On January 13, 2022, the Supreme Court issued two opinions in which the Court (1) blocked enforcement of the Occupational Safety and Health Administration’s COVID-19 Vaccine and Testing Emergency Temporary Standard (OSHA ETS) and (2) allowed enforcement of the Centers for Medicare & Medicaid Services (CMS) vaccine mandate for healthcare workers at Medicare and Medicaid covered facilities.

While the federal contractor vaccination mandate (Contractor Mandate) was not the subject of those cases, the Supreme Court’s decisions hint at its future–and it’s grim.

The Contractor Mandate is Currently Stayed

The Contractor Mandate is currently stayed by multiple district courts. And the 6th Circuit and the 11th Circuit have both declined to lift those stays. There are two more appeals pending in the 5th and 8th Circuits. Resolution of these cases will take months. In the meantime, the federal government cannot enforce the Contractor Mandate. Therefore, the likeliest option is that the Supreme Court simply lets the various Contractor Mandate cases run their course.

However, there’s always a chance the Supreme Court decides to intervene and hear appeals on the stays – as it did with the OSHA ETS and CMS vaccine mandate. If this happens, the Contractor Mandate is in trouble. Here’s why.

The OSHA Opinion (NFIB v. OSHA): OSHA Is Not Authorized to Regulate Public Health

First, an overview of the Supreme Court’s OSHA opinion. On January 13, 2022, the conservative majority of Supreme Court ruled that the parties challenging the ETS are likely to succeed on the merits of their claim that OSHA lacked statutory authority to impose the ETS. The majority held that while OSHA is empowered by statute to regulate workplace safety standards and occupational hazards, it has not been authorized to regulate “public health standards” and “the hazards of daily life” more broadly.

The Court acknowledged that the pandemic is a risk that occurs in many workplaces, but distinguished COVID-19 from the typical occupational hazard because it has spread everywhere “that people gather.” The Court characterized COVID-19 as a “kind of universal risk” that is no different from the “day-to-day dangers that all face from crime, air pollution or any number of communicable diseases.” The Court concluded that permitting OSHA to regulate the hazards of daily life simply because most Americans have jobs and face those same risks while working would significantly expand OSHA’s regulatory purview.

The Court said that “we expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” After reviewing the statutory text, the Court found that the Occupational Safety and Health Act (OSH Act) does not clearly authorize OSHA to regulate public health through the ETS. The Court further noted that OSHA has “never before adopted a broad public health regulation…addressing a threat that is untethered…from the workplace.” Put simply, the Court decided that the ETS is not “what the agency was built for.”

The CMS Opinion (Biden v. Missouri): HHS Mission Includes Addressing Infection Problems

Issued concurrently with the OSHA opinion, the Supreme Court’s CMS opinion reversed injunctions staying the CMS health care worker vaccine mandate (CMS Mandate). The Court’s decision allows CMS to enforce the CMS Mandate, pending the disposition of the federal government’s 5th and 8th Circuit appeals. The Supreme Court said Congress authorized the Secretary of Health and Human Services to impose conditions on the receipt of Medicaid and Medicare funds “that the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services.” After reviewing the contours of the CMS Mandate (and noting that it excludes staff who telework full-time), the Court held that the mandate “fits neatly within” the statutory authorization language because requiring health care workers to be vaccinated protects the health and safety of patients in covered facilities.

In addition to the statutory text, the majority looked at the US Department of Health and Human Services’ (HHS) overarching mission and long history of safety-oriented rulemaking. According to the Court, ensuring that healthcare providers protect their patients’ health and safety is “perhaps the most basic” function of the Secretary of Health and Human Services. “After all, ensuring that providers take steps to avoid transmitting a dangerous virus to their patients is consistent with the fundamental principle of the medical profession: first, do no harm.” The dissent argued the Secretary was limited to imposing bureaucratic conditions, but the majority noted that CMS has “always” imposed such conditions on health facilities that wish to participate in Medicare and Medicaid. Indeed, the CMS Mandate’s challengers conceded at oral argument that the Secretary could require hospital employees to wear gloves, sterilize instruments, wash their hands in a certain way, and implement other infection control measures at Medicare and Medicaid facilities. The Court reasoned that “there can be no doubt that addressing infection problems in Medicare and Medicaid facilities is what [the Secretary] does” and the CMS Mandate does just that.

Anticipating the Fate of the Federal Contractor Executive Order

The Supreme Court’s likely question: Did Congress clearly authorize a federal contractor mandate?

The OSHA and CMS opinions shed light on how the Supreme Court analyzes vaccine mandates. In both cases, the Court largely based its rulings on a single issue: whether the agency in question had a clear grant of authority from Congress to promulgate its vaccine mandate. Both opinions cited a recent Supreme Court case which the Court noted said that it expected “Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.”

