Survey looks at vaccine mandates and employee turnover 

October 12, 2021

Last month, President Biden announced a COVID-19 Action Plan aimed at speeding up the pace of COVID-19 vaccinations in the country.  The plan mandated vaccinations for federal employees, federal contractors and subcontractors, and health providers that are paid by Medicare and Medicaid. It also directed the federal Occupational Safety and Health Administration (OSHA) to issue regulations under which private employers with 100 or more employees must require workers either to get vaccinated or to provide negative COVID-19 test results at least weekly to enter a company’s worksite.  

Employers anticipate that the requirements, once issued, will present a range of challenges. For some, these will be largely administrative — tracking vaccination and testing status and handling medical and religious exemptions and accommodations. Others foresee that employee resistance will disrupt operations.  Mercer launched a pulse survey on October 4 to learn from the experience of employers that have already implemented mandates -- and to discover what others see as the biggest hurdles.  In just one week, more than 1,000 employers responded to the survey.  Among the most important findings:

  • 34% of respondents already have some type of vaccine mandate in place.
  • There was no impact on turnover for 71% of those with mandates in place; however, 25% saw a slight increase in turnover (1%-5% above normal) and 4% saw a significant increase (more than 5% above normal).
  • The decision to mandate vaccination varies widely by industry, ranging from 63% of survey respondents in healthcare organizations requiring at least some employees to be vaccinated, to just 16% of those in manufacturing.
  • Will employers allow unvaccinated workers to choose regular testing as an alternative to vaccination?  22% of respondents say yes, 21% say no (except as a medical/religious accommodation), and the rest don’t know yet.    
  • Asked about possible impacts on their organization of implementing the OSHA requirements, most employers say they are concerned or very concerned about turnover (76%), the complexity and cost of planning/implementation (73%), and employee engagement/morale (69%).

More than a third of survey respondents already have vaccination requirements in place

Two months ago, in a survey that closed August 9, 14% of respondents required employees to be vaccinated to work at a company worksite. That number has jumped to 25% in the new survey -- and a just over half of those employers require all employees to be vaccinated, regardless of worksite location.  An additional 8% require vaccinations only for employees engaged in certain business activities, such as business travel or client contact, and a few – about 2% -- say that new hires but no other employees are required to be vaccinated. In total, 34% have some level of mandate in place.

Not surprisingly, this varies by industry.  Of the healthcare organizations responding to the survey, nearly half – 47% -- require all employees to be vaccinated, and an additional 16% require just those working onsite or engaged in specific activities to be vaccinated, for a total of 63%. (It’s important to note that some states, such as New York, have mandated that healthcare workers be vaccinated.) Vaccination requirements are also relatively common among high-tech respondents, with 44% requiring at least some employees to be vaccinated.

At the other end of the spectrum, few manufacturing respondents – just 4% -- require all employees to be vaccinated, and only 12% require any to be vaccinated. Vaccine requirements are also relatively rare among retail/wholesale industry respondents: just 2% require all employees to be vaccinated, and 23% require at least some employees to be vaccinated.  As we will discuss below, employers in these industries – which tend to have a higher proportion of hourly and lower-paid workers -- are the most concerned about losing employees over vaccine mandates.

Most of those implementing mandates saw no increase in turnover.  Of the survey respondents with vaccine mandates already in place, 71% say they have seen no change in turnover as a result.  However, 25% have seen a slight increase (1%-5% above normal) and 4% report a significant increase (more than 5% above normal).

Little interest in using premium surcharges to encourage vaccinations

Premium surcharges are based on the same logic as tobacco-use surcharges:  Unvaccinated people are more likely to become infected with COVID-19 and require health care treatment, raising health plan costs and, potentially, future premium contributions for all employees. Despite a few well-publicized examples of prominent employers implementing a surcharge, only 3% of respondents currently have a surcharge or are definitely planning to add one, and only 14% are even considering it.  While surcharges provide a greater degree of choice than a mandate, other health premium surcharges have proven to be unpopular with workers, and employers may not see a surcharge as offering much of an advantage over a mandate – especially those that are already concerned about health care affordability.

Surcharges are somewhat more common among manufacturing respondents – 6% have already implemented a surcharge or are planning to, and 26% are considering it.  Since manufacturing respondents are the least likely to have already mandated vaccinations (as noted above), these employers may be more likely to adopt a surcharge as a palatable way to encourage vaccinations. 

