In response to the COVID-19 pandemic, state governors and even some major counties and cities have issued “stay at home” orders closing or limiting “nonessential business” operations, closing schools, and restricting travel. The goal of these orders is to slow the spread of COVID-19 by minimizing the number of individuals traveling outside their home, whether for employment or otherwise. Due to the unprecedented nature of these circumstances, orders are not always clear as to what businesses are impacted and must close or restrict their typical operations. This update examines the different types of orders in place today as well as how that may impact your business.
Types of Orders
Within the last 48 hours, the governors of Colorado, Hawaii, Idaho, Indiana, Kentucky, Maryland, Michigan, Minnesota, New Mexico, Vermont, West Virginia, Wisconsin, and the mayor of the District of Columbia all joined the governors of California, Connecticut, Delaware, Illinois, Louisiana, Massachusetts, Nevada, New York, Ohio, Puerto Rico, and Washington, in issuing orders effectively requiring the closure of “nonessential business” facilities. As with everything relating to this crisis, this is constantly evolving and it is likely that more states will join this list over the coming days.
Other states have issued stay at home orders for certain counties or put in place less restrictive state-wide measures and ordered only the closing of restaurants and bars other than takeout, theaters, fitness centers, barber shops and salons, and certain other “nonessential retail establishments.” It is important to note though that some counties and cities have imposed additional restrictions that may impact your business even if you do not fall under the restrictions included in the state executive order. For example, the governor of Texas has issued only limited restrictions on bars and restaurants and social gatherings of 10 or more people. In response, many of the state’s largest counties including Dallas, Travis, and Harris counties have issued their own stay at home orders.
What Businesses are Considered “Essential?”
The definition of what businesses are considered “essential” varies depending on the applicable state or local order. Nonessential businesses are generally recreational in nature and businesses that people rely on for meeting daily needs are likely to remain open. Some locales have identified a list of businesses that are essential for the purposes of the order or simply refer to the non-binding federal guidance issued by the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) which provides a guidance relating to the “essential critical infrastructure workforce” during this pandemic (CISA Memo).
Below is a list of businesses that most jurisdictions are deeming to be essential depending upon the circumstances and implementation:
- Grocery stores and pharmacies
- Healthcare operations
- Law enforcement
- Financial institutions
- Construction and skilled trades
- Residential facilities
- Hotels and motels
- Public works and utilities
- Waste management
- Businesses that allow essential business to operate
This list is not all-inclusive and is subject to many caveats depending on the location and the specific activities being engaged in by the particular business. For example, although dental offices may be deemed healthcare operations, under the current circumstances, non-emergency dental may be deemed nonessential. Likewise, although construction, particularly related to healthcare and housing facilities, may be deemed to be essential, construction of a bowling alley may fall within a gray area depending upon the applicable order. Moreover, hotels provide lodging and aid both the healthcare and housing needs of the critical infrastructure, but their restaurants are likely required to be take-out only and their recreational facilities likely need to be closed.
Many orders expressly allow nonessential businesses to continue operations so long as such operations can be carried on remotely from employees’ homes or, in some cases, a state may allow a nonessential business to continue operations if certain conditions are met. Virginia, for example, has ordered the closure of nonessential retail establishments but provides that, notwithstanding that order, nonessential retail establishments may continue operations so long as they limit in-person shopping to no more than 10 people per establishment and adhere to the social distancing requirements of six feet between each person. In order to accurately determine whether or at what capacity your business can continue to operate, it is necessary to review any state and local order which applies to your business and employees.
Potential Options if Your Business is Not Defined as “Essential”
Some states such as Connecticut, Delaware, Maine, Massachusetts, Minnesota, New York, Pennsylvania, Washington, and Wisconsin have provided a mechanism for businesses to apply for relief from the restrictions or for clarification that their business is encompassed by the applicable order’s definition of essential. However, the majority of jurisdictions are less clear on this point but further guidance is anticipated.
Additionally, some states allow primary businesses that are “essential businesses” to designate suppliers, distributors, and service providers as “essential” to the extent that the work of such supplier, distributor, or service provider is necessary for the continued operation of the primary business. Thus, such a company may be able to continue operations so long as it is providing essential support or services to an essential business.
What Happens if a Business Operates in Violation of an Applicable Order?
Penalties differ depending on the state or local order but typically include fines, license suspension, and/or criminal penalties.
What Happens if Your Business is Interrupted as a Result of One of these Orders
As a result of some of these orders, businesses may be interrupted and such interruptions may trigger force majeure clauses in contracts or implicate various types of insurance coverage. MMM attorneys are following these issues closely as they are very contract, fact and circumstance specific. If you have any questions about this legal update or any other COVID-19 related issue, please reach out to the authors of this update or your MMM attorney.
Below are the state-specific resources currently available:
New Mexico General Covid19 Information Hotline: 1-833-551-0518.
Ohio General Covid19 Hotline: 1-833-427-5634.