to adequately address what might be considered conflicting individual and collective rights could potentially result in claims against directors for breach of their duty.

As events related to COVID-19 vaccination continue, directors and officers (D&O) must be actively involved in key decisions impacting stakeholders. A company’s failure to comply with health and safety legislation may result in a D&O claim.

Directors and officers navigating the financial performance of their companies through this part of the COVID-19 pandemic response could be targets of litigation related to alleged hardship for employees or other stakeholders caused by the vaccine mandate.

Whether a company should adopt a mandatory vaccination policy depends on a number of legal implications and other factors. It is extremely important that directors and officers and companies have the relevant information to make the right decisions for their business and thus mitigate the risks for the company, its directors and other stakeholders.

Cyber insurance

The ETS will require companies to:

• Develop a procedure for collecting vaccination status and testing information
• Create a vaccination status roster
• Implement a written vaccination mandate policy and maintain those medical records
• Produce vaccination status data to the requester
• Provide a written vaccination mandate policy, among other requirements, to OSHA

Employers are currently evaluating how they plan to track employee vaccinations and comply with privacy rules. For example, will the information be saved in your data system? Do you have a system that can manage it well? Do you need to contract with a third-party provider? Who will have access to the data, as it may be analyzed to manage COVID-19 response and business activities?

Will employers that collect vaccination cards be subject to data breach notification laws? Health information is personal information that, if compromised, would trigger a breach notification obligation.

All of the above could potentially trigger a Cyber Insurance Policy.

What can McGriff do?

Noncompliance from our clients could result in penalties of up to $14,000 per violation. We are ready to assist in coverage and/or policy-related questions that could arise based on your individual policy terms and conditions.

If you have questions about this advisory, please contact:

Natalia Santiago
Senior Vice President and Claims Manager
Executive Risk Advisors
713.402.1410
NSantiago@McGriff.com

To learn more about McGriff Executive Risk Advisors, please contact:

David Sellars
Executive Vice President, Co-Division Leader
Executive Risk Advisors
404.497.7582
DSellars@mcgriff.com

Dusty Cahill
Executive Vice President, Co-Division Leader
Executive Risk Advisors
404.497.7537
DCahill@mcgriff.com