Vaccine Card Mandate Pushes Local Businesses To ‘breaking Point’

University of California Hastings College of Law Professor Dorit Rubinstein Reiss joins the Yahoo Finance Live panel to discuss Texas Govenor Greg Abbott's move to ban vaccine mandates.

Video Transcript

ADAM SHAPIRO: Governor Abbott in Texas issued that executive order which prohibits vaccine mandates by any entity in Texas, public and private. Should point out, though, that American Airlines and Southwest Airlines have said, oh no, our employees still have to get vaccinated. Let's talk about the legal ramifications, if any, from all of this, with Dorit Reiss, University of California Hastings College of Law Professor.

And I guess the question that a lot of people have is, so Abbott signs an executive order, what happens next? Because it's not the law, is it?

DORIT RUBENSTEIN REISS: So Governor Abbott has powers under the Texas Government Code to issue emergency orders, including this one. And it has the force of law and it comes with a potential fine. So for all intents and purposes, it's the law in the sense that businesses that ignore it may face fines and may face consequences unless they can challenge it in court and win.

ADAM SHAPIRO: OK. I'm not a lawyer, but I do remember civics classes. And federal law in the United States takes precedent over state law. Now, the Biden administration has said they want the vaccine mandates, but they have not yet issued the guidance via OSHA. So is there a federal law that could be used to say to Governor Abbott, you lose?

DORIT RUBENSTEIN REISS: As with many things in the law, yes and no. It's not the OSHA mandate that will be an issue here. If you look at the executive order, what it says is not, you can't tell people to vaccinate or something will happen. It says you can't compel the vaccine without giving broad exemptions to anyone that basically wants them.

That means that an employer can say, vaccinate. And if you're exempt, test. That's well in line with the Biden plan and should be in line with the order when it comes down from OSHA. On the other hand, the Biden administration also told federal contractors that they have to vaccinate or fire employees. And for example, the Veterans Administration hospitals have a vaccine mandate that has limited exemptions. So those two could be in tension with Governor Abbott's order, and those entities may have a claim.

ADAM SHAPIRO: Well, then you've got private companies-- American Airlines and Southwest, both have contracts with the federal government to move different federal products-- products is not the right word, but I'm a little tired right now. I guess they would have a claim and they have the validity to say, no, to Abbott-- or would they lose in court?

DORIT RUBENSTEIN REISS: It really depends how the contracts are structured. If the federal government requires them to have their employees vaccinated, then, yes, the federal law takes precedent. And they can go to court. As for example, Norwegian Cruise Line did in Florida and challenged the Florida ban and claimed that the federal law should trump.

ADAM SHAPIRO: I know lots of lawyers-- I live in New York City and I'm Jewish, how could I not? I got to ask you-- lawyers complain a lot about the frivolous suits that tie up the system. Is this an example of that? Because when you listen to different people talking about Abbott, what you hear the pundits saying-- and I realize it's one echo chamber-- but what you hear them saying is that this is really just playing to a small base because he's got to run for re-election. What do you think?

DORIT RUBENSTEIN REISS: So this would not be a frivolous lawsuit by people challenging his order. This would be a lawsuit by people who say, you gave us an order that's in line with other laws. We need to go to court. Whether it's a political move by Governor Abbott, very possibly. I mean, he is a politician as well.

One of the things that's going on is that there are some bills in front of the Texas legislature addressing mandates, and they have not been moving. So he may have decided to move ahead to see what the legislature does. So it's not a frivolous lawsuit, but it may well be a political step.

ADAM SHAPIRO: On the flip side, the ultimate arbitrators of this will be the voters. If they disagree with what Governor Abbott's doing, they can vote him out of office.

DORIT RUBENSTEIN REISS: In theory, certainly. But there's a lot of issues on the table, and voters might disagree with him on this and agree with him with on 10 other issues. But, yes, the voters can call him to account. And people in Texas can respond and make their opinions known.

ADAM SHAPIRO: If I'm a business outside of Texas, say I'm headquartered in Chicago, and yet I've got employees in Texas, what law would take precedent-- the law in Illinois or the law in Texas?

DORIT RUBENSTEIN REISS: So when businesses do business across states, they often have to comply with the law of the state they're in. That said, sometimes laws that limit the ability of a business to operate across states run into what we call the Dormant Common Commerce Clause-- the law that says states can't interfere impede interstate commerce. But in this case, it might just be that a business that covers multiple states has to comply with different local conditions.

ADAM SHAPIRO: So as we wrap this up, what's going to be the next step in this?

DORIT RUBENSTEIN REISS: I expect there'll be lawsuits. I'm not sure who will bring them, but I expect that maybe some federal contractors will bring lawsuits saying this conflicts with our federal requirements. I suspect that some businesses may bring lawsuits saying this is in tension with our freedom. We are private entities, and you're limiting our freedom to no reason. And I also expect there will be some debate whether to pass this in the legislature as well.

ADAM SHAPIRO: Dorit Reiss is University of California Hastings College of Law Professor-- we appreciate your joining us here on Yahoo Finance Live.

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