Seyfarth Synopsis: On April 7, 2020, the Massachusetts Executive Office of Housing and Economic Development (“EOHED”) issued its updated COVID-19 Essential Services FAQs, providing more details on what is and what is not considered a COVID-19 Essential Service in Massachusetts. One of the key updates clarifies which types of “e-commerce” businesses are permitted to continue operating during the Governor’s business closure order, which currently lasts until May 4, 2020. Additionally, the Massachusetts Office of the Attorney General has revised a previously-issued FAQ regarding the obligation to pay out unused vacation time when an employee is temporarily laid off.  The revision makes clear that an employer need not pay accrued vacation time when an employee is furloughed, meaning when the employee is not being paid, but remains an employee and continues to receive benefits.

COVID-19 Essential Services:

As we previously reported, on March 23, 2020, Massachusetts Governor Charlie Baker issued COVID-19 Order No. 13, requiring businesses and organizations whose workforces are not engaged and working in production and service sectors designated as “COVID-19 Essential Services” to close their brick-and-mortar facilities until April 7, 2020. Exhibit A to the Order identified the list of businesses and organizations considered to provide essential services related to COVID-19.

On March 31, 2020, the Governor extended the Order until May 4, and issued a new COVID-19 Essential Services list, which expanded the categories of businesses and services considered to provide COVID-19 Essential Services on Exhibit A.

On April 7, 2020, the EOHED issued its updated COVID-19 Essential Services FAQs, which describe in more detail what is and what is not considered an essential service under the Governor’s Order. The FAQs provide several notable updates, including with regard to the following categories of essential services:

Commercial Facilities. Under the current COVID-19 Essential Services list, the Commercial Facilities category includes businesses with workers who support the supply chain of building materials, hardware and building material stores, and other related businesses. Most notably, this category also applies to businesses with “[w]orkers supporting ecommerce through distribution, warehouses, call center facilities, and other essential operational support functions.” As described below, the FAQs expand upon this particular subcategory and provide detailed guidance on what types of e-commerce services are allowed to continue during the course of the statewide shutdown.

• Distribution of Goods in Ecommerce and Distribution Centers. The FAQs now clarify that permitted “ecommerce” means telephone, internet, or other electronic transactions that result in: (1) the shipment of goods and products that themselves would qualify a seller as providing a COVID-19 Essential Service; (2) the shipment of goods and products that are necessary for other COVID-19 Essential Services providers to conduct their essential work; or (3) the shipment of goods and products from a warehouse or distribution center that includes within its normal inventory essential COVID-19 related goods. This third category is noteworthy because it appears to target businesses that may have added COVID-19 related goods (e.g. masks) to their inventory and continued distribution of all goods out of a Massachusetts distribution center. Now, if such goods were not part of the company’s “normal inventory,” the EOHED would not permit such distribution centers to remain open.
• According to the EOHED, to “substantially limit the number of workplaces open during the state of emergency[,]” “businesses that only offer products such as furniture, most clothing for consumer purchase, cosmetics, jewelry, recreational equipment, or other consumer specialty items are not considered to be COVID-19 Essential Services.” These businesses are required to close their brick-and-mortar locations in Massachusetts and may not remain open in order to conduct e-commerce.
• The guidance permits individual business owners to enter brick-and-mortar locations to perform necessary operations such as shipment of packages, but employees of such businesses should not be permitted to enter those retail locations.
• Distribution centers, warehouses, and call centers may continue to operate only if they support the types of COVID-19 related e-commerce activities described above. Otherwise, the facilities must close and employees are not permitted to enter those locations.

Residential/Shelter Facilities and Services. Under the March 31, 2020 Hotel-Motel Guidance, hotels, inns, and short-term residential rentals – including those rented through on-line hosting platforms – are not considered essential unless they are used for certain COVID-19 related purposes such as accommodation for health care workers.

Hygiene Products and Services. This category of essential services includes producers of hygiene products, laundromats and dry cleaners, businesses necessary for the installation, maintenance, distribution, and manufacturing of water and space heating equipment, janitorial cleaning services, and other related services.

Construction-Related Activities. Construction is generally allowed to continue if it is for essential infrastructure or is related to essential products, services and supply chain in COVID-19 relief efforts. Construction work may also continue if it is needed for the operation or maintenance of existing buildings, is expressly permitted within the exemption for a specific essential industry, or involves the production of new housing units, among other types of permitted construction.

Retail. The FAQs make clear that brick-and-mortar stores that sell both essential and non-essential items are permitted to remain open only if the essential items are the primary goods sold at the store. In addition, a brick-and-mortar store that does not sell essential items may not stay open by shifting to curb-side pickup. The FAQs expressly permit convenience stores, office supply chain stores, and electronics stores to remain open.

The FAQs provide further clarity regarding what are COVID-19 Essential Services. The most significant changes are those relating to retailers and e-commerce operations, which are not otherwise selling products deemed essential. By limiting what e-commerce operations may continue during the crisis, the new guidance effectively penalizes e-commerce operations for maintaining distribution centers in Massachusetts, since e-commerce operations utilizing distribution centers outside of the Commonwealth remain able to ship goods to Massachusetts residents (subject to restrictions in other states). Further, the specific rule banning curb-side pickup means that many retailers, which closed their brick-and-mortar stores, but still made products available through a combination of phone or internet orders and customer pick-up, will further limit retail operations. The FAQs suggest that non-employee owners of a retail store may continue to perform work, such as shipping packages, but customer pick-up and use of distribution centers to ship products are now prohibited.

Businesses that are not currently considered “essential” under these rules can submit this form to the EOHED and request to be designated as an essential service. According to the EOHED, businesses currently deemed essential need not apply for an essential services designation, and employees of these businesses are not required to carry any special documentation. Businesses that have been operating under the belief that they are providing a COVID-19 Essential Service, but are now unclear as to whether they qualify under the new guidance, may wish to apply for such a designation.

Massachusetts Attorney General FAQ:

Finally, the Massachusetts Office of the Attorney General (“OAG”) has revised a previously-issued FAQ regarding the requirement of vacation payouts for employees who are temporarily laid off in response to COVID-19. The revision is critical for Massachusetts employers contemplating furloughs and other workforce management responses to COVID-19.

Previously, the OAG opined that employees who are temporarily laid off are entitled to a payout of accrued vacation time on the date of the layoff. The Wage Act requires employees who are involuntarily discharged to be paid their earned wages, including vacation time, on the date of discharge. The FAQ equated a temporary layoff, where the employer expects to recall the worker after a period of time, to a permanent one. The OAG noted, however, that it will not bring an enforcement action if an employee voluntarily elects to save earned vacation time for later use after a return to work.

This original FAQ resulted in uncertainty as to whether a furlough constituted a “temporary layoff” within the meaning of the FAQ. The OAG revised its response to clarify that it did not consider a furlough, in which the employee and employer continue the employment relationship by, for example, maintaining the employee’s benefits, to be a “temporary layoff” for purpose of its interpretation of the Wage Act. Thus, earned and accrued vacation pay would not need to be paid out in the event of such a furlough.

The OAG included two additional clarifications of which employers should be aware. First, if the employee wishes to separate from employment, all earned wages must be fully paid on the next regular pay day. Second, if the employer becomes unable to continue contributions towards employee benefits plans, then the OAG will consider that event to be the effective date of discharge.