Financial incentives and PTO.  Currently, 15% of respondents offer employees cash or a gift card as an incentive to be vaccinated, and 7% hold raffles.  Additional time off is offered by 17%.  Relatively few additional respondents – just 8% -- say they are considering adding these types of incentives.  However, as discussed in an earlier post, incentives may still have a role in helping to lift vaccination rates prior to a mandate, by easing the way for employees who are not entirely opposed to vaccination.

No time to waste:  Employers start planning for the new requirement

Once OSHA issues the Emergency Temporary Standards (ETS) for the new requirements, employers may not have much time to implement them.  Based on the requirements for federal contractors that were issued Sept. 24 with a deadline of Dec. 8, it’s reasonable to expect the deadline for employers could be as little as 45 days after the ETS is released. We asked survey respondents to provide their current thinking on how they might choose to implement the requirements, recognizing that plans may change once the ETS is issued. 

Administering a vaccination mandate will require employers track and likely verify vaccination or testing status and evaluate requests for religious and medical exemptions and accommodations. At this point, about one-third (36%) believes it is most likely that they will handle all tasks in-house, about one-third (36%) expects to outsource some or all aspects of administration, and the rest (28%) couldn’t yet say.

Allow testing?  Who pays?   The survey asked whether employers will allow unvaccinated employees to work onsite if they are regularly tested (remember, a testing alternative is not allowed for federal contractors/subcontractors or healthcare providers that are paid by Medicare and Medicaid).  Over half (57%) were not ready to say -- they may be waiting to see forthcoming OSHA guidance on the frequency of testing required and whether employers will be allowed to pass along testing costs to employees.  Respondents that did answer were evenly split between those that would accept testing as an alternative to vaccination (22%) and those that would not accept testing except as an accommodation for those granted medical or religious exemptions (21%).  Those inclined to permit testing also were split on who would cover the cost – 13% say they would want to cover the cost or provide the tests onsite, and 10% would want to require employees to pay (assuming this is allowed under federal / state laws).

So far, most employers report low levels of requests for medical or religious exemptions.  Among companies currently mandating the vaccine, about half (49%) report that 2% or fewer of employees subject to the mandate have applied for a medical or religious exemption; another 16% report that 3-5% have done so.  Only 10% of respondents have seen more than 5% of employees request exemptions.  The rest (25%) are not tracking the percentage of the employees requesting exemptions.

Concerns about implementing a vaccine mandate are real

The majority of respondents are concerned that implementing a vaccine mandate will result in increased turnover – 40% are very concerned, and another 35% are concerned.  The level of concern is especially high among manufacturing respondents:  60% are very concerned, and 32% are concerned, about turnover.  By contrast, 25% of banking and finance respondents are very concerned (46% are concerned), and 30% of high tech respondents are very concerned (37% are concerned).

Based on the real-world experience of employers that have already implemented a mandate, turnover that can be attributed specifically to the mandate has not been as bad as feared. However, employers that have already taken the step of implementing a vaccine mandate voluntarily may have been confident that, with their particular workforce, significant turnover was not likely to result.  As noted above, mandates are far more common among high-tech organizations, in which the workforce is largely high-paid, than among manufacturers or retailers, in which the workforce is largely hourly or low-paid.  A recent Mercer survey of 2,000 US workers found that low-paid workers were significantly less likely to approve of employer vaccine mandates (46%) than high-paid workers (76%).

Among all employers nationally, the complexity and cost of planning and implementing a vaccine mandate was the next biggest concern, with 37% very concerned and 36% concerned.  Employee morale and engagement was next, with 30% very concerned and 40% concerned.  Most did not see negative public relations as a significant concern, with 11% very concerned and 19% concerned.

Leveling the playing field?

The majority of respondents either strongly agreed (24%) or agreed (39%) with the statement, “The Action Plan provides a national standard approach to follow and levels the playing field for large private employers.”  While 22% were neutral, only 15% disagreed.  For employers operating in multiple states, some of which have laws that support (or even require) mandates and some of which have laws that restrict employer mandates, a national standard may help with a consistent approach across operations.  In addition, for those wanting to mandate vaccinations but concerned about turnover, it may be more difficult for employees to choose to leave if they know vaccinations will likely also be required at the next job for which they apply. 

In a previous blog post, we shared advice and examples of what employers are doing to encourage vaccination. However you choose to move forward with the forthcoming OSHA requirements, communication will be key. Let your employees know that the organization is genuinely concerned for the safety and wellbeing of all your employees and their families and your customers.

Note:  The survey launched October 4 and will remain open through October 13.  Data in this post were as of October 12 and based on 1,060 respondents; final results may differ slightly.

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