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The bottom seems to be falling out of the Biden administration’s vaccine mandate for federal contractors. Seven states filed lawsuits against it. And now a judge in Georgia has blocked the mandate nationwide. For one view of what contractors should do now, Federal Drive with Tom Temin turned to Jenner and Block partner Matthew Haws.

Interview transcript:

Tom Temin: Matthew, good to have you back.

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Matthew Haws: Tom, nice to be back.

Tom Temin: And when we spoke, it was kind of in the beginning of the wave of the pandemic. Now, we thought it would be over by now, now we’re living with the mandate. And so is this thing in effect the mandate for federal contractors? Is it not in effect? What should people do?

Matthew Haws: Sure, it’s been a very busy few months coming on the heels of a busy almost two years now for federal contractors. When you and I spoke in the spring, we were talking about the performance impacts of COVID on federal contractors, how they were dealing with delays to performance, increased cost relating from COVID. And they’ve continued to face those challenges. We of course, are all seeing supply chain issues, and federal government contractors aren’t exempt from those either. And then in the midst of all of that comes this contractor COVID mandate. The Biden administration issued that mandate in September, as you know, went through a somewhat complicated rulemaking process, where guidance came out from a separate body at the end of September. And contractors have then been spending the last few months implementing their compliance plans, figuring out who this should apply to, how they’re going to track workers, how they’re going to collect the information that they need to collect. Of course, the Biden administration did that in order to improve economy and efficiency in federal contracting. That’s the standard that they cited. And on the one hand, that’s, of course, a welcome idea for federal contractors. Obviously, many business leaders, beyond federal contracting have stated that it would be wonderful and ideal if all of their workers, indeed, if the entire country were vaccinated, they think it would help their business and it would help the economy. And so certainly everyone supports that. On the other hand, of course, it was another complicated thing for contractors to have to work through, especially in the midst of the burgeoning politicization around vaccines, and all of the other administrative and management challenges coming out of COVID. So in the midst of all of that, of course, this is America. And so to paraphrase de Tocqueville, in America, every political question ultimately becomes a judicial question. And so we knew that these issues would end up in the courts. And over the last couple of months, several lawsuits have been filed. And we’ve now received some initial decisions in those lawsuits.

Tom Temin: All right. Well, then there is a mandate from the administration for those purposes that you cited, and there is a judge in Georgia that has in effect blocked it nationwide. So do contractors, in your opinion, continue with the mandate? Do they ignore it? Is there some middle path? Because sort of sounds like they can win or lose no matter what they do.

Matthew Haws: I think that’s right. It’s actually been an interesting evolution. So even before we got the court cases, you had the administration talking more about flexibility in implementing this requirement, started several weeks ago with talking about airlines and whether Christmas would be canceled. And you got some statements out of the White House regarding the fact that that’s not the intent of the policy, and that there would be flexibility in its implementation. Since then, we had some questions and answers on the federal website addressing this mandate, that also expanded on that theme of flexibility in how you’ve implement it. So contractors were already starting to figure out the specifics of enforcement of this policy, and how they could do that in a way that wasn’t overly disruptive. Then, of course, as you know, we had the court step in first last week, actually, the Eastern District of Kentucky issued a preliminary injunction that suspended enforcement of the vaccine mandate in three states in Kentucky, Ohio and Tennessee. And so that was kind of the first indication of what we might see coming out of courts. And it also provided a template for other judges to look at as they reviewed similar cases filed in other federal districts. I’ll start, I think it’s important to start given the politicization of vaccines with how that judge began his opinion. He was very clear to try to step back from the politicization, and he started off his order by saying that his case had nothing to do with whether vaccines were effective, that they were effective. It also had nothing to do with whether the government can require vaccination. Some governments in some circumstances, that it’s absolutely settled that governments can do that under certain circumstances. And instead he focused on a very narrow question that’s interesting to government contractors, which is what can the President do under his statutory authority, under what’s called the Federal Property and Administrative Services Act when it comes to something like vaccines. And ultimately, the judge in Kentucky decided that this sort of a mandate, which he viewed as in effect, a public health action was beyond the scope given to the president under that statute. Now, that’s really interesting for federal contractors, because that statute has been used for decades to implement a wide variety of executive orders and other federal government contract rules. And so now you’re seeing it being challenged directly. And we have now the judge in Kentucky, and then a judge in Georgia, finding that that statute certainly doesn’t extend in their mind to something like a vaccine mandate.

