Delta Air Line Insurance Surcharge for Unvaccinated Employees Raises HR Issues

Author: Robert S. Teachout, Brightmine Legal Editor

August 30, 2021

Delta Air Lines announced it will charge a $200 monthly surcharge on employees enrolled in the Delta healthcare plan who have not been vaccinated against COVID-19. In a memo, CEO Ed Bastian said that the surcharge is necessary to address the financial risk that employees' decisions to not vaccinate creates for the airline, noting the average hospital stay for COVID-19 is $50,000 per person. The surcharge will take effect starting November 1.

In addition to the surcharge, Delta also announced other steps that the company was taking to increase the vaccination rates of its employees:

  • Unvaccinated employees are required to wear masks in all indoor Delta settings.
  • Starting September 12, any US employee who is not fully vaccinated will be required to take a weekly COVID-19 test while community case rates are high. Employees with a positive result will be required to isolate and remain out of the workplace.
  • Effective September 30, COVID-19 pay protection will be provided only to fully vaccinated employees who experience a breakthrough infection. The memo states that this step complies with state and local laws.

Insurance surcharges are not new, and are mainly associated in connection with smoking cessation and wellness programs. However, the vaccination surcharge announcement has raised several HR-related issues.

A primary concern is how to verify an employee's vaccination status. Proof of vaccination would constitute a medical record and require appropriate measures to maintain confidentiality. In addition, several news reports have been published documenting a growing black market in fake vaccination documents. Employers may opt, instead, to allow employees to self-certify that they have been fully vaccinated, though that does not provide the same level of certainty as a document.

A surcharge also raises issues related to wellness incentives. Guidance issued by the Equal Employment Opportunity Commission (EEOC) allows employers to offer incentives to encourage employees to get the vaccine. If the COVID-19 vaccine is administered by the employer or its agent, any incentive provided must not be "so substantial as to be coercive." However, the EEOC did not provide guidance on when an incentive would be considered coercive.

Additionally, the imposition of health care surcharges may implicate other laws including, nondiscrimination rules under the Health Insurance Portability and Accountability Act, the Affordable Care Act, the Americans with Disabilities Act and state law restrictions related to vaccine status. Employers considering instituting an insurance surcharge to incentivize employees to receive a COVID-19 vaccine are advised to plan carefully to address the related compliance issues.