In response to the COVID-19 outbreak in the United States, all 50 states, Puerto Rico, and the District of Columbia have adopted certain measures intended to encourage “social distancing” in an effort to limit human contact and thus slow down the spread of the virus. Cities and states have adopted various measures to try to achieve this goal, including by closing schools and/or limiting or prohibiting large gatherings (such as by cancelling concerts, plays, museums, and eating in restaurants and bars). Some governments are also acting to protect people who get sick and cannot work or who are laid off. Several states have recently taken even more aggressive action.

In just the last week, some jurisdictions have issued orders advising their residents to stay in their homes (i.e., “shelter in place” orders). Other states have imposed strict limits on which businesses can remain open and/or have imposed requirements that “nonessential” workers stay home. As of now, these types of restrictions are in effect in, among other places, California, New York, Illinois, Ohio, Pennsylvania, New Jersey, and Connecticut. At present, these types of orders reach one in four Americans. As a result, businesses and workers have been confronted with the critical issue of whether they can operate and who, if anyone, can leave home to work on premises.

These actions are similar to many of those that have been taken by other jurisdictions, such as in China, Italy, and France. As governments have imposed these tight restrictions, they have also recognized the need to allow certain businesses to continue to operate as necessary to provide essential goods and services. These orders have been imposed quickly, responding to the immediate needs of each community, and thus neither the orders nor the exemptions to the orders allowing certain activities to continue are consistent across jurisdictions or always well-defined.

This Update provides guidance on the scope of essential services or businesses in five US jurisdictions that have adopted restrictive measures to fight the spread of the virus: CA, NY, IL, OH and PA. Alerts covering additional jurisdictions across the globe, and updates regarding these jurisdictions, will follow.

The work below addresses certain important issues and is current as of today. These orders, which can be quite complex, are frequently revised (the NY order was amended as this was being written). Accordingly, if you need an answer to a specific question in a particular jurisdiction, we recommend you email the Team at FW-SIG-COVID-Essential-Business@mayerbrown.com, and the Team will provide you with the latest guidance on your issue.

Who or What Is “Essential” in California

After first declaring a state of emergency and taking other incremental steps, on March 19, 2020, California Governor Gavin Newsom issued a statewide order directing all residents to “stay home or at their place of residence” until “further notice.” The governor’s executive order (EO N-33-20) makes clear, however, that not all businesses must close. Businesses and sectors deemed critical may remain open because of their importance “to Californians’ health and well-being.”

Initially, the governor’s order defined “critical” sectors by referencing a list of 16 infrastructure sectors identified by the Cybersecurity and Infrastructure Security Agency (CISA), part of the US Department of Homeland Security.[1] On March 20, 2020, though, the governor provided additional clarification by issuing a detailed list of “essential critical infrastructure workers.”[2] One will want to consult both this list and the CISA guidance to assess sectors and industries of interest. For example, for financial services, essential critical infrastructure workers include:

  • Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities).
  • Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (e.g., armored cash carriers).
  • Workers who support financial operations, such as those staffing data and security operations centers.

And for the chemical industry, essential critical infrastructure workers include:

  • Workers supporting the chemical and industrial gas supply chains, including workers at chemical manufacturing plants, workers in laboratories, workers at distribution facilities, workers who transport basic raw chemical materials to the producers of industrial and consumer goods, including hand sanitizers, food and food additives, pharmaceuticals, textiles, and paper products.
  • Workers supporting the safe transportation of chemicals, including those supporting tank truck cleaning facilities and workers who manufacture packaging items.
  • Workers supporting the production of protective cleaning and medical solutions, personal protective equipment, and packaging that prevents the contamination of food, water, and medicine, among other essential products.
  • Workers supporting the operation and maintenance of facilities (particularly those with high-risk chemicals and/or sites that cannot be shut down) whose work cannot be done remotely and requires the presence of highly trained personnel to ensure safe operations, including plant contract workers who provide inspections.
  • Workers who support the production and transportation of chlorine and alkali manufacturing, single-use plastics, and packaging that prevents the contamination or supports the continued manufacture of food, water, medicine, and other essential products, including glass container manufacturing.

Businesses operating in California should also be aware of orders issued by various local health officials, including “shelter-in-place” orders issued by seven counties in the San Francisco Bay Area on March 16, 2020, and similar orders issued by the County and City of Los Angeles on March 19, 2020. To the extent that local orders are less restrictive than the governor’s order (e.g., Orange County), they have been superseded by the governor’s order. However, to the extent that local orders are more restrictive than the governor’s order, several counties (e.g., Santa Clara County, Alameda County), have publicly expressed the view that they are still enforceable. The Governor’s office has yet to provide clear guidance on this issue, so if a client is operating within an industry that may be subject to conflicting state and local orders, we would recommend contacting Mayer Brown immediately.

Who or What Is “Essential” in New York

The State of New York has approached the situation differently from California. It has, for the time being, grouped businesses, including services, into three categories:  (a) essential businesses and services experiencing little or no restrictions; (b) non-essential businesses and services required to work remotely; and (c) social and recreational gathering spots such as bars and casinos, which must close.

Governor Andrew Cuomo declared a state of emergency in New York on March 7, 2020. In a series of executive orders and actions since then, Governor Cuomo has increased the restriction on businesses and people. The governor has also announced a mandatory 90-day moratorium on any residential or commercial evictions and mortgage foreclosures in New York State; notably, this is 30 days longer than HUD’s previously announced moratorium.

Of particular interest is Executive Order (EO) 202.6 issued on March 18, 2020. This first order declared that all non-essential businesses and firms not providing essential services located in the State of New York must reduce their in-person workforce at every location within the state by 50 percent no later than 8:00 pm on March 20, 2020. EO 202.6 was followed the next day by EO 202.7, which required employers to reduce the in-person workforce of all non-essential businesses and service providers at all locations by 75 percent by no later than 8:00 pm on March 21, 2020. Finally, on March 21, 2020, Governor Cuomo signed the “New York State on PAUSE” Executive Order, directing all non-essential businesses statewide to close 100 percent of all in-office personnel functions effective Sunday, March 22, 2020 at 8:00 pm.

  • The New York Empire State Development Corporation (ESDC) has provided guidance to help businesses and employers determine “whether they are an essential business” and has set forth “steps to request such designation.” Generally speaking, the ESDC defines “essential businesses” to include all essential healthcare operations including research and laboratory services; essential infrastructure including utilities, telecommunication, airports and transportation infrastructure; essential manufacturing, including food processing and pharmaceuticals; essential retail, including grocery stores, pharmacies, and restaurants (but only for take-out/delivery); essential services, including trash collection, mail, and shipping services; news media; banks and related financial institutions; providers of basic necessities to economically disadvantaged populations; construction; vendors of essential services necessary to maintain the safety, sanitation and essential operations of residences or other essential businesses; vendors that provide essential services or products, including logistics and technology support, child care and services needed to ensure the continuing operation of government agencies and provide for the health, safety and welfare of the public. For businesses or entities that provide both essential and non-essential services, only those lines and/or business operations that are necessary to support the essential services are exempt from the restrictions. Similarly, to the extent a business operates from more than one location, only the location(s) that provide essential services will be exempt.
  • Businesses and entities that provide essential services are required to implement rules that facilitate social distancing of at least six feet.
  • For each sector or type of business, the ESDC’s guidance provides additional details.  For example, with respect to financial institutions, the ESDC’s guidance includes banks, insurance, payroll and accounting. To view the ESDC’s complete guidance on what qualifies as an “essential business,” visit https://esd.ny.gov/guidance-executive-order-2026.

Finally, New York permits certain businesses not covered by the guidance to apply for status as an “essential business.” For a description of this process and the requisite forms, visit https://esd.ny.gov/sites/default/files/Request%20for%20Designation%20Form_0.pdf. However, this process is not available to bars, restaurants, gyms, movie theaters, casinos (including tribal facilities that are governed by the Indian Gaming Regulatory Act), and certain other businesses.

Who or What Is “Essential” in Illinois

On March 20, 2020, Governor JB Pritzker issued Executive Order 2020-10 (Executive Order), which ordered all Illinois residents to “stay at home or at their place of residence” from 5:00 pm on March 21, 2020, until April 7, 2020, unless otherwise exempted under the executive order (https://www2.illinois.gov/Documents/ExecOrders/2020/ExecutiveOrder-2020-10.pdf). The executive order followed Governor Pritzker’s March 9, 2020 Disaster Proclamation, which “declared all counties in the State of Illinois a disaster area” in response to COVID-19. The executive order does not prohibit residents from essential activities such as going to the grocery store or receiving medical care, but it does otherwise restrict travel and require residents to “stay at home” unless one of the five following categories of exemptions apply:  (1) healthcare and public health operations; (2) human services providers; (3) essential infrastructure; (4) essential government functions; and (5) essential businesses and operations. The executive order provides that many of the exempted categories are to “be construed broadly.” Furthermore, Section 17 of the executive order provides that it “may be enforced by State and local law enforcement.” The five exempted categories are described below:

  • Healthcare and Public Health Operations (Executive Order § 7) – Although hospitals, healthcare providers, pharmacies, clinics and other public health operations are clearly covered by this section, the exemption also applies to “manufacturers, technicians, logistics, and warehouse operators and distributors of medical equipment, personal protective equipment (PPE), medical gases, pharmaceuticals, blood and blood products, vaccines, testing materials, laboratory supplies, cleaning, sanitizing, disinfecting or sterilization supplies, and tissue and paper towel products.” Veterinary care and “all healthcare services provided to animals” also are covered. Not covered by this section are “fitness and exercise gyms, spas, salons, barber shops, tattoo parlors, and similar facilities.”
  • Human Service Operations (Executive Order § 8) – This exemption applies to entities such as long-term care facilities, shelters, homes for people with disabilities, transitional facilities, adoption agencies, development centers and “businesses that provide food, shelter, and social services, and other necessities of life for economically disadvantaged individuals, individuals with physical, intellectual, and/or developmental disabilities, or otherwise needy individuals.”
  • Essential Infrastructure (Executive Order § 9) – Traditional infrastructure operations are exempted and include such key operations as: food production and distribution, construction, building management, airport operations, utilities (e.g., water, sewer, gas, electrical), oil refining, roads, railroads, public transportation, telecommunications, public waste/recycling, and cybersecurity operations.
  • Essential Government Functions (Executive Order § 10) – Key governmental functions are exempted such as:  first responders, emergency management personnel, law enforcement, court personnel, corrections officers, child welfare personnel, and other governmental employees who “support” Essential Business and Operations as defined by the executive order.
  • Essential Businesses (Executive Order § 12) – The fifth and final category of exempted entities and individuals is Essential Business and Operations, which itself is comprised of 23 sub-categories of exempted businesses: (a) stores that sell groceries and medicine; (b) food, beverage and cannabis production and agriculture; (c) charitable and social service organizations when providing food, shelter, social services and “other necessities of life” for needy individuals; (d) media; (e) gas stations and businesses needed for transportation; (f) financial institutions; (g) hardware and supply stores; (h) critical trades; (i) mail, post, shipping, logistics, delivery and pick-up services; (j) educational institutions for purposes of providing distance learning; (k) laundry services; (l) restaurants for consumption off-premises; (m) supplies to work from home; (n) supplies for Essential Business and Operations; (o) transportation; (p) home-based care and services; (q) residential facilities and shelters; (r) professional services; (s) day care centers for employees exempted under the executive order; (t) manufacture, distribution, and supply chain for critical products and industries; (u) critical labor union functions; (v) hotels and motels; and (w) funeral services and cemeteries. Many of these sub-categories are very broad and include those entities that “support” the functions within the sub-category.

The State of Illinois has created a “Stay at Home FAQs” webpage with additional information and guidance on the executive order, which can be found at:  https://www2.illinois.gov/sites/coronavirus/FAQ/Pages/Stay-At-Home-FAQS.aspx#qst6.

 Who or What Is “Essential” in Ohio

On March 9, 2020, Governor Mike DeWine declared a state of emergency in Ohio (EO 2020-01D). On March 17, 2020, Ohio’s Director of Public Health, Amy Acton, ordered the closure of all bowling alleys, gyms, movie theaters, and other recreational facilities within the state. On March 19, 2020, Acton extended the closures to all hair and nail salons, barber shops, tattoo parlors, tanning salons, and other similar facilities.

In her March 17, 2020 order, Director Acton also banned all mass gatherings of 50 or more people in Ohio.  Exceptions were made for certain specified businesses. Specifically, the order

“does not include normal operations at airports, bus and train stations, medical facilities, libraries, shopping malls and centers, or other spaces where 50 or more persons may be in transit.  It also does not include typical office environments, schools, factories, warehouses, distribution centers, retail or grocery stores where large numbers of people are present…”

As of March 21, 2020, Ohio has not ordered the type of “shelter in place” requirements seen in California. Nor has Ohio provided (a) further guidance on the types of businesses exempt from the mass gathering ban or (b) a means by which businesses can request certification as exempt or appeal prior determinations of non-exempt.

Who or What Is “Essential” in Pennsylvania

Governor Tom Wolf declared a “disaster emergency” in Pennsylvania on March 6, 2020. On March 16, 2020, he ordered the closure of all “dine-in facilities” and restaurants. On March 19, 2020, the governor ordered all businesses not “life sustaining” to close.  The state published a very extensive list of businesses it considers “life sustaining,” which includes grocery stores, all types of farming and food production, basic chemical manufacturing, manufacturers of medical equipment and supplies, and certain banks and financial institutions. Law firms within the state are ordered closed “[e]xcept as permitted expressly by the Administrative Office of Pennsylvania Courts.” To see the entire list visit https://www.governor.pa.gov/wp-content/uploads/2020/03/20200319-Life-Sustaining-Business.pdf.

Conclusion

This is a fluid situation. New guidance and directives meant to reduce the spread of the COVID-19 pandemic are being issued and revised frequently. Businesses large and small, and their workers, are being affected by these measures.

Mayer Brown is closely following developments in this area, and new content will be posted periodically on the firm’s website, https://covid19.mayerbrown.com. If you have questions about business limitations in a specific jurisdiction, please contact the firm’s COVID-19 Essential Business Team, which is dedicated to tracking and analyzing these types of restrictions around the globe, at FW-SIG-COVID-Essential-Business@mayerbrown.com. If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.

[1] The list of 16 critical infrastructure sectors can be found at www.cisa.gov/identifying-critical-infrastructure-during-covid-19.

[2] The list of essential critical infrastructure workers can be found at www.covid19.ca.gov/img/EssentialCriticalInfrastructureWorkers.pdf.