Back in June, tens of millions of Americans were getting vaccinated and it seemed that an end to the coronavirus pandemic was finally visible on the horizon. Biden predicted a “summer of freedom” in which we could once again get together, celebrate, and get back to work. Many employers took this optimism to heart and looked forward to welcoming workers back to the office in the fall, but instead the Delta variant took hold and dashed these hopes. Case numbers have nearly returned to their peaks seen before the vaccines became available, and hospitalizations and deaths rose during the summer months. Vaccinations stalled, with only 64 percent of the populations having received at least one dose of the vaccine and 55 percent being fully vaccinated. This slide back left employers feeling confused and frustrated, with many considering or taking more proactive steps such as employee vaccine mandates to keep employees safe, but such mandates bring with them a number of complexities.
The U.S. Food and Drug Administration advancing the Pfizer-BioNTech COVID-19 vaccine from emergency use authorization to full approval in late August enabled the White House to fight the pandemic more aggressively, and on September 9th President Joe Biden announced numerous new measures to combat the pandemic and the contagious Delta variant that impact employers. He signed executive orders requiring federal workers and contractors to get vaccinated against COVID-19, and directed the Occupational Safety and Health Administration (OSHA) to draft a new emergency rule requiring all businesses with 100 or more employees to ensure all of their workers are either tested for COVID-19 once a week or fully vaccinated. The federal employee vaccination mandate will apply to executive branch employees and members of the armed services among others, and applicable federal employees will not be provided the option for weekly testing in lieu of vaccination.
The OSHA emergency rule is currently being developed and is expected within the next few weeks. It could affect as many as 80 million Americans and will reportedly require large employers to provide paid time off for their workers to get vaccinated and recover from any vaccination-related side effects. They will have the ability to fine non-compliant businesses up to $14,000 per violation. Additionally, COVID-19 vaccinations will be required for more than 17 million health care workers at hospitals and other facilities that receive Medicare or Medicaid reimbursement. This requirement covers a majority of healthcare workers throughout the country. The emergency temporary standard will undergo an expedited review process before taking effect and will not involve public comment.
Currently, the only vaccination requirement for employers is an OSHA rule mandating that employers whose workers could be exposed to Hepatitis B offer free vaccination to employees, and workers who elect not to receive the vaccine are required to sign an acknowledgement. Additional details such as timing, cost and employer obligations or options with respect to employee non-compliance will be addressed within the mandate, but as it stands right now this will be unprecedented territory for many employers, in particular when it comes to risk mitigation. According to Hauser Insurance Group, being prepared and having written policies and procedures in place for complying with the new mandate will be critical, and they recommend consulting with legal counsel to prepare a policy and best practices for compliance, including guidelines for remote, temporary, and seasonal employees, vendors and contractors.
Hauser Insurance Group says that while this hardline stance on vaccines differs from the hands-off approach most employers took earlier this year, the curveball brought in by the Delta variant has necessitated employers to ramp up efforts to protect their organizations. At the end of the day, health experts and business leaders agree that when it comes to maintaining uninterrupted operations vaccination is the most effective way to limit the spread of the virus, but what does this mean in terms of risk management and insurance? Hauser Insurance Group believes that these are the potential coverage options that could prove useful in light of these recent developments.
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Employment Practices Liability (EPL)
Employment practices liability insurance covers businesses against claims by employees or third parties that their legal rights have been violated. This can include a number of allegations such as wrongful termination, harassment, discrimination, failure to hire, failure to promote, and failure to accommodate amongst others. According to Hauser Insurance Group, claims from employees that refuse to get vaccinated or undergo the required weekly testing will likely occur as a result of the new mandate. Additionally, there may also be claims alleging failure to accommodate remote working under the American with Disabilities Act. In order to get ahead of the problem employers should implement written corporate policies and corresponding disciplinary action, and ensure those policies once established are administered fairly. While employees may seek to make a claim against their employers alleging discriminatory or unfair treatment relative to their stance on vaccination and testing, with proper compliance to the mandate such claims should be defensible.
Workers’ Compensation (WC)
Workers’ compensation insurance helps cover costs related to work injuries such as disability benefits, missed wage replacement and death benefits. While this is often thought of in terms of physical injuries, it can also entail those who get sick from a work-related cause, and Hauser Insurance Group predicts that the biggest exposure for this type of coverage will derive from an employee potentially having an adverse reaction to the virus. Employers will now need to keep track of those that have been vaccinated and those that have not, and as a result an employee may be able to use those records to support a compensable claim should they contract COVID-19 in the course and scope of their employment. If several employees they work in close contact with are unvaccinated this may be an argument in their favor, but conversely evidence of a strong vaccination record could be used to refute a claim that the employee contracted the illness at work.
Directors and Officers (D&O)
Directors and officers liability insurance liability insurance covers directors and officers or their company or organization from allegations such as an error, misstatement, act, omission, neglect or breach of duty. Hauser Insurance sees a heightened exposure to regulatory fines and penalties as a result of the vaccination mandate. They note that most D&O policies exclude coverage for certain fines and penalties imposed by law or government agencies such as OSHA, but due to the potential fines for non-compliance it is still a good policy to review in light of the upcoming regulation changes.
The Biden administration will likely continue to take measures to increase vaccination rates, and it is times of uncertainty like these that can often leave companies most vulnerable. Whenever there is a drastic change in regulatory policies, employers should apply scrutiny to their organization and identify any new areas of increased exposure to risk.
