Delta Air Lines Inc. will impose a $200 monthly surcharge on employees who aren’t vaccinated against Covid-19, becoming the first major U.S. company to levy a penalty to encourage workers to get protected.
The new policy was outlined in a memo from Chief Executive Officer Ed Bastian, who said 75% of the carrier’s workers already are vaccinated. Increasing cases of coronavirus linked to a “very aggressive” variant are driving the push for all employees to get the shots; he said in the note to employees Wednesday.
The fee applies to employees in the airline’s healthcare plan who haven’t received shots by Nov. 1. The company also will require weekly testing for employees who aren’t vaccinated by mid-September.
Delta stopped short of a mandatory vaccine requirement like the one imposed earlier this month by United Airlines Holdings Inc. and other companies. Goldman Sachs Group Inc., Alphabet Inc.’s Google, and Facebook Inc. also have announced vaccine requirements.
Delta is confident that its approach will succeed in moving its worker vaccination rate beyond 75%, a spokesman said when asked why the company didn’t impose a mandate. The potential penalty is “well within” legal parameters, he said.
While vaccine requirements have increased since Pfizer Inc. and BioNTech SE’s vaccine received full Food and Drug Administration approval on Monday, employers are treading carefully for fear they’ll hurt morale and spur defections in a tight labor market. Some consultants doubt that surcharges will be as persuasive as demanding vaccination, though the size of Delta’s surcharge could change that calculus.
Bastian said that the fee for unvaccinated employees is “to address the financial risk” from their decision. The average hospital stay for Covid-19 patients has cost Delta $50,000 each, he said.
Delta was the best performer on the S&P 500 Airlines Index, rising 1.9% to $41.30 at 2:09 p.m. in New York.
Employees who aren’t vaccinated must wear masks in all indoor settings, effective immediately. Delta also said that starting Sept. 30, the airline would preserve full pay for workers who have received both shots but who still get sick and may end up on short-term disability.
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