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Contractors in ‘Uncharted Water’ With Narrowed Vaccine Mandate

Aug. 30, 2022, 5:00 PM

An Eleventh Circuit order allowing President Joe Biden to enforce his Covid-19 vaccination mandate for federal contractors in some states is likely to sow further confusion among businesses with government pacts.

The US Court of Appeals for the Eleventh Circuit handed the administration a partial victory Aug. 26, narrowing a nationwide injunction from a federal court in Georgia last year blocking the mandate. The ruling, and a patchwork of previous injunctions blocking the mandate in more than two dozen states, have put contractors on edge as they await the government’s response to the Eleventh Circuit decision.

“Anybody who tells you what’s going to happen is really reading the tea leaves,” said Leigh Nason, a shareholder with Ogletree, Deakins, Nash, Smoak & Stewart, PC. “I think everybody is waiting to see what the reaction from the administration is. That is going to be the litmus test on where this goes.”

The appeals court agreed that Biden’s vaccine rule, which applied to roughly a quarter of the US workforce and affected companies that do business with the federal government, is too broad. It said the administration likely overreached its statutory authority in regulating contracts under federal procurement law.

The court also said the injunction a coalition of seven states and construction trade group Associated Builders and Contractors won in December was overbroad and wrongly extended relief to nonparties.

A US Department of Justice spokesperson declined to comment.

If the administration enforces the mandate in states not covered by ongoing litigation, attorneys said it would cause chaos and compliance headaches for contractors, because courts have either blocked enforcement in certain states or nationwide. The mixed rulings would also make it tricky for the government to enforce the mandate, they added.

“Until we get some finality in these cases, there could be a piecemeal kind of application of this mandate because the injunctions apply to certain groups,” said Tony Torain II, a shareholder at Polsinelli PC. “There’s uncertainty among contractors. And it’s important that contractors get counsel and make wise decisions going forward in this uncharted water, so they don’t end up at the wrong end.”

The mandate, initially set to take effect last January, is part of Biden’s broader plan to increase vaccination rates.

The plan included an emergency regulation from the US Occupational Safety and Health Administration covering private-sector companies with 100 or more employees, a shot requirement for health-care workers, and one for the federal workforce. The implementation of some of those mandates has been frozen as court challenges continue.

More Litigation

The injunction at issue in the Eleventh Circuit case only shields contractors in Alabama, Georgia, Idaho, Kansas, South Carolina, Utah, and West Virginia, as well as members of the Associated Builders and Contractors, which intervened in the case as a plaintiff.

The mandate is also enjoined by several states covered by the Fifth, Sixth, and Eleventh circuits that are currently mulling preliminary orders against Biden’s measure. The challenges are part of a string of suits filed by employers or Republican-led states over claims that Biden overstepped his executive power in demanding contractors to vaccinate their workers.

The Eleventh Circuit decision could potentially invite more lawsuits from other states or nationwide trade groups, according to some employment lawyers like Nason and Mike Eastman, an NT Lakis LLP partner and assistant general counsel for the Center for Workplace Compliance.

“It is entirely possible that other groups may look to do that to ensure they get some protections,” said Eastman. “Up until now, they hadn’t had to, but there might be some now who think that’s worthwhile.”

But other attorneys are skeptical about that legal strategy and questioned whether more litigation is warranted. The administration appears unlikely to implement the mandate unevenly, because several courts found that Biden likely exceeded his authority, said Shlomo Katz of Brown Rudnick LLP.

“I don’t see the government starting to enforce the mandate knowing ultimately it’s going to lose,” Katz added. “Americans like to sue but I don’t know if there’s a great need for that. There are enough reasons to think the government will not enforce it.”

Unfavorable court rulings on Biden’s action have not stopped some companies, including top contractors Leidos Inc., Alphabet Inc.'s Google, and Boeing Co., from implementing the shot mandate. But many others remain hesitant.

Torain said that at least one of his clients voiced concerns that requiring workers to get vaccinated would negatively affect employee morale and encroach on their religious beliefs.

“It’s really about the culture of the contractor,” said Torain, who noted that he told his client it could exempt certain workers from its mandate. “They were hesitant to do that because they didn’t want to have employee morale decrease. And that was their choice.”

Inconsistent Messaging?

Adding further confusion to the muddle of legal decisions is the government’s recent notice that federal agencies should cease Covid-19 testing requirements for unvaccinated employees. Agencies were also instructed to no longer ask employees, contractors, and visitors if they are vaccinated before entering federal buildings, under a new guidance issued by the Safer Federal Workforce Task Force.

Nason said that guidance not only undercuts the government’s legal arguments in court, but also fuels further confusion among contractors about what to do next.

“It really puts them in a little bit of a pickle,” Nason said. “I think everybody is so tired of this subject. That’s my practical observation.”

Before the case returns to the district court for further proceedings on the merits, the government could either ask the Eleventh Circuit for an en banc review of the split panel decision or seek intervention from the US Supreme Court.

Katz said the Supreme Court’s conservative majority appears to be pro-business, so an appeal there would likely come down in favor of contractors. He noted that the Supreme Court earlier this year blocked Biden’s vaccine requirement for large private employers, allowing it to proceed for workers in nursing homes, hospitals and other facilities that get Medicare and Medicaid funding.

To contact the reporter on this story: Khorri Atkinson in Washington at katkinson@bloombergindustry.com

To contact the editors responsible for this story: Keith Perine at kperine@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com