On Friday, March 19, 2020, California Governor Gavin Newsom issued the first statewide Shelter-in-Place Executive Order limiting business operations, restricting travel, and impacting the daily lives of millions of healthy Californians. Since then, several other states have issued similar orders closing non-essential businesses: Connecticut, Delaware, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, and West Virginia. Some major counties and cities have also issued their own orders, like New York City, Athens-Clarke County, Ga., and Philadelphia.

While every order is unique — whether a shelter-in-place or an order closing non-essential businesses only — each order poses the same practical question: Can my business stay open? The answer depends on the specific language of the order, though a recent memorandum from the Department of Homeland Security can give some guidance on the types of businesses that might be exempt. 

The Different Types of Orders

Because of the different ways the pandemic is affecting each of the fifty states, it is no surprise that the shelter-in-place orders differ in the types of businesses that are exempt. The vast majority simply list the types of businesses that are exempt.  Common exempt businesses include state and local government agencies, law enforcement, grocery stores, hospitals, waste management, banks, transportation, public works and utilities, news media, and essential manufacturing. At least two orders exempt liquor stores or marijuana-related businesses.

Other orders have listed those core businesses that are exempt, but delegated authority to a separate agency to add to that list. Delaware’s Governor, for example, delegated the authority to make “additions, amendments, clarifications, exceptions, and exclusions” to the list of essential businesses in his Fourth Modification to the Declaration of a State of Emergency. Pennsylvania — which did not issue a shelter-in-place order but instead issued an order shutting down “non-life sustaining businesses” — attached a spreadsheet listing the types of businesses that were exempt from the mandatory closures.[1]

California, however, is slightly different. Instead of only identifying essential businesses exempt from the shelter-in-place order, the Governor also incorporated the essential critical infrastructure sectors from the United States Cybersecurity & Infrastructure Security Agency’s website and ordered the California Department of Public Health to issue additional public health directives. Last night, the State Public Health Officer issued expanded guidance about the essential businesses exempt from the shelter-in-place order. 

Non-Binding Guidance from the Federal Government

Around the same time that California’s Governor issued his shelter-in-place order, the Director of the U.S. Department of Homeland Security, Cybersecurity & Infrastructure Security Agency issued a Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response (the “CISA Memo”). On Sunday, Ohio became the latest state to incorporate the CISA Memo into its shelter-in-place order.

The CISA Memo identifies different essential critical infrastructure workers necessary to help governments respond to the COVID-19 pandemic:

• Health Care/Public Health
• Law Enforcement, Public Safety, First Responders
• Food and Agriculture
• Energy
• Water and Wastewater
• Transportation and Logistics
• Public Works
• Communications and Information Technology
• Other Community-Based Government Operations and Essential Functions
• Critical Manufacturing
• Hazardous Materials
• Financial Services
• Chemical
• Defense Industrial Base

The workers identified in the CISA Memo fall into one or more of the critical infrastructure sectors identified by Presidential Policy Directive-21 issued by President Obama in 2013.[2]

The CISA Memo is “advisory in nature” and does not create “a federal directive or standard in and of itself.”  Instead, the CISA Memo is intended “to assist prioritizing activities related to continuity of operations and incident response, including the appropriate movement of critical infrastructure workers within and between jurisdictions.” The CISA Memo was not created from scratch, but was guided by years of study and analysis by DHS, non-governmental organizations, and presidential advisory councils like the National Infrastructure Advisory Council.[3]    

Waivers From Such Orders

Orders issued by many states provide a mechanism for businesses to seek a waiver from the shelter-in-place orders. Under Pennsylvania’s order closing non-essential businesses, businesses can apply for a waiver to stay open by submitting an online application to the Department of Community & Economic Development. Due to the volume of waiver requests received across the State, the Governor had to extend deadline for businesses to close under the order to allow for additional processing of requested waivers by roughly three days. Despite the extension, businesses must nevertheless close by 8:00 a.m. on Monday, March 23rd and stay closed until their application is granted.

Like Pennsylvania, the New York Governor delegated the Empire State Development Corporation with the authority to identify other essential businesses exempt from the Executive Order 202.6, which required non-essential businesses to reduce its non-telecommuting workforce by 100%.  By the next afternoon, the Empire State Development Corporation had issued “Guidance for Determining Whether a Business Enterprise is Subject to a Workforce Reduction Under Recent Executive Orders” on its website. That guidance provided a link for non-businesses to file an electronic form requesting designation as an essential business.

While New York’s executive order does not provide guidance to the delegated agency about what should be considered when granting an exemption, the Delaware order does. It directs the Division of Small Businesses to consider the CISA Memo when determining whether to clarify or otