Update on Challenges to Federal Contractor Mandate

By Fern Fleischer-Daves

While we remain focused on the legal challenges now consolidated at the Sixth Circuit Court of Appeals, quite a lot has been going on with regard to the Federal Contractor Mandate which is facing its own set of challenges.

Did you recently receive a request to amend an existing federal contract? 

If so, you are not alone!  Over the past few weeks, federal administrative agencies have been busy sending emails to tens of thousands of federal contractors seeking to amend existing federal contracts by implementing a COVID-19 vaccination mandate pursuant to guidance issued by the Safer Federal Workforce Taskforce.  These efforts are now being tracked through a new online interactive dashboard reflecting whether or not the 17,000+ contracts currently administered by GSA have been amended.  The contracts in this publicly accessible database are classified as  “Accepted”, “Closed/Cancelled”, or “Pending.”  Meanwhile, federal agency contracting officers are being strongly encouraged to check this database before placing new orders.

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Needless to say, there are potentially serious consequences for a current federal contractor who fails to respond or declines to accept the vaccination mandate.  GSA has warned that company names flagged as “Closed/Cancelled” in this database may be removed or hidden in other federal contracting tools which will make it difficult if not impossible to get any new orders on existing contracts. Recent solicitations for new federal contracts have the clause implementing EO 14042 already included in the terms and conditions.

Employees of federal contractors challenge EO 14042

While several cases have been filed to challenge the President’s authority to mandate vaccinations for federal employees and/or contractors, so far, none have secured a stay of EO 14042.

In Altschuld v. Raimondo, employees of more than a dozen different federal agencies and two unnamed government contractors are challenging both Executive Orders 14042 and 14043.  Last week, Judge Chutkan in the DC Circuit Court held that plaintiffs failed to show irreparable harm, since they had all requested religious exemptions from the vaccination mandate, so they are not entitled to a preliminary injunction.  Explaining further, the Court noted that:

“this court is guided by the century-old standard that mandatory vaccinations are a suitable expression of the public interest in health and safety. See, e.g., Does 1-6 v. Mills, No. 21-1826, 2021 WL 4860328 at *11 (1st Cir. Oct.19, 2021)application for injunctive relief denied sub nom, No. 21A90, 2021 WL 5027177; see also Jacobsen v. Mass.,197 U.S. 11, 31 (1905) (“Nor, . . . can anyone confidently assert that . . . [mandatory vaccinations] have no real or substantial relation to the protection of the public health and the public safet​y”). Plaintiffs have failed to allege any reasons for this court to depart from this well-settled legal principle and are not entitled to injunctive relief.

Now that the deadline for federal contractor employees to be fully vaccinated has been delayed, courts may continue to deny emergency relief for want of ripeness for two reasons.  First, a federal contractor employee could wait until January 4th to get the Johnson and Johnson shot, so there is really no urgency.  Second, the Safer Federal Workforce Task Force issued guidance indicates some flexibility on enforcing this new contract term:

“Where covered contractors are working in good faith and encounter challenges with compliance with COVID-19 workplace safety protocols, the agency contracting officer should work with them to address these challenges. If a covered contractor is not taking steps to comply, significant actions, such as termination of the contract, should be taken.”

On October 27th, one of the chairs of Task Force, Jeff Zients, said: “You know, to be clear, the requirements for federal workers and contractors will not cause disruption. … The other piece of this is that vaccination requirements for federal workers and contractors—there are still weeks until we reach those deadlines. And it’s important to remember that those deadlines are not cliffs.”  Additional FAQs posted by the Task Force indicate that covered contractor employees who have pending requests for accommodation may continue to work so long as they are masked and observe other COVID-19 safety protocols even after the new January 18, 2022 deadline.

States, Employers and Employees challenge EO 14042 

Less than a week after President Biden announced the Path out of the Pandemic Plan, and issued Executive Order Executive Order (EO) 14042Arizona was first in line to file a federal lawsuit challenging the President’s authority to require anyone to be vaccinated.  An amended complaint was filed that narrowed the claims to equal protection violations for federal workers and contractors.   On November 10th, Judge Liburdi (US District Court Arizona) denied Arizona’s motion for a preliminary injunction to block both EO 14042 and EO 14043, and ordered Arizona to amend the complaint again, and file a new motion for preliminary relief by November 19th.  During the hearing, he commented “You seem to want me to declare this unconstitutional …I don’t think I’m going to do that.’’  Judge Liburdi also questioned whether the State has standing and whether he even has the authority to issue a nationwide injunction.

At last count, 27 states have filed challenges in 7 Federal District Courts challenging EO 14042 including: Dist Ct Arizona ED KentuckyED Missouri, Southern Dist Georgia, MD Florida,  Southern Dist Texas and Western Dist Louisiana .  In some, but not all, of these cases, private companies and even some individual employees who work for federal contractors have joined the states in objecting to the vaccination mandate.  These parties are challenging the President’s authority to require that employees of state agencies, employees of companies that do business with the federal government, and employees of their subcontractors be vaccinated for COVID-19.  The various parties assert violations of the Administrative Procedure Act, the Federal Property and Administrative Services Act Competition in Contracting Act, and/or the Spending Clause, arguing that the actions of the Office of Management and Budget and the Federal Acquisition Regulation Council are arbitrary and capricious.  In one complaint, the plaintiff argues that the underlying justification for the vaccination mandate to “improve procurement efficiency by reducing absenteeism and decreasing labor costs is blatantly pretextual and a trojan horse for regulation of public health.”

