As you have inevitably read about, in September 2021, the Biden administration instructed the Department of Labor’s Occupational Safety and Health Administration (OSHA) to write a rule that would generally require employers with more than 100 employees to mandate vaccination or weekly testing and mask-wearing for unvaccinated employees.

OSHA published its final rule on Friday, November 5, which generally requires, among other things, employees to be vaccinated or start testing by January 4, 2022, with an earlier (December 5, 2021) enforcement date regarding the rule’s mask mandate, among other requirements for employers. Within 24 hours of the publication of the final rule, the Fifth Circuit Court of Appeals granted an emergency motion to stay enforcement of the vaccine requirement and required the administration to respond by Monday, November 8. In its response, the administration asked the court to lift the stay. Final resolution of the matter is pending.

Also in September 2021, the Biden administration issued an executive order requiring federal contractors to mandate that their employees be vaccinated against COVID-19, although recent guidance provides that contractors have broad discretion in determining compliance and enforcement of the mandate in the workplace. Several states have recently sued to prevent the implementation of the vaccination requirement for federal contractors. However, unlike OSHA’s mandate, the executive order has not been halted. For excellent coverage about developments of this order, check out our Bass, Berry & Sims GovCon & Trade blog (link here).

In light of these developments, public companies are contending with their planned compliance with these rules and how to disclose the potential material effects of such requirements in their Securities and Exchange Commission (SEC) filings. While we anticipate disclosures to continue to evolve and be fluid in this area, below is a current snapshot of some of the disclosures that companies are making in this area.

Company A (MD&A):

“Additionally, in September 2021 the President of the United States signed an executive order, and related guidance was published that, together, require certain COVID-19 precautions for federal contractors and their subcontractors, including mandatory COVID-19 vaccines for employees (subject to medical and religious exemptions). We are classified as a federal contractor due to a number of our agreements. In October 2021, we announced to our U.S. employees that the federal vaccine mandate would require all of our U.S. employees (subject to the exemptions described above) to be vaccinated by December 8, 2021. We continue to evaluate the potential impact of this executive order on our business. As a result of the federal vaccine mandate, we may experience constraints on our workforce and the workforce of our supply chain, which could require us to adapt our operations.”

Company B (Forward-Looking Statements; Risk Factors):

“Future factors that could affect the outcome of forward-looking statements include … any adverse effects of the U.S. government’s COVID-19 vaccine mandates.”

The U.S. government’s pending rules and regulations concerning mandatory COVID-19 vaccination of U.S.-based employees of companies that work on or in support of federal contracts, or have 100 or more employees, could materially and adversely affect our results of operations, financial condition and cash flows.

On September 9, 2021, President Biden issued an executive order requiring all employers with U.S. government contracts to ensure that their U.S.-based employees, contractors and subcontractors, that work on or in support of U.S. government contracts, are fully vaccinated against COVID-19 as required by the executive order. The executive order includes on-site and remote U.S.-based employees, contractors and subcontractors and provides for limited medical and religious exceptions.

In addition, on September 9, 2021, President Biden announced that he has directed Occupational Safety and Health Administration (OSHA) to develop an Emergency Temporary Standard (ETS) mandating either the full vaccination against COVID-19 or weekly testing of employees for employers with 100 or more employees. OSHA has not yet issued the ETS nor provided any additional information on its contents or requirements.

It is currently not possible to predict with certainty the impact the executive order or the OSHA ETS will have on our workforce. As a U.S. government contractor, all U.S. based employees, contractors and subcontractors that service or support our U.S. government contracts, which are subject to the provisions of the executive order, will be required to be fully vaccinated against COVID-19. Employees who are not subject to this requirement and who are not fully vaccinated may be subject to the ETS that will require them to get a COVID-19 test at least once a week. Additional vaccine mandates may be announced in jurisdictions in which our businesses operate. Our implementation of these requirements may result in attrition, including attrition of critically skilled labor, and difficulty securing future labor needs, which could materially and adversely affect our results of operations, financial condition and cash flows.”

Company C (Forward-Looking Statements):

“Factors that could materially affect our financial results or such forward-looking statements include, among others, the following factors … our ability to retain and recruit key management personnel and other talent (including while the UHG Transaction is pending and in light of our recently imposed COVID-19 vaccine mandate).”

Company D (Risk Factor):

Government imposed COVID-19 vaccine mandates could have a material adverse impact on our business and results of operations.

The Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an Emergency Temporary Standard (“ETS”) requiring that most employers with at least 100 employees ensure that their employees are fully vaccinated for COVID-19 or require employees to obtain a negative COVID-19 test at least once a week. As a company with more than 100 employees, the ETS will require us to mandate COVID-19 vaccination of our workforce or have our unvaccinated employees undergo required weekly COVID-19 testing, which could be difficult and costly. Further, additional vaccine and testing mandates may be announced in jurisdictions in which we operate our business, and there could be potential conflict with actions by certain states that are in conflict with the federal mandate, the impacts of which remain uncertain. Requirements to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly could result in labor disruptions, employee attrition and difficulty securing future labor needs, and could have a material adverse effect on our revenues, costs, financial condition and results of operations.”

If you have any questions regarding any of the topics covered in this blog post, please feel free to email the authors directly or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.

About the Bass, Berry & Sims Corporate & Securities Practice

Public and private companies of all sizes across a variety of industries turn to Bass, Berry & Sims for counsel on a wide range of corporate matters, including mergers, acquisitions and dispositions; capital markets transactions; special purpose acquisition companies (SPACs) and de-SPAC transactions; executive compensation issues; corporate governance; ESG matters; and shareholder activism. We serve as primary corporate and securities counsel to numerous public companies and have counseled on more than 150 deals ranging in size from $20 million to more than $15 billion over the past two years. Click here to learn more about the Corporate & Securities Practice at Bass, Berry & Sims.