Executive Orders Place US Federal Contractors and Employers at Forefront of New COVID Mandates

In July 2021, the White House tried the carrot approach to curbing the spread of COVID-19 by encouraging vaccinations among US federal employees and contractors through either proof of vaccination or COVID testing and following required safety protocols such as mask wearing and physical distancing.¹ Dissatisfied with that approach, the president issued two new Executive Orders (“EOs”) on September 9, 2021, directed at the federal workforce and federal contractors, broadly defined, (and their supply chain). The EOs require COVID vaccinations for federal and contractor employees, as well as the implementation of other safety protocols for these groups.² Furthermore, in the commercial sector, employers with 100 or more employees will be required to ensure their employees are vaccinated or tested weekly.³

Executive Order on COVID Safety Protocols for Federal Contractors

Executive Order 14042 (Ensuring Adequate COVID Safety Protocols for Federal Contractors) directs federal contractors and subcontractors (“contractors”) to provide “adequate COVID-19 safeguards to their workers performing on or in connection with a Federal Government contract or contract-like instrument” (emphasis added).⁴

The “on or in connection with” standard makes clear that the EO is intended to cover as many contractor employees as possible. The standard’s phrasing mirrors the terminology in the Department of Labor’s proposed rule “Increasing the Minimum Wage for Federal Contractors,” 86 Fed. Reg. 38816, 38823. As explained there, a “worker performs ‘on’ a contract if the worker directly performs the specific services called for by the contract and [] a worker performs ‘in connection with’ a contract if the worker’s work activities are necessary to the performance of a contract but are not the specific services called for by the contract.”

Federal agencies and executive departments will enforce contractor compliance through the inclusion of a mandatory contract clause, which prime contractors and higher-tiered subcontractors must flow down to all tiers of subcontractors. To this end, the EO directs the Federal Acquisition Regulatory Council (“FAR Council”) to amend the Federal Acquisition Regulation (“FAR”) to include this clause for inclusion in FAR-based contracts starting on October 15, 2021, which requires contractors to comply with all safety protocol guidance for “covered work place locations.” Prior to this rulemaking, by October 8, 2021, the FAR Council will develop a clause and recommend that federal agencies use their deviation authority under the FAR to include this clause.⁵ Also by October 8, the EO directs federal agencies to “take steps, to the extent permitted by law,”⁶ to include the FAR clause in non-FAR contracts (e.g., other transaction authority agreements) entered into on or after October 15, 2021.⁷

The contemplated clause will direct contractors “to comply with all guidance for contractor and subcontractor workplace locations published by the Safer Federal Workforce Task Force” (“Task Force”) as approved by the Director of the Office of Management and Budget (“OMB”).⁸ This clause will apply to new contracts, solicitations, extensions or renewals of existing contracts, and exercises of options on existing contracts entered on or after October 15, 2021.

With respect to contracts entered into prior to October 15, 2021, the EO “strongly encourages” federal agencies to implement the safety protocols published by the Task Force.⁹ Since the language of the clause (as well as the Task Force’s guidance) is not yet published, it is uncertain what the risks of contractor noncompliance will be or how the government will enforce the clause (e.g., a separate certification of compliance). However, contractors should be aware of the government’s right to terminate contracts for default for a contractor’s failure to perform its contractual obligations.¹⁰ Such a failure may also be a cause for debarment under FAR § 9.406-2(b)(1). In addition, contractors also must be concerned with potential false certifications of compliance, explicit or implicit, and potential False Claims Act liability and resulting penalties and treble damages that may ensue. Accordingly, contractors should expect to be under scrutiny from the government and whistleblowers to comply with the Task Force’s guidance as implemented by the contract clause.

The EO applies to (i) procurement contracts for services, construction, or a leasehold in interest in real property; (ii) contracts covered by the Service Contract Act; (iii) contracts for concessions; and (iv) contracts in connection with federal property or lands and related to offering services to federal employees, their dependents or the general public.

This EO specifically exempts (i) grants, (ii) contracts or agreements with Indian Tribes, (iii) contracts and subcontracts below the simplified acquisition threshold ($250,000), (iv) subcontracts for the provision of products and (v) employees who work outside the United States or its outlying areas.

The Task Force has not yet issued its guidance (due no later than September 24). This guidance will provide definitions for relevant terms, the explanation of the required protocols and any exceptions to the Task Force guidance. For example, the EO directs compliance toward contractors’ “workplace locations and individuals in those locations.” As written, this EO would appear to potentially cover employees who work from home since the home could be a “workplace location,” and the EO may be seen to cover those company employees not performing on government contracts but, instead, commercial work as those employees would be at the same “workplace location.” We expect the Task Force to clarify these issues and definitions with its forthcoming guidance.

We expect the Task Force guidance to substantially mirror those safety protocols required at federal worksites. These safety protocols can be found at the Safer Federal Workforce website. Based on the current guidance at that website, we expect the Task Force to set the following protocols for contractors:

First, we expect the safety protocols to require vaccines for contractor employees at workplace locations. Moreover, the guidance should provide deadlines by which contractor employees must be vaccinated; deadlines for new employees to be vaccinated as well; and the required vaccination documentation, which may include the record of immunization from a healthcare provider or pharmacy or medical records documenting the vaccination.

Second, we expect the safety protocols to require contractor employees to comply with mask wearing and physical distancing.

• These requirements will be consistent with CDC guidance.
• In areas of high or substantial transmission, all contractor employees will be required to wear a mask, and in areas of low transmission, vaccinated people will not be required to wear a mask.
• With respect to physical distancing, fully vaccinated people do not need to physically distance regardless of the level of transmission, whereas people not fully vaccinated must wear masks regardless of the transmission level and must physically distance regardless of the transmission level.

We expect that contractors will be able to find the forthcoming Task Force guidance and answers to any additional FAQs at the Safer Federal Workforce site once available.

Executive Order on Requiring Coronavirus Disease 2019 Vaccination for Federal Employees

Executive Order 14043 requires this population to be vaccinated but subject to “exceptions required by law.”¹¹ Importantly, the EO removes the July 2021 guidance that allowed for a weekly testing option for those employees who did not want to take the vaccine. On September 17, 2021, the administration announced that federal employees must be fully vaccinated by November 22, 2021.¹²

Vaccine Mandates for the Commercial Sector

As stated above, private sector employers with 100 or more employees must ensure their employees are vaccinated or produce a negative COVID test on a weekly basis. The president directed the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) to develop a rule to implement this emergency temporary standard (“ETS”), which “will impact over 80 million workers in private sector businesses.”¹³

OSHA’s authority to issue an “emergency temporary standard” comes from 29 U.S.C. § 655(c), which allows a standard to “take immediate effect upon publication in the Federal Register” upon a determination that “employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful or from new hazards” and “that such emergency standard is necessary to protect employees from such danger.”

According to the Congressional Research Service, in OSHA’s 50-year history, it has only used this authority 10 times. Of these 10 instances, three ETS’s went unchallenged, and with respect to the other seven, courts have stayed or vacated four rules and partially vacated one.¹⁴ The White House can expect that this ETS will face judicial scrutiny as well.¹⁵

What the Orders Mean for Contractors

The EO relating to federal contractors and OSHA’s ETS present complex legal issues for contractors and commercial sector employers, especially in addressing vaccine mandates. These issues will include employees’ claimed exceptions to the mandate and also employees’ refusal to be vaccinated. Both concerns raise the prospect of disciplinary employment actions and ensuing litigation, as well as increasing existing labor shortages in some industries. Contractors also must account for the additional costs in enacting the Task Force’s safety protocols and guidance, which will follow in the coming weeks. Moreover, the EO does not distinguish between small businesses and other businesses but instead applies to all contractors. Small businesses may encounter relatively greater burdens in implementing these safety protocols than larger businesses.

Finally, the White House can expect court challenges to these EOs and OSHA’s ETS in the near future, which may ultimately impede its efforts to curb the spread of COVID. For example, several governors have said they are reviewing legal options to this end in what they view as an illegal overreach of the president’s authority.¹⁶ In addition, business groups are divided on their support of the president’s bold actions. The AFL-CIO and the Business Round Table, composed of chief executive officers from some of the largest US companies, support the mandates. Alternatively, other groups such as the Chamber of Commerce, the Consumer Brands Association and the Retail Industry Leaders Association are still reviewing and seeking clarification on the president’s actions to assess the impact on businesses, including increased costs due in part to weekly testing.¹⁷