Several litigants rely on the U.S. Supreme Court decision in Alabama Association of Realtors v. HHS, in which the Court concluded that there are limits on Presidential powers even during a worldwide pandemic in holding that HHS does not have the authority to issue a national moratorium on residential evictions.  141 S. Ct. 2485 (2021) .  This argument, however, has been raised before and rejected when litigation was brought challenging the CDC’s COVID-19 related orders restricting the cruise industry.

The first preliminary injunction of the federal contractor mandate is scheduled to be heard by the E.D. Kentucky on November 18th.  Motions for preliminary injunction have been filed in three other cases.

In Texas’ motion for a temporary restraining order and preliminary injunction, the State disputes the stated purpose of the federal contractor mandate (to improve economy and efficiency by reducing absenteeism and decreasing labor costs in federal contracting), characterizing it as “pretense” and “a trojan horse for regulation of public health.”  The State seeks immediate relief to avoid the “staggering economic loss” of prime contracts valued at $73+ billion and subcontracts of $20+ million, and significant costs for payment of unemployment and increased Medicaid expenses that State will incur when its citizens face the “horrible reality” of being “forced” into unemployment because the mandate “conditions their livelihoods on the violation of a religious or personal belief” including employees of Pantex, American Airlines, and general contractors.

Texas asserts that the President acted ultra vires in issuing EO 14042, violated the Procurement Act (particularly in the extension of the mandate to subcontractors), and that the FAR Counsel acted ultra vires by not providing for adequate public notice and comment. Further, the State argues that if the President’s actions are authorized under the Procurement Act, this constitutes an unconstitutional delegation of authority, and that the mandate violates the Spending Clause.

Additionally, Southwest Airlines pilots challenged their employer’s COVID-19 policies and EO 14042.  Chief Judge of the US District Court (N.D. Dallas) denied the motion for injunctive relief and dismissed the entire case against Southwest Airlines because the pilot’s claims are unripe, they failed to “make every reasonable effort to settle such dispute either by negotiation or with the aid of any available governmental machinery of mediation or voluntary arbitration,” and the dispute is subject to compulsory and binding arbitration as a “minor dispute” under the Railway Labor Act.

Other judges may just dismiss motions to for injunctive relief for lack of ripeness now that the deadline to be “fully vaccinated” is January 18, 2022.  Or they may view EO 14042 as a matter of contract law — that any contractor may object to a federal agency’s contract terms and conditions, and if so they may choose not to do business with the federal government.  In the meantime, the notice and comment period for the FAR amendment will close.  In the new year, the FAR Council may adopt the original proposed text of the contract term, change it in some way, or delay a decision until the pandemic has been declared “over”.

So what can/should federal contractors do now?

While it is possible that EO 14042 will be invalidated by the courts, doing nothing while you wait for a favorable court ruling is likely not the best strategy because your company may find itself in a particularly disadvantageous condition if the challenges fail.  Fortunately, employers can several steps now that will put them in a better position to comply just in time if the federal contractor mandate withstands the weight of these challenges.

10 Steps Federal Contractors Should Take 

  1. Confirm vaccination status of any employees that work on-site at any federal building or property – documentation (either proof of vaccination status or a recent negative COVID-19 test) is currently required to gain admittance
  2. Look for updates to the guidance issued by the Safer Federal Workforce Task Force
  3. Review existing vaccination policy and procedures for any gaps
  4. Designate a coordinator for COVID-19 workplace safety efforts at your company’s covered contractor workplaces
  5. Post signs with requirements for vaccinated and unvaccinated persons at your workplaces
    • Sample signage for areas of high or substantial levels of community transmission can be found here.
    • Sample signage for areas of low or moderate levels of community transmission can be found here.
  6. Require employees and visitors to comply with masking and physical distancing in workplaces you control
  7. Train managers and HR professionals on handling accommodation requests related to COVID-19 vaccinations
  8. Set up systems to confirm employee vaccination status –
    • current employees by January 18, 2022 (though that could change again)
    • after that date, all covered contractor employees must be fully vaccinated by the first day of the period of performance on a newly awarded covered contract, and by the first day of the period of performance on an exercised option or extended or renewed contract
    • employees with pending requests for a medical or religious accommodation may continue to work so long as they observe masking, social distancing and other COVID-19 safety protocols
    • employees with approved accommodations may be allowed to continue to work on a federal contract if permitted by the federal agency’s contracting officer
    • note that self-certifications are no longer acceptable.
  9. Start working on the strategy to flow down vaccination requirements to your subcontractors
  10. Keep your employees informed

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