What’s Next for Employers After SCOTUS’ Decisions on the OSHA ETS Mandate and the CMS Rule?

On January 13, 2022, the U.S. Supreme Court reinstituted the stay of the federal vaccine or testing mandate, effectively killing the rule that would have obligated all companies with more than 100 employees to require their employees to be fully vaccinated against COVID-19 or undergo weekly testing. Concurrently, the Court upheld a similar mandate applying only to certain healthcare employers.

The 100+ Employee Vaccination or Weekly Testing Mandate

Procedural posture and decision

The Biden Administration’s proposed rule, previously reported by us here, which was promulgated as an Emergency Temporary Standard (“ETS”) by the Occupational Health and Safety Administration (“OSHA”), was quickly challenged by many states and businesses throughout the country and stayed by the Fifth Circuit Court of Appeals. The cases were then consolidated and reassigned to the Sixth Circuit which, as discussed here, reviewed and reversed the Fifth Circuit’s stay on December 17, 2021, finding that the ETS was likely consistent with OSHA’s statutory and constitutional authority. The Sixth Circuit’s decision was quickly appealed to the Supreme Court in NFIB v. Dept. of Labor. The Court granted an expedited hearing date to address both the OSHA ETS, as well as the CMS vaccination rule discussed below.  

Not surprisingly, the Supreme Court’s 6-3 decision invalidating the OSHA ETS turned on a conservative majority, with Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan dissenting. A copy of the decision is attached here. 

Calling the ETS “a significant encroachment into the lives – and health – of a vast number of employees,” the Court held that OSHA is empowered “to set workplace safety standards, not broad public health measures.” It then determined that, while COVID-19 is a risk that occurs in many workplaces, it is not an occupational hazard in most, because it is a “universal risk” found also at schools, sporting events, and everywhere else. It reasoned that allowing OSHA to regulate such a universal hazard, without the express authority from Congress, would expand OSHA’s jurisdiction too far. After finding that there was little likelihood of success on the merits, the Court ordered a stay, without addressing the other factors (e.g. whether the rule would impose irreparable harm or consideration of the public interest). 

The Court left open the possibility that in some future rule OSHA could regulate occupation-specific risks related to COVID-19, where the virus poses a special danger due to the particular nature of the job, such as researchers who work with the virus. The Court took issue with OSHA’s “indiscriminate approach” and labelled the ETS as a “blunt instrument.”

Moving forward for employers

The Supreme Court’s decision essentially ends the saga and sounds a death knell for the OSHA ETS. Because the Court was acting only on the stay order, and this was not a decision on the merits, OSHA could continue in the Sixth Circuit. But the broad language of the decision sends a strong message on the limited authority OSHA has over infectious diseases and the Sixth Circuit would have to give deference to the Supreme Court’s reasoning in any further litigation. Further, a majority of the Supreme Court has signaled its opinion on the merits. As such, OSHA may very well withdraw the ETS, and its proposed permanent rule, which would moot the ongoing legal battle on OSHA’s mandatory vaccination or testing rule.

However, the Biden Administration is not without options. For one, it could try and pass federal legislation promoting or mandating vaccine or testing requirements. Given the current political makeup up in Congress, such efforts face significant challenges.

Alternatively, the Biden Administration could potentially ramp up enforcement under OSHA’s General Duty Clause, which requires employers to provide a workplace free from recognized hazards that are likely to cause death or serious physical harm. Although the Supreme Court essentially took the vaccine mandate or any broad national requirements (e.g. masking or testing) out of OSHA’s toolbox, OSHA may crack down in other ways, by issuing fines for failure to implement and follow OSHA’s recommended guidelines for safe workplaces. This includes quarantine and isolation procedures, masking requirements, social distancing practices, and other COVID-19 preventative measures that reflect guidance from the Center for Disease Control and other regulatory agencies. While OSHA rules do not require any specific measures, OSHA said in July 2021 that an employer’s failure to follow guidelines could result in violation of the General Duty Clause. As such, employers should not assume that OSHA will be exiting the COVID-19 arena altogether and should be prepared for the agency to continue enforcing policies that keep employees safe from the spread of COVID-19.

Without a national OSHA rule, there is no doubt that there will be a growing patchwork of state and local vaccination and testing laws cropping up around the country. This will certainly make it even more complicated for multi-state employers, as well as those employers with employees who travel between jurisdictions. As a result, employers must still be aware of state and local vaccination requirements, as well as any industry-specific vaccination requirements. But absent state or local requirements or restrictions, employers are back to where they were in September 2020. They have the flexibility to adopt COVID-19 safety rules for some or all employees, including vaccine mandates or testing, subject to EEOC or state discrimination laws. But employers have lost the ability to say these rules are necessary to comply with federal law.     

The Healthcare CMS Mandate

Procedural posture and decision

On November 5, 2021, the Secretary of the Department of Health and Human Services (“HHS”) issued an interim final rule requiring facilities receiving funding from the Centers for Medicare & Medicaid (“CMS”) to ensure all in-person staff be vaccinated against COVID-19. Multiple states successfully challenged the rule in federal district courts, where it was preliminarily enjoined. Both the Fifth and Eighth Circuit Courts of Appeal denied attempts by the government to overturn the injunction and reinstitute the rule, though the Fifth Circuit limited application of the injunction (thereby allowing the vaccine mandate to stand) in states that were not parties to the lawsuit. But, the Supreme Court decision to stay the injunctions in Biden v. Missouri allows the rule to remain in place throughout the country.

The Court noted that, unlike the lack of authority previously granted to OSHA, Congress has authorized the HHS to impose conditions on the receipt of Medicaid and Medicare funds that are “necessary in the interest of the health and safety of individuals who are furnished services.” It noted that COVID-19 is particularly deadly for Medicare and Medicaid patients and the Secretary of HHS’ determination that the vaccine mandate will substantially reduce the likelihood that healthcare workers will contract the virus and transmit it to patients, conforms within the statute granting HHS authority to impose certain conditions on the receipt of Medicaid and Medicare funds. The Court further held that the rule is not arbitrary and capricious because the Secretary of HHS articulated satisfactory explanations for the reasoning behind the rule’s requirements.

The Court ruled 5-4 in favor of staying the injunctions, thereby permitting the rule to take effect. Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, and Amy Coney Barrett dissented.

Moving forward for employers

With the CMS rule reinstituted, applicable healthcare employers must ensure covered employees (other than those entitled to religious or medical exemptions) receive a first dose of the COVID-19 vaccine by January 27, 2022, and are fully vaccinated no later than February 28, 2022. Covered employers must also enact policies that comply with the rule by January 27, 2022.