The President issued Executive Order 14042 on September 9, 2021, which directs federal contractors to comply “with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force).” The Task Force issued the Contractor Mandate a few weeks later, requiring “COVID-19 vaccination of covered contractor employees, except in limited circumstances where an employee is legally entitled to an accommodation.” The Contractor Mandate applies to over one-fifth of the country’s workforce. And unlike the CMS Mandate, the Contractor Mandate does not contain a carve-out for remote employees. Instead, even employees working from home must comply with its vaccination requirement if they work on federal contracts.

The federal government argues its authority to issue the Contractor Mandate derives from the Federal Property and Administrative Services Act (Property Act). According to its text, the Property Act is intended “to provide the federal government with an economical and efficient system” for “procuring and supplying property and non-personal services,” “using available property,” “disposing of surplus property,” and “records management.” Section 121 of the Property Act adds that the “President may prescribe policies and directives that the President considers necessary to carry out this subtitle” and that those “policies must be consistent with [the Property Act].” The federal government argues that the Property Act authorizes the Contractor Mandate because requiring employees to be vaccinated will promote economy and efficiency in federal contracting by, among other things, reducing absenteeism.

Similar to the OSHA and CMS cases, one of the main arguments lobbed against the Contractor Mandate is that the Task Force has exceeded its statutory authority by requiring federal contractors to be vaccinated.  The Contractor Mandate’s challengers allege that the Task Force has improperly relied on the Property Act for its mandate. As with the ETS and CMS Mandate, this is the issue the Supreme Court will focus on if it takes up the appeal: did Congress clearly authorize the Task Force to promulgate the Contractor Mandate?

The Court’s likely answer: No, the Task Force did not have the requisite authority to issue the mandate

Using the Court’s reasoning in the OSHA and CMS opinions as a guide, the answer appears to be no. Unlike the authority granted by Congress to the HHS Secretary, the Property Act makes no mention of the health and safety of individuals who are furnished services by the federal government. In fact, the Property Act doesn’t mention “health and safety” or public health measures at all. As the 6th Circuit said when it refused to lift the stay, “[the Property Act] thus authorizes the President to implement systems making the government’s entry into contracts less duplicative and inefficient, but it does not authorize him to impose a medical mandate directly upon contractor employees themselves because he thinks it would enhance their personal productivity.” The Supreme Court will likely find that the Contractor Mandate’s relationship to the Property Act is similar to the ETS’s relationship to the OSH Act – tenuous and questionable.

A key factor: The agency’s rulemaking history

To determine whether HHS and OSHA had a clear grant of congressional authority to issue their mandates, the Supreme Court looked at each agency’s rulemaking history. The Court found that HHS “routinely imposes conditions of participation that relate to the qualifications and duties of healthcare workers themselves.” The Court viewed the CMS Mandate as part of the “longstanding litany of health-related participation conditions” appropriately established by HHS. When reviewing the ETS, however, the Court said “it is telling that OSHA, in its half century of existence, has never before adopted a broad public health regulation” like the ETS. According to the Court, the “lack of historical precedent” is a “telling indication that the mandate extends beyond [OSHA’s] legitimate reach.”

Like the ETS, the Property Act does not have the same history as HHS’s health and safety regulations. The Property Act has never been used to regulate health and safety issues in federal contracting. In its appeal of the district court’s stay, the federal government provided the 6th Circuit with examples of requirements that courts have held to be authorized by the Property Act (e.g. prohibiting discrimination, abiding by wage and price controls, confirming employee’s immigration status). But the 6th Circuit found those examples distinguishable from the Contractor Mandate because each of the proffered examples had a “close nexus to the ordinary hiring, firing, and management of labor.” Foreshadowing the Supreme Court’s language in the recent OSHA opinion, the 6th Circuit said that “it is telling that none of the history from 1949 to present…involves the imposition of a medical procedure upon the federal-contractor workforce” and that a “lack of historical precedent” tends to be the most “telling indication that no authority exists.”

Since the Property Act makes no mention of health, safety, or public health measures, and since the President has never before relied on the Property Act to impose a broad public health regulation, the Supreme Court would almost certainly find that the Property Act does not clearly authorize the Task Force to issue a vaccine mandate. It is possible that the Court could decide the fate of the Contractor Mandate on some other basis, such as standing, the major questions doctrine, or lack of injury, but if it sticks with its simple analysis of Congressional grants of authority, the Contractor Mandate is unlikely to take effect.

Stay tuned for further developments on the Contractor Mandate, and contact your Baker McKenzie employment attorney for help with your employment needs.