Back in March, we looked at the wage and hour risk of paying incentives to employees for COVID-19 vaccinations. As is par for the course in DC, it seems, the EEOC released important guidance on COVID-19 vaccinations and vaccine incentives late on Friday afternoon going into the holiday. The EEOC’s new guidance finally gives employers clarifications on a number of vaccination issues, including the ability to offer incentives without fear of running afoul of Title VII or the Genetic Information Nondiscrimination Act (GINA). The EEOC’s new guidance makes offering incentives to get vaccinated more attractive than we had discussed previously, but does not eliminate the wage and hour pitfalls of paying this additional discretionary bonus.
Obviously, one option is to require employees to get the vaccine as a mandatory condition of continued employment. That option raises a host of legal and employee relations questions, and the overwhelming number of employers in most surveys have ruled out mandatory vaccination. So what are employers doing? Marriott, Kroger, McDonald’s, Trader Joe’s, Starbucks, Lidl, and Dollar General (among others) are all paying some kind of cash incentive to employees. Now, most employers have explicit authorization from the EEOC to do so without violating federal anti-discrimination law.
Impact of EEOC’s Guidance
Employers not administering vaccinations
For employers that are not administering vaccines for COVID-19 directly or via a contracted third party, the EEOC’s guidance is simple: “Federal EEO laws do not prevent or limit employers from offering incentives to employees to voluntarily provide documentation or other confirmation of vaccination obtained from a third party (not the employer) . . . .” This is great news, since the absence of EEOC guidance suggested that any such payment could have been unlawful under Title VII or GINA.
Employers administering vaccines
The updated guidance gives employers that administer vaccines less clear rules, unfortunately. The EEOC allows employers that are administering vaccines to “offer vaccination incentives to employees so long as the incentives are not so substantial as to be coercive.” Unfortunately, the EEOC does not offer any useful guidance on what constitutes a “coercive” incentive.
Employer Takeaways: Go crazy, but don’t forget OT!
For the vast majority of employers that are not actually vaccinating employees (directly or through a contracted provider), this guidance removes the significant obstacle the EEOC’s silence presented. Go crazy, folks! Consider paying what you can in pay or leave to encourage your employees to get vaccinated.
BUT, remember to include those bonuses when calculating the regular rate for purposes of the FLSA-mandated overtime premium.
As we discussed in March, vaccine incentive payments are likely considered “discretionary bonuses” under the FLSA. That means that employers that wish to pay incentives to employees who get a COVID vaccine will likely have to include these payments in their calculations of the “regular rate” under the FLSA (and perhaps state law). That may make them unaffordable or unworkable because of the administrative burdens. For those who are still on the vaccine bonus wagon despite the potential wage and hour issues, though, these aren’t the only issues a direct payment raises.