Texas Companies Are Stuck Between Mandates. What Now?

(Bloomberg) -- Texas businesses face risk and uncertainty as the state and federal government spar over Covid-19 vaccine mandates for employees. Governor Greg Abbott signed an executive order Oct. 11 outlawing such requirements in the second-largest U.S. state. That set up a clash with President Joe Biden, who issued an executive order Sept. 9 requiring employers with more than 100 workers to mandate Covid vaccines or weekly testing once the federal workplace safety regulator creates formal rules. Caught in the middle are companies trying to protect workers and customers from a virus that’s killed more than 700,000 Americans since January 2020.

1. What authority does the governor’s order carry?

Under Texas law, the governor’s executive orders “have the force and effect of law.” Abbott, an outspoken Republican, was crystal clear with this one. “No entity in Texas can compel receipt of a Covid-19 vaccination by any individual, including an employee or consumer, who objects to such vaccination for any reason of personal conscience, based on a religious belief, or for medical reasons,” the order said. The federal rules aren’t in place yet, so Abbott’s order, which carries a $1,000 fine for violations, applies to all companies in Texas right now. Even when Biden’s rules do take effect, they won’t apply to companies with fewer than 100 employees, so smaller firms will be obliged to heed the governor’s rules no matter what.

2. What about the president’s order?

Biden’s order carries more weight, period. While governors have a lot of power in their states, an executive order issued by a president preempts one issued by a governor on the same topic, says Mini Kapoor, a Houston lawyer with Haynes and Boone LLP. Biden’s executive order directed the Occupational Safety and Health Administration to create rules implementing his mandate. When those rules come out, companies employing more than 100 people will need to follow Biden’s lead. “Those employers would be required to follow the federal mandate and not the Texas mandate at that point,” Kapoor said. “It’s a confusing situation because the federal OSHA standards are still being issued, but the governor’s order is in place right now.”

3. So is this just a matter of sequencing? 

Not necessarily. Abbott’s order and the president’s will probably see each other in court. While employment law experts say the supremacy of federal OSHA regulations over a governor’s executive order is a given, there’s nothing stopping the state from seeing how a judge might rule. Abbott could attempt to bring novel arguments to court, expanding on his position that employees and customers should be allowed to cite religious, moral or medical objections to the federal mandate. That argument might come up short, however, since Biden’s mandate already allows workers to submit to weekly testing instead of getting the inoculation. Abbott’s order is likely to be put on hold during such a lawsuit, according to Kapoor. That’s because a judge will probably find that vaccine mandates benefit public health, while an executive order against them creates potentially costly policy U-turns for larger businesses, she said.

4. What are Texas employers saying?

Texas-based American Airlines Group Inc., the biggest U.S. airline, and Southwest Airlines Co., the fourth largest, aren’t waiting for OSHA to issue rules. Both companies said Oct. 12 they will follow Biden’s mandate, defying Abbott’s order and braving a $1,000 state fine. American, which had 117,400 workers nationwide at the end of June, and Southwest, which had about 54,500, both have federal contracts to transport employees and goods. Many other large Texas-based companies, including AT&T Inc., are rolling out company-wide Covid vaccine requirements, and health systems such as Houston Methodist have had them in place for some time. Some large oil and gas companies with operations in Texas, such as Royal Dutch Shell Plc, said they were still evaluating Abbott’s ban, and others, including Valero Energy Corp., declined to comment.

5. What’s the situation in other states?

Abbott is not the only Republican state official to object to Biden’s executive order. Before the ink had dried on the president’s directive, several were promising to challenge the mandate in court. Most said they would wait for OSHA to publish its rules, but Arizona Attorney General Mark Brnovich went ahead and sued on Sept. 14. He conceded his case was a “long shot” because a court would likely rule that his challenge was premature. Montana was the real trailblazer, passing a law against vaccine mandates months before Biden signed his executive order (the Montana law is being challenged in court). Similar proposals are pending in Ohio and Pennsylvania. Several states have barred state and local government agencies from mandating the shots for their public workforce.

The Reference Shelf

• A related QuickTake on Covid vaccine mandates.
• Governor Greg Abbott’s executive order.
• President Joe Biden’s executive order.

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