State Governments Order the Shutdown of Non-Essential Businesses to Reduce the Spread of Coronavirus (COVID-19)
25.03.2020 | Client Alert
Understanding Which Businesses are Classified as “Essential” Under Current and Future “Stay-at-Home” Orders
As the novel coronavirus (“COVID-19”) continues to spread rapidly, a number of states have ordered the closure of all non-essential businesses to limit further transmission of this disease. As of March 24, 2020, nearly 20 states have issued orders to this effect. As a result, many businesses already faced with a challenging economic environment must now determine whether they are classified as “non-essential” and therefore required to close. Businesses located in states not yet subject to these orders must also confront the uncertainty of not knowing whether they too will become subject to a mandatory closure of non-essential businesses. Although the federal government has not issued orders restricting business activities, it has issued guidance relating to this issue. Most notably, on March 19, the Cybersecurity & Infrastructure Security Agency (“CISA”) issued guidance concerning Essential Critical Infrastructure Workers. This list builds on earlier guidance released by CISA that identified 16 “critical infrastructure sectors” necessary to the preservation of the national welfare. CISA’s March 19 list of Essential Critical Infrastructure Workers identifies critical infrastructure workers in 14 discrete industries, each of which has been deemed necessary to the continued operation of the services and functions Americans will depend on during this public health crisis.
To date, the stay-at-home orders issued by the states have largely conformed with CISA’s guidance concerning critical industry sectors and the workers essential to their continued operations. Generally, the states have classified workers in the following sectors to be “essential” and, therefore, exempt from any stay-at-home order:
- Chemical Sector, which includes the manufacture, storage, and transportation of various chemicals upon which a wide range of other critical infrastructure sectors, such as the agricultural and healthcare sectors, rely.
- Communications and Information Technology, including privately owned and maintained communication systems, firms that produce news media, and those that supply essential services to communications and information technology companies.
- Community-Based Government Operations and Essential Functions, such as weather forecasters, elections personnel, and hotels used for COVID-19 mitigation and containment measures.
- Critical Manufacturing, including firms responsible for the manufacture of materials and products needed for medical supply chains and for supply chains associated with transportation, energy, communications, food and agriculture, chemical manufacturing, nuclear facilities, and the defense industry.
- Defense Industrial Base, such as the Department of Defense’s service and material providers, as well as companies that provide the essential services required to meet the national security commitments of the federal government and U.S. military.
- Energy, including the production, distribution, and storage of electricity and fossil fuels and the maintenance of the facilities critical to this sector’s continued operation.
- Financial Services, including providers of banking and lending services, as well as companies that provide supporting data and security operations.
- Food and Agriculture, including retail stores that sell food and pharmaceuticals, food manufacturers and farms, testing labs, and companies engaged in the storage, transportation, and distribution of food and the products necessary for food production (such as pesticides and fertilizers).
- Hazardous Materials, such as nuclear facilities and servicers that manage and dispose of medical and hazardous waste.
- Healthcare and Public Health, including hospital and laboratory personnel, manufacturers and distributors of medical equipment and pharmaceuticals, companies conducting research concerning COVID-19, and mortuary service providers.
- Law Enforcement, Public Safety, and First Responders, including emergency medical technicians and the vendors who maintain and supply the digital systems that support law enforcement and emergency services.
- Public Works, including companies responsible for the operation and maintenance of essential public works facilities and the removal, storage and disposal of solid and hazardous waste.
- Transportation Systems and Logistics, including mass transit providers, postal and shipping workers, trucking companies, and manufacturers and distributors of packaging materials and other supplies needed to support manufacturing, packaging staging and distribution operations.
- Water and Wastewater Systems, including water authorities and community water systems, wastewater treatment facilities, and related suppliers.
Importantly, at the federal level, CISA’s classifications are not binding. Practically, however, states implementing stay-at-home orders seem to be relying heavily on CISA’s guidance. For example, the guidance issued by Massachusetts Governor Charlie Baker in tandem with his March 24 shutdown of all non-essential services in Massachusetts enumerates 14 “COVID-19 Essential Services”; these services directly align with CISA’s guidance concerning Essential Service Critical Infrastructure Workers. Although there are differences among the orders issued by each of the states to date, businesses can generally expect that any future stay-at-home orders will generally parallel the exemptions enumerated in CISA’s guidance. As a result, the guidance issued by CISA may help businesses located in states that have yet to implement stay-at-home orders anticipate whether they’ll be permitted to operate.
It is critical that firms correctly determine whether they are classified as “essential” for purposes of stay-at-home orders. Businesses that remain open in contravention of such orders risk the imposition of legal liability as well as negative press coverage, as video game retailer GameStop recently discovered after it characterized itself as “essential.” If you operate a business in a state subject to a stay-at-home order, or if you do not and would like advice as to the potential implications of such an order on your operations, please contact the lawyer at Sullivan & Worcester LLP with whom you regularly consult, or any of the lawyers listed above.