Texas Governor Greg Abbott just raised the stakes in the inevitable tide of litigation about President Biden’s COVID-19 vaccine mandates by issuing an Executive Order banning vaccine mandates in Texas. We expect other states to follow suit. This raises important questions for federal contractors, who are working against the clock to ensure compliance with the new vaccine mandate applicable to most federal contracts by December 8, 2021 (see our most recent blog post about the details of the mandate, Government Contractor Vaccine Mandate FAQ: Status of Class Deviations and Accommodations Process).
Do federal vaccine mandates preempt contrary state laws?
As a general matter, yes. Validly issued federal laws and regulations typically “preempt” contrary state laws. The primary exception to this would be if the federal mandates are viewed as exceeding President Biden’s authority. In the case of the mandate for federal contractors, the Executive Branch has broad authority to regulate federal contracts—authority it typically exercises via FAR clauses and Executive Orders. We have seen this authority exercised on hot-button political issues time and time again. If challenged in court, we expect the vaccine mandate for federal contractors to be upheld, given the Executive Branch’s broad authority in dealing with federal contractors.
What should contractors with operations in states that ban vaccine mandates do?
If and when your contracting officer reaches out regarding the vaccine mandate, we recommend beginning a dialogue about the mandate ban in your state and its impact on your operations. The purpose here is three-fold:
- First, in the case of contracts to which the mandate does not squarely apply (e.g., existing contracts for manufactured products), the mandate ban—and the ensuing costs of litigation and potential business disruptions over the ban—may provide sufficient leverage to persuade the agency not to impose the mandate on your contract at this time.
- Second, it is critical to lay the groundwork for a Request for Equitable Adjustment (“REA”) and/or claim in connection with this issue. State enforcement proceedings will be costly, even if the contractor ultimately prevails. Contractors should expressly inform the Contracting Officer that they will be seeking all such costs (including the cost of any judgment against them) via an REA. (Whether contractors are likely to prevail on such an REA/claim is a topic for another day and will be highly fact specific.)
- Third, a dialogue with the Government will preserve the ability to later argue that the Government Contractor Defense shields the contractor from any liability under state law, if necessary. The Government Contractor Defense is a narrow doctrine that provides for preemption of some state laws where contractors are subject to a conflicting federal requirement. However, pursuant to Boyle v. United Technologies Corp., 487 U.S. 500, 512-13 (1988), the doctrine expressly requires that the contractor warn the Government about the potential liability.
Will I likely be subject to a state enforcement proceeding if I comply with the federal mandate?
Quite possibly. This will, of course, vary state by state, but we certainly expect there may be test cases in which federal contractors are subject to enforcement proceedings by state governments (although it is also possible that states will recognize that contractors have a strong preemption argument).
As reflected above, assuming a company’s business with the federal government is an important piece of its overall operations, the focus for contractors should be on pushing back on the federal mandate where possible, and where that pushback is unsuccessful, on laying the groundwork for cost recovery down the road. As always, we are here to help navigate these challenging issues.