Vaccine Mandate Cost-Benefit Analysis

With OSHA sending its emergency temporary standard to the White House for final review on October 12, many businesses are looking for direction, wondering what their choices are, and trying to prepare for the upcoming mandate. Fines for non-compliance are at an all-time high, but are other options viable?

What is the mandate?

The OSHA emergency temporary standard was ushered in by President Biden for businesses with 100 employees or more. The mandate requires the employees of these businesses to be COVID-19 vaccinated or requires the business to provide weekly COVID-19 testing for their employees. That being said, employers are not required to offer testing for their employees, but may instead opt out of testing and simply require their employees to be vaccinated. In this case, the employer would be required to terminate employees who are unwilling to be vaccinated. In either case, the mandate requires businesses to cover the costs of the time off required for employees to be vaccinated or tested.

The Cost of Compliance

Many businesses are frustrated at the increased burden the administration has put upon employers. “Organizations are concerned about the challenges to implementing the new vaccine mandate during a time when there is a talent shortage in many industries,” said Trent Burner, SHRM’s vice president of research. “The majority of organizations say mandating the vaccine will impact their organization’s recruitment, retention, morale and engagement, and business operations.”

Without clear direction on the costs, some businesses have no intention of complying with the mandate. As with all businesses, the decision to not comply vs require vaccines and testing is a balance of risk. Let’s look at the three main options available to most businesses and compare the pros and cons of each.

We’ll make some assumptions and use the same assumptions in each scenario. First of all, let’s assume a business size of 500 employees. Next, let’s assume an average salary of $60k. We’ll use Mayo Clinic’s vaccination rate national average of 59.9%, and Gallup’s most conservative cost to replace an employee at one-half their annual salary. Lastly, we’ll assume a $30 cost per COVID-19 test and a 6-month duration of the mandate.


  • 500 employees
  • Average salary of $60k
  • 56.9% of workforce vaccinated, as of 10/14/21 via Mayo
  • Replacement cost of one half annual salary via Gallup
  • $30 COVID-19 Test
  • 6 month mandate duration

Require Vaccinations

This business has chosen the option to require vaccinations of their entire workforce, and not offer any testing to its employees. At this point, it’s probably safe to assume that their unvaccinated employees are not going to get vaccinated. If their workforce vaccination rate is the same as the national average of 56.9%, they would be required to terminate 216 of their employees (43.1%). 

Based on Gallup’s 2019 study, the cost of replacing an employee is one-half to two times their annual salary. Taking the most conservative number would put the cost to replace employees at $6.5 million. This figure takes into account loss in production, talent acquisition, and getting replacement employees up to speed. 

The good news is, the business does not need to pay for COVID testing or pay any fines since it is in compliance with the mandate. Additionally, the business would most likely qualify for the Employee Retention Tax Credit up to $3.5 million. This is because their operations of the business were partially suspended due to government orders. Overall, this business still sustained a $3 million cost by making this decision.

Factors to consider:

  • Cost to replace lost workforce
  • Reward – ERTC

Provide testing for non-vaccinated employees

This business has chosen the option to provide COVID-19 testing to its workforce. OSHA will certainly require documentation of vaccinated employees and will allow unvaccinated employees to continue work as long as they are tested for COVID-19 on a weekly basis.

It’s possible that some unvaccinated employees may not want to be tested, which would result in some amount of turnover. We’ve assumed a 5% loss in workforce or 25 employees. Using the same figures from before the cost to replace those employees would be $750k.

Assuming testing occurs weekly for 6 months for the unvaccinated employees, at a cost of $30 per test, the overall testing cost would be roughly $170k.

As in the previous example, this business would also likely qualify for the Employee Retention Tax Credit for similar reasons and could earn up to $3.5 million in credits for Q4’21 alone. Overall, this business netted almost $2.6 million despite the cost of turnover and implementing a testing program.

Factors to consider:

  • Cost to replace lost workforce
  • Cost of testing program
  • ERTC

Do not comply and offer no testing for non-vaccinated employees

In this last example, the business has chosen the option to not comply with the mandate. We’ll assume that the business has proper documentation for its vaccinated employees. 

As no major disruptions to the workforce have occurred, there is no loss of workforce, and therefore no cost to replace lost employees. Since the business is not implementing a testing program there are no testing costs. Unlike the first two examples, there is no real disruption to the business and they won’t likely qualify for the Employee Retention Tax Credit. At this point, this business is a wash.

However, because they were non-compliant with their unvaccinated employees the business sustained heavy fines totaling $78 million (216 employees x 26 weeks x $14,000). It’s easy to see that the potential fines are vast while offering no offsetting benefit of the ERTC.

Factors to consider:

  • No ERTC
  • Cost of fines


In conclusion, example 2 won the cost-benefit analysis by a landslide. Offering testing to your unvaccinated workforce provides the most flexibility and the least disruption to your business. Yes, there are testing costs involved, but the Employee Retention Tax Credit should be available if your company is under 500 employees, and in the end, you’ll come out cash positive and provide a safer environment for your employees while helping to end this pandemic.

At Amtec we eat our own pudding and are going to provide weekly COVID-19 testing to our employees when the mandate goes into effect. We have negotiated an arrangement with an established and reputable diagnostics company to serve our clients. If you are in need of a high-volume corporate testing solution, please reach out to your account manager or click the link below.


The information contained on this page is for informational purposes only and does not, and is not intended to, constitute legal advice. Please consult your attorney and tax advisor for issues related to any legal matter.


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