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Federal vaccine mandates could cost businesses millions per week

October 21, 2021, 9:01 PM UTC

The U.S. is moving quickly to implement sweeping mandates that will require employers to verify workers’ COVID-19 vaccine status or ensure they are undergoing weekly testing, but it could end up costing companies. 

Last month, President Joe Biden called on the Occupational Safety and Health Administration to issue an emergency temporary standard that would require private businesses with at least 100 employees to put vaccine mandates in place. Biden’s directive stipulated that unlike federal employees and contractors, private businesses could also provide an option for weekly COVID-19 testing. The mandate is expected to affect as many as 80 million Americans

OSHA has the power to fine businesses up to $13,600 per violation, but it may not have the resources to enforce this new mandate. The agency has about 800 inspectors to cover the estimated 100,000 employers set to be affected by the new requirements, according to Reuters.

The new rules are expected any day, but Biden’s directive set up a lot of questions—chief among them: Who’s paying for all of this? 

If businesses are forced to shoulder the burden, members of the Retail Industry Leaders Association have reported the costs “could be in the millions of dollars per week,” says Evan Armstrong, a member of RILA’s government affairs team. The costs at play range from verification tracking, testing, paid time off, and, of course, the time needed from business leaders and HR professionals to organize and manage the new mandates. 

If OSHA mandates that employees need to pay for testing, they could be on the hook for costs that range between $12 and $150 per test, depending on the type of test required, where they’re purchasing it from, and how it’s processed.

Many employers are extremely worried about losing employees, especially in the current tight labor market. About 11% of workers say they would resign immediately if their employer put a vaccine requirement in place, according to a September survey conducted by Benefitfocus.

COVID testing 

“The testing protocols are going to be what are the most operationally challenging components,” Armstrong said. In retail, for example, there could be thousands of employees spread across multiple stores in different states, and many locations do not have HR personnel on-site.

Not to mention the expense. “It’s obviously just a huge cost burden on every employer to be able to manage all that testing if individuals refuse to vaccinate,” Armstrong adds. 

Rapid antigen testing can range from $12 to $50 per test depending on the volume ordered, shipping method, and clinical services and technology needed to support the testing program, says Sandy Goldstein, clinical services leader at Mercer, a firm that provides advice and solutions around corporate health benefits, talent recruitment, risk management strategies, and reopening plans. PCR testing that is self-collected and shipped to a lab for processing can range from $47 to $150 per test, although that can vary substantially.

“It’s crazy expensive,” says Michael Sinensky, CEO of New York–based WeShield, which offers PPE supplies and testing to companies. 

Over-the-counter tests are generally cheaper, about $10 per employee per day, but they’re difficult for both companies and individuals to source and purchase right now, Sinensky says. Point-of-care testing, which requires a nurse or medical personnel to administer, are more readily available, but cost about $25 per employee per day because of the staffing needed. 

The current supply of tests is “terrible,” Sinensky says, adding that it’s still very difficult to get OTC tests right now, and when they are available, it’s almost double the price. He added that the OTC and POC tests are “virtually the same,” and that if the FDA simply issued an emergency-use authorization that allowed POC tests to be used in over-the-counter settings, it would solve a lot of the supply and pricing issues. 

But it may not be employers who bear the burden. Depending on how the rule is structured, it could be up to employees to pay for testing and submit their results—a solution that many companies are pushing for. “That is ultimately the best motivator to perhaps get that employee vaccinated, which is the ultimate goal,” Armstrong says.

And workers shouldn’t expect to have their insurance automatically cover this testing. Under current rules, employers and health plans are not required to pay for tests in these circumstances, says the Kaiser Family Foundation’s Cynthia Cox, who directs the Peterson-Kaiser Health System Tracker. 

Vaccine mandates  

For businesses, it may be easier and cheaper to put a vaccine mandate in place that doesn’t allow employees to test weekly. But that’s not entirely without cost. Vaccine verification could take the form of a simple spreadsheet, but many companies will likely opt for specialized software. That can range in price from $1 to $6 per employee per month, says Goldstein.

ReturnSafe—a company that has helped more than 75 employers including the San Antonio Spurs, the Howard Hughes Medical Institute, and the Federal Home Loan Bank of Chicago implement COVID-19 safety protocols—says it costs $1.50 per employee per month or $18 per employee per year for software to track vaccines and test results at large volumes.

Even $1 per employee per month starts to become expensive for larger companies—and nearly half of the Fortune 100 companies have more than 100,000 employees (although all may not be located in the U.S. and subject to OSHA rules). 

It’s also worth noting that many experts expect the OSHA rule to allow exemptions on medical and religious grounds. In many cases, that may mean employers with vaccine mandates will need to provide accommodations, likely in the form of testing, to eligible workers. Plus, they’ll likely need to evaluate accommodation requests, which could take some time. Southwest Airlines, which is currently working to comply with Biden’s mandate that all federal contractors be vaccinated, has already said staff who filed an accommodation request will not be terminated or put on unpaid leave as the company works through employee exemptions by the Dec. 8 deadline. 

About 18% of employees say they would file for a medical or religious exemption if their employer required a COVID-19 vaccine. So there may be no way for companies to avoid dealing with COVID testing, as least in some capacity.

Additionally, employers will likely have to grapple with time-off questions as those unvaccinated employees work through getting a COVID-19 vaccine. That could be especially challenging in industries such as food services, manufacturing and construction, and retail where over a third of workers are still unvaccinated. 

“This is an obviously very complicated rule that has a lot of challenges,” Armstrong says.

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