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Delta Air Tells Workers to Get Covid Shot or Pay $200 Charge (1)

Aug. 25, 2021, 6:18 PM

Delta Air Lines Inc. will impose a $200 monthly surcharge on employees who aren’t vaccinated against Covid-19, becoming the first major U.S. company to levy a penalty to encourage workers to get protected.

The new policy was outlined in a memo from Chief Executive Officer Ed Bastian, who said 75% of the carrier’s workers already are vaccinated. Increasing cases of coronavirus linked to a “very aggressive” variant are driving the push for all employees to get the shots, he said in the note to employees Wednesday.

Read More: Get Shots or Get Out, U.S. Employers Are Telling Workers

The fee applies to employees in the airline’s health-care plan who haven’t received shots by Nov. 1. The company also will require weekly testing for employees who aren’t vaccinated by mid-September.

Delta stopped short of a mandatory vaccine requirement like the one imposed earlier this month by United Airlines Holdings Inc. and other companies. Goldman Sachs Group Inc., Alphabet Inc.’s Google and Facebook Inc. also have announced vaccine requirements.

WATCH: Delta Air Lines Inc. employees will face a $200 monthly surcharge if they aren’t vaccinated against Covid-19.
Source: Bloomberg

Delta is confident that its approach will succeed in moving its worker vaccination rate beyond 75%, a spokesman said when asked why the company didn’t impose a mandate. The potential penalty is “well within” legal parameters, he said.

While vaccine requirements have increased since Pfizer Inc. and BioNTech SE’s vaccine received full Food and Drug Administration approval on Monday, employers are treading carefully for fear they’ll hurt morale and spur defections in a tight labor market. Some consultants doubt that surcharges will be as persuasive as demanding inoculation, though the size of Delta’s surcharge could change that calculus.

“Vaccine hesitant employees are likely to see this as a mandate or a punitive measure, as it creates an additional annual cost of $2,400 for that employee,” said Brian Kropp, chief of human-resources research for the Gartner consulting firm.

The fee for unvaccinated employees is “to address the financial risk” from their decision, Bastian said. The average hospital stay for Covid-19 patients has cost Delta $50,000 each, he said.

Ed Bastian
Photographer: Christopher Goodney/Bloomberg

“With this week’s announcement that the FDA has granted full approval for the Pfizer vaccine, the time for you to get vaccinated is now,” Bastian said.

American Airlines Group Inc. and Southwest Airlines Co. continue to encourage employees to be vaccinated but haven’t imposed mandates.

Delta was the best performer on the S&P 500 Airlines Index, rising 1.9% to $41.30 at 2:09 p.m. in New York.

In May, Delta became the first major U.S. airline to require coronavirus shots for new employees. The airline had agreed not to mandate vaccinations for its pilots, the only major work group represented by a union, until at least Nov. 21. The pact also provided incentives for pilots to be vaccinated.

Read more: Worker Support Grows for Harsher Vaccine Stances From Employers

Delta would have to negotiate a new agreement “over any employer-mandated vaccination for pilots,” the Air Line Pilots Association said in a statement. Union leadership “has consistently advocated to maintain the right of each individual pilot to consult with his or her medical provider regarding Covid-19 vaccinations or booster doses.”

Under the policy announced Wednesday, any worker not fully vaccinated by Sept. 12 will be required to take a weekly coronavirus test “while community case rates are high,” Bastian’s memo said.

Employees who aren’t vaccinated must wear masks in all indoor settings, effective immediately. Delta also said that starting Sept. 30, the airline would preserve full pay for workers who have received both shots but who still get sick and may end up on short-term disability.

(Updates with company comment in fifth paragraph. In an earlier version, the company corrected its average cost for hospitalization.)

--With assistance from John Tozzi and Matthew Boyle.

To contact the reporter on this story:
Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editors responsible for this story:
Chester Dawson at cdawson54@bloomberg.net

Tony Robinson, Kevin Miller

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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