Tom Temin: We’re speaking with attorney Matthew Haws, he’s a partner at Jenner and Block. So should contractors then move ahead with their own mandates? And say, I don’t care what the law or the administration says, we want you to do this, assuming that’s legal. Do they follow the judge and say, well, sorry, the court threw it out, or do they follow the administration anyway? And figure, if that eventually prevails, then they’ll be okay with the government as a customer.

Matthew Haws: That’s exactly the question on every contractors mind, Tom. And it’s a very complicated landscape. So on the one hand, we now have a nationwide injunction against the federal government enforcing the contractor COVID mandate. So we know that the federal government can’t enforce it. But that doesn’t mean that private companies can’t have their own corporate mandate. So certainly a company, a contractor. can decide to proceed or to implement its own mandate, subject to one caveat, which is that, of course, several states have started to put in place restrictions on corporate vaccine mandates. And the situation is more complicated for contractors operating in those states. So prior to yesterday’s ruling, a federal contractor could rely on the fact that there was federal preemption, that the supremacy clause meant that the President’s executive order would trump those state laws now that that executive order has been enjoined, they no longer have the benefit of that argument. And so it gets very complicated where they’re in a state with those sorts of restrictions. Outside of those states, they’re free to continue on. Now, the other note I’ll make is about what the federal government’s going to do. So it’s certainly true that the federal government is likely to appeal, they’ll seek a stay of this injunction, and they will very likely proceed up through the courts of appeals, probably, ultimately to the Supreme Court. In the meantime, though, we may see the federal government decide that it will stop including this clause in new contracts and solicitations. So the Department of Defense actually came out with guidance after the ruling in Kentucky, saying that it would suspend including the clause in its contracts that were performed in those states. And I expect we’re going to see that expanded nationwide. So as a practical matter, you’re exactly right, contractors have a decent amount of freedom to maneuver, they’re likely to be able to proceed with new contract actions without that clause being included. And they also have the option of continuing their own mandates, if they see fit, subject to that caveat about some of the states that have state level preemption.

Tom Temin: And as a practical matter in some industries, just maybe the nature of the industry, that serving the government, most people are vaccinated anyhow. And then in other areas, other types of industries, there’s a low level of vaccination. So maybe the answer for a given contractor in part depends on the level of vaccination that’s happening in its employees.

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Matthew Haws: That’s exactly right. We all go right to the mandate, but there’s obviously a more interesting complicated strategic picture here. Some contractors that are say in the DC area with higher vaccination rates may be in an industry related to IT services, are making the strategic decision that they feel they’re better off with a corporatewide mandate. They can basically rip the band aid off, they get a competitive advantage going forward because they can more accurately predict their future labor issues, their ability to come up with costs for contracts. And so they’re actually quite content to move forward in order to gain that competitive advantage. Other industries and other parts of the country’s manufacturing, in particular, are facing much greater challenges. And so of course, they might have different strategic interests.

Tom Temin: So it sounds like this is a kind of complicated area for the law firms such as yourself to say anything overly definitive to a given client.

Matthew Haws: We certainly haven’t been sleeping very much, Tom, lots of calls, lots of discussions with clients. It’s actually been interesting though, because we are able to help clients sort through those strategic issues in addition to the legal issues and come to a place that’s really best for their business. And that’s what makes my job most fun.

Tom Temin: Attorney Matthew Haws is a partner at Jenner and Block. Thanks so much for joining me.

Matthew Haws: Pleasure as always, thanks Tom.

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