Can Employers Deduct Paychecks for Unvaccinated Employees?

Close-up Of A Businessperson's Hand Opening Envelope With Paycheck Over Wooden Desk.
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The coronavirus pandemic has wreaked havoc on the lives of both workers and employers for the bulk of 2020 and 2021. Although businesses are reopening and employees are returning to the workplace, the coronavirus is still spreading, in part due to the refusal of some Americans to get vaccinated. In an effort to get employees vaccinated, employers have tried all types of enticements, yet a large number of workers remain unvaccinated. The next step could very well be docking the paychecks of employees who refuse to follow company vaccination policies.

Learn: Majority of US Companies May Require COVID-19 Vaccine, Survey Finds
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How Much Would Employers Dock Employee Paychecks?

Employment benefits consultancy Mercer told Forbes that a number of its larger clients have recently asked about charging employees $20 to $50 per month if they refuse to get vaccinated.  According to a Mercer spokesperson, “Employers have tried encouraging employees to get vaccinated through offering incentives like paid time off and cash,” but since those efforts are falling short, employers are inquiring about instituting these paycheck deductions.

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See: Small Businesses and Workers See Slowdown Due to Delta Variant

Are These Paycheck Deductions Considered Penalties?

Employees can’t dock worker paychecks just because they feel like it. However, the proposed COVID-19-related paycheck deductions would not be in the form of taxes or penalties, but rather as a health insurance surcharge. That shines a whole new light on the discussion.

Think about how insurance works. In a nutshell, when risk rises for an insurance company, policy premiums go higher. This is why older people pay higher amounts for life insurance and why drivers with a number of accidents on their record pay higher premiums as well. 

In the case of employers docking paychecks for failure to get vaccinated, these $20 to $50 monthly deductions would essentially serve as health insurance premiums to help offset the staggering cost of coronavirus infections. After all, if workers refuse to get vaccinated and end up requiring lengthy hospital stays, the cost of that treatment would eventually filter down from the insurance company to the business and its workers in the form of higher premiums. In order to prevent higher health insurance premiums for all workers, the proposed paycheck deductions would seek to have those most likely to get infected bearing the bulk of the cost upfront.

Make Your Money Work Better for You

See: FDA Approves Moderna, Pfizer’s Booster Shots – Is Now the Time to Buy the Stocks?
Find Out: Need To Prove You’re Vaccinated? Here’s How To Add Your COVID-19 Card To Your Phone

Will All Employers Institute a Paycheck Deduction?

As of early September 2021, widespread paycheck deductions for unvaccinated employees have yet to be instituted. However, some employers have already gone further than simply assessing a surcharge on the unvaccinated. Google and Facebook, for example, are two of the many large companies that have mandated vaccinations for all workers returning to the office. New York City has mandated either vaccinations or weekly testing for all of its employees, and California announced the same policy thereafter.

The Bottom Line

Employers and employees alike are still trying to figure out exactly how to adapt to the coronavirus pandemic, and changes to proposals and policies are likely to be frequent. However, it’s clear that the trend in workplaces is toward requiring workers to be vaccinated, either through outright mandate, financial incentives or paycheck deductions. 

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Last updated: Sept. 10, 2021

About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.

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