Covid-19 tests for unvaccinated workers will come out of some employers’ pockets even if President Joe Biden’s mandate doesn’t explicitly require it, creating one more incentive for companies to get employees shots.
The tests themselves will likely fall under state laws in places like California and Illinois that require employers to reimburse workers for job-related expenses, employment lawyers said. And the time it takes to get tested may be covered by federal or state wage law.
The issue of who pays for testing is a crucial concern for businesses as the Occupational Safety and Health Administration develops an emergency temporary standard requiring employers with at least 100 workers to either require vaccinations or weekly testing. At a median cost of $148 for each Covid-19 test, according to the Kaiser Family Foundation, frequent testing could quickly add up for employers.
OSHA’s ultimate decision on who’s responsible for testing costs will reflect a strategic decision on how to boost lagging vaccination rates, lawyers said.
“The Biden administration’s goal is to get people vaccinated, not more testing,” said Kate Bischoff, an attorney who runs tHRive Law & Consulting LLC.
OSHA could put the financial burden on employers to nudge them into mandating vaccination rather than testing, Bischoff said. Other employment lawyers, however, suggested that giving companies the leeway to make workers pay for testing would serve as an incentive to get the free, widely available vaccine.
However, OSHA has ordered employers to pay costs related to other health and safety regulations. The agency’s rule on personal protective equipment, for example, says that workers will get most gear at no expense.
OSHA didn’t respond to telephone and email requests for comment.
State reimbursement requirements could kick in if OSHA doesn’t direct employers to pay for Covid-19 testing. California, Illinois, Iowa, Montana, New Hampshire, and North Dakota have provisions in their wage laws that may cover tests, according to a Bloomberg Law review of state wage requirements.
In addition, states like Kentucky, New Jersey, and Pennsylvania bar companies from charging employees or applicants for medical testing.
Along with the pending OSHA rule, the White House’s pandemic plan announced in September included a $2 billion investment to buy tests, a partnership with retailers to sell tests to consumers at cost, and an expansion of free testing.
OSHA’s rule could allow for at-home testing—potentially providing a way for companies to minimize the time it takes for workers to get tested, which can be its own expense separate from the tests themselves, said Samantha Monsees, an attorney with Fisher & Phillips LLP.
Pay for Testing Time
The U.S. Supreme Court’s 2014 decision in Integrity Staffing Solutions v. Busk set the legal framework for determining whether the time it takes for a work-related test must be paid under federal law, lawyers said. Activities outside of a regular shift are compensable if they’re “integral and indispensable” to employees’ principle work duties.
The Labor Department has signaled that it views testing for public-facing workers as meriting payment. The department’s Wage and Hour Division said in guidance that a grocery store cashier who interacts with customers would likely require payment.
That represents an expansive interpretation of whether testing must be paid under the Fair Labor Standards Act—an interpretation courts may not agree with, said John Lassetter, an attorney with Littler Mendelson P.C. Post-Busk decisions on payment for time spent donning and doffing protective gear suggest that testing wouldn’t automatically be compensable due to the OSHA regulation, he said.
“Just because the government requires it wouldn’t necessarily render it integral and indispensable under the Busk test,” Lassetter said. “The fact that the government requires it may make it more integral, but not indispensable.”
Some state wage laws could require payment for testing even if the FLSA doesn’t. The analysis on whether testing time outside of work requires compensation is similar to that for other activities, like pre-shift security screening or temperature checks, attorneys said.
Practical consequences of mandatory testing could raise other wage law issues, said Jeffrey Ruzal, an attorney at Epstein Becker & Green P.C. A worker who arrives at work but is sent home after a positive Covid-19 test could be owed pay under a state or local predictive scheduling law, he said.
Taxes and Health Insurance
Companies won’t find much help from the tax code to defray testing costs, aside from credits for paid time-off for testing. Health insurers generally aren’t required to cover the costs of employment-related testing, though businesses may be able to shift those expenses to insurance.
While companies have refundable tax credits available for employees’ paid time-off to get tested, there aren’t any related proposals to directly blunt the costs of testing, said Gordon Hill, an attorney for Hill Ward Henderson. The administration’s push for vaccinations over tests means that option is unlikely.
Health insurers are unlikely to voluntarily cover the costs of weekly testing, health benefits attorneys said.
Federal guidance in June 2020 detailed when group health plans and health insurance issuers must cover Covid-19 testing under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act.
That includes when a patient’s attending health care provider deems the test to be medically necessary and that attending provider doesn’t need to be “directly” responsible for providing the patient care. Plans don’t have to cover testing for surveillance or employment purposes, the guidance said.
These provisions, which mandate testing coverage, remain in effect as long as there is a public health emergency.
But there may be a way around the exception for insurance payment of employment-related testing.
Many big Covid-19 testing vendors have a telemedicine service associated with their screening that requires patients to fill out a questionnaire in advance, which then generates a doctor’s order telling the person to get tested, said Ben Conley, a partner at Seyfarth Shaw LLP, who specializes in employee benefits and the Employee Retirement Income Security Act.
“The questionnaire is pretty all encompassing,” he said. “It’s pretty hard to answer the questionnaire in a way that does not generate the need to have a Covid test.”
It’s a way employers could get insurers to pay for testing if the employee can generate a doctor’s order.
“I don’t even know that it’s necessarily fraudulent in nature,” Conley said. “A doctor is likely willing to and can plausibly issue an order for people to get tested for pretty much whatever reason.”
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