As World Debates Corporate Vaccine Mandates, Boards Should Prepare

By Michael W. Peregrine


COVID-19 Legislation Online Article

Corporate boards across industry sectors should begin preparing for one-of-a-kind decisions regarding possible employee COVID-19 vaccination mandates and related verification efforts.

Recent interest in company mandates arises from two critical but competing factors. One is the broad recognition of the public health, workforce safety, and economic benefits of expansive COVID-19 vaccination within the general population. The other, however, is the reported unwillingness of large numbers of US residents (including those in certain racial and religious groups) to be vaccinated.

Nonetheless, both factors are expected to generate pressure on companies to mandate employee vaccination as a necessary step toward achieving recognized, country-wide and even global vaccination goals. Indeed, influential journalist Andrew Ross Sorkin of the New York Times recently called on leading commercial policy interests such as Business Roundtable members to jointly commit to pursuing the vaccination of their own employees. Such a commitment would be consistent with increasingly accepted corporate social responsibility principles.

At this stage, however, even health-care organizations are not mandating that their employees receive the COVID-19 vaccine, relying instead on strong peer-to-peer influence, encouragement, and education to attain substantial compliance. That position could well change over time.

Regardless, any such decision around mandating the vaccine—whether pressured, influenced, or unfettered—will be extraordinarily consequential for companies and likely highly controversial, both internally and externally. Thus, whether the idea arises from the boardroom or the C-suite, the ultimate decision will rest with the board (with management responsible for implementation). And there are a series of factors the board should consider when making its decision.

First, directors should coordinate closely with their chief legal officers to confirm whether a vaccination mandate would be consistent with applicable law. The traditional perspective is that reasonable employer requirements concerning employee health are, indeed, acceptable—but with certain exceptions.

The authority for such health-related requirements is grounded in the foundational obligation of an employer to maintain a safe workplace. The federal Occupational Safety and Health Administration (OSHA) laws under the “General Duty Clause” require “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” Indeed, OSHA has in the past approved employer actions requiring their employees to be vaccinated for seasonal flu and the H1N1 swine flu. Specific to COVID-19, the Equal Employment Opportunity Commission (EEOC) recently determined that employers can require workers to get vaccinated against COVID-19, with some exceptions.

Boards should also understand that, mandate notwithstanding, companies will be required by federal civil rights laws to accommodate employees’ sincerely held anti-vaccine religious beliefs. Similarly, employees with disabilities recognized by the Americans with Disabilities Act may also claim exemption from vaccination mandates. These exceptions may be limited, however in situations where their application would impose an undue hardship on the employer.

Then, there’s the broader issue of what may be permissible under federal and state law in terms of verification of employee vaccination. While the expectation is that employers’ right to require verification would be consistent with the “General Duty” (and early EEOC feedback has indicated that these requests are acceptable), boards should anticipate potential additional privacy-focused regulatory clarification on the verification question.

All of this should suggest to the board that while its right to impose a verifiable mandate is grounded in established law, the interpretation of that law and of the exceptions thereto—as well as the potential for additional guidance—muddy the legal waters more than a little.

The second key factor boards should consider is the implication of the mandate on the workforce. As NACD publications have made clear, the board has an ongoing obligation to exercise oversight over workforce culture. Yet assumptions regarding workforce support for mandated vaccination should be tested before the board gives its approval. This is especially the case with workforces containing substantial representation from minority communities with historical suspicion for public health initiatives, or from religious communities with faith-based opposition to vaccination.

Another factor is the impact of a vaccination mandate on company reputation, particularly with regard to the customer base. In the context of today’s highly politically polarized environment, there is potential for significant pushback depending on the composition of the customer base. The word “mandate” can be seen as threatening and intimidating, especially if a company is perceived as taking a stance based on self-interest rather than on a commitment to social responsibility or charitable purposes.

A fourth factor is the liability impact of a mandate decision on a company as a whole and its directors. Indeed, the pandemic has given rise to a variety of novel derivative and similar third-party actions against directors on such grounds as race and gender discrimination, failure to achieve board-level diversity goals, and misleading COVID-19 disclosures. It is reasonable in this environment for boards to consider the risks of similar litigation (perhaps grounded in workforce safety allegations) as part of their vaccination mandate decisions.

For these and other reasons, boards’ decisions with respect to employee vaccination and verification will not be easy. They will be based on laws that are subject to multiple interpretations and guidance that is ever-shifting; uncertain workforce reactions; a polarized political environment; and uncertain company and director liability risks. Simply put, the decision-making process will be difficult and will require informed business judgment.

But the suggestion is that boards should not run from such decisions; rather, they should run toward them. Proactive consideration of this critical public health issue can reflect board awareness of the broader social interests at stake—social interests which corporations, as well as commercial policy organizations, are increasingly embracing. The ultimate calls are certainly at each board’s discretion, but their careful consideration of the decision is, most likely, what values-driven companies and their boards are expected to do.

Michael W. Peregrine
Michael Peregrine is a partner at McDermott Will & Emery.