Michigan businesses grapple with next steps under vaccine-or-test rules

Beginning Jan. 4, millions of unvaccinated Americans will be required to be fully vaccinated against COVID-19, undergo weekly testing — or likely get dumped from their jobs.

That excludes people who work for companies of fewer than 100 people, people with religious or medical exemptions, and people who work remotely or exclusively outdoors. Businesses will have 30 days to put together plans for their work.

The rule is the most sweeping effort to date by President Joe Biden to push Americans to get vaccinated and will have broad implications for businesses and workers — especially the 2.5 million Michiganians who remain unvaccinated — and it likely will draw legal challenges.

Most of Michigan’s largest employers told The Detroit News Thursday that they plan to comply with the rule and emphasized their support for vaccination. But the state-level business organizations that represent them raised concerns the rule could impose new costs and push employees to quit amid a tight labor market.

The emergency temporary standard (ETS) issued by the Department of Labor’s Occupational Safety and Health Administration applies to businesses with more than 100 employees. Combined with a similar rule applying to health care workers, the policy is expected to cover two-thirds of the U.S. labor force.

Brad Williams, vice president of government relations for the Detroit Regional Chamber, said increasing the vaccination rate is the best way to get through the pandemic. But added that “one-size-fits-all approaches don’t work for everyone” and called upon the Legislature to appropriate funds for businesses to implement the rule.

Rich Studley, CEO of the Michigan Chamber of Commerce, was more critical, saying: “For Michigan businesses, what ETS really stands for is a federal mandate that is excessive, time-consuming and short-sighted. We believe the Biden-Harris administration made a serious mistake developing this very broad, very detailed overreaching federal regulation in secret.”

Michigan AFL-CIO president Ron Bieber, however, praised the decision as a crucial move to keep workers safe: “Steps like this that ensure our members and hardworking families are protected during the COVID-19 pandemic are just common sense.”

The regulations announced Thursday provide details to a policy Biden unveiled in early September, arguing that while 70% of American adults are vaccinated, the remaining unvaccinated people are preventing a full recovery from the virus that has to date killed more than 750,000 Americans and nearly 24,000 people in Michigan.

“While I would have much preferred that requirements not become necessary,” Biden said in a statement Thursday, “too many people remain unvaccinated for us to get out of this pandemic for good.”

Administration officials said they don’t believe the policy will worsen supply chain issues that have caused widespread goods shortages. Or that it will cause workers to leave their jobs, pointing to high vaccination rates and low turnover rates in companies that have already implemented mandates.

“People are sitting out of the workforce because of COVID concerns,” White House spokeswoman Jen Psaki told reporters. “The worst disruption businesses have faced for nearly two years is their employees getting sick with COVID. At the same time, we have tools at our disposal we know work. These policies work.”

Vaccine-or-test rules

The administration’s policy directs large employers to create rules requiring workers receive two shots of the Moderna or Pfizer vaccines or one shot of Johnson & Johnson by early next year.

After Jan. 4, any unvaccinated employee will have to provide a verified negative COVID-19 test once per week and wear a mask while at work. Employees who work exclusively from home or outdoors won’t be required to get a vaccine or submit to testing, and people who have a valid religious or medical reason not to get the vaccine will also be exempted — a population OSHA estimates will make up around 5% of employees.

Most employers won’t be required to pay for the tests, shifting the cost of testing onto workers. This “creates a financial incentive for those employees to become fully vaccinated and avoid that cost,” OSHA wrote, though “some employers may choose to pay for some or all of the costs of testing as an inducement to keep employees in a tight labor market.”

Employees represented by a union may get testing paid for if the union already has struck a deal with the employer to pay for it. However, Veronica Martine, a spokeswoman for the Michigan AFL-CIO, said it’s not immediately clear how many companies have such an agreement in place.

Deborah Gordon, a Bloomfield Hills-based employment attorney, said she expects unions and collective bargaining agreements to come into play in implementing the mandate. Employers likely would not have to bargain over the rule itself, she said, but how the mandate is implemented could be subject to bargaining.

“What may have to be bargained for is how much time off people are going to get to go get the vaccine, how many sick days they’re going to get, what the discipline will be,” she said. “But the underlying premise that now you are being required by OSHA to have people be vaccinated — in my opinion, that is not an issue that has to be collectively bargained for.”

Employees who test positive for COVID-19 won’t be allowed in the workplace and businesses won’t be required to provide paid time off for them, though other state and local laws or collective bargaining agreements could require it. Businesses will be required to provide paid time off for employees to get the vaccine and recover from any side effects.

OSHA will enforce the vaccine-or-test mandate by targeting efforts on workplaces that have received complaints and will also have planned inspections to make sure businesses are complying, agency officials said. Any penalties would depend on the scope and severity of non-compliance. For example, a standard penalty for a single violation would be nearly $14,000. For a “willful violation” of the rules, the amount would jump to nearly $137,000.

Experts say that’s a powerful incentive for workplaces to hop on board.

“Organizations are going to be very, very motivated to comply,” said Angela Hall, a professor of human resources and labor relations at Michigan State University. While multiple experts say enforcement might be spotty — there are fewer than 2,000 OSHA workplace inspectors to oversee 8 million workplaces — most employers will prefer to play it safe.

“Those OSHA fines can really add up from a little over $13,000 to $130,000-plus for violations,” Hall said. “So I think that organizations are going to be strict about it.”

And for employees who decide not to do either the vaccine or testing? They’re likely headed for the door.

“What can an employer do when an employee objects and refuses to vaccinate? The short, brutal truth is that the employer can fire that worker,” said Marc Sherman, a business attorney with New York-based Conway Farrell. And “those who do (refuse) will have little recourse if they’re terminated.”

Business concerns

White House officials said the rule was written to ease challenges for businesses tasked with implementing it. But Studley of the Michigan Chamber says the policy will be complicated for businesses to implement amid pre-existing challenges.

“I think that we’ve already discovered some provisions of this massive regulatory proposal that will be very problematic, especially as employers were already struggling with inflation and supply chain shortages and labor shortages moving into the holiday season,” he said. Studley is also a member of a coalition of 22 local business groups in Michigan opposing Biden’s vaccine mandate, Listen to MI Business.

The Michigan Occupational Safety and Health Administration said it would adopt the same rules as the federal ones, which Studley said would help “mitigate a bad situation.”

John J. Walsh, CEO of the Michigan Manufacturers Association, told The News that while the organization is supportive of vaccination efforts broadly, it also has concerns about the mandate, which he estimates would impact at least 30% of the association’s membership.

“Our concern is that the relationship between an employer and an employee is delicate and, generally speaking, we think it’s best if the workplace and what is ongoing there is best left to the employer and the employees to work that out, whether it’s with a collective bargaining agreement or otherwise,” he said.

Though the MMA has not conducted a formal survey, Walsh said that, anecdotally, members are most concerned about a potential loss of employees who do not wish to comply amid a labor shortage “that adds to the concern today.”

“There are enough open manufacturing jobs that those employees that do wish to remain unvaccinated have, if they wish to exercise it, the opportunity to move to a smaller company. I can’t tell you what number that will be; it could be very small, it could be large,” he said. “But we think there will be some movement in the industry.”

Companies are particularly concerned about losing employees, even a small percentage of their overall workforce, because of the tight labor market conditions: “Whether they believe firmly in this mandate or not, they are concerned that they’ll lose employees at a time when we’re already struggling across the board throughout the supply chain.”

National business groups were more supportive of the announcement, with Business Roundtable saying in a statement it “welcomes the administration’s vaccination efforts.” And the U.S. Chamber of Commerce said in a statement that OSHA “made some significant adjustments in the ETS that reflect concerns raised by the business community.”

Most of the major Michigan businesses polled by The News — including Consumers Energy, Stellantis NV, Ford Motor Co., General Motors Co., Dow Inc., Rocket Mortgage, DTE Energy Co. and BorgWarner Inc. — indicated they support safe workplaces, including through vaccination. They are still reviewing the rule and will have guidance in the coming weeks for employees on how to comply.

Battle lines are already being drawn in the courts over the rule. Attorneys general from 18 states filed three lawsuits last week against the vaccine mandate for federal contractors and asked a federal judge to block the implementation of the rule. Multiple states have also pledged to challenge the rule for large businesses when it is issued.

Administration officials argued Wednesday evening that the Department of Labor has “broad” authority to issue the mandate under safety rules that allow the agency to issue new standards in emergencies when workers are “subjected to a grave danger.”

Many Republicans in Congress have also argued that Biden is overstepping his authority by issuing the mandate, including Rep. John Moolenaar of Midland, who sits on the powerful House Appropriations Committee.

Moolenaar introduced a bill on Tuesday that would bar the Department of Labor, the Department of Health and Human Services and the Department of Education from using federal funds to administer COVID-19 vaccine requirements. The bill is co-sponsored by 17 Republicans on the committee.

“There’s simply nothing in the Constitution that allows the federal government to impose this mandate on private businesses and my bill will cut off funding for the Department of Labor to enforce it,” Moolenaar said in a statement.

Other Michigan Republicans expressed frustration with the rule as well. Rep. Tim Walberg, R-Tipton, said in a statement that the mandate is “a serious overreach that will inflict further harm on an already hobbled economy” and the Michigan GOP released a statement saying “vaccine mandates cause hesitancy among those that are unvaccinated. Everyone should get this life-saving vaccine, but mandates are not the way to get people vaccinated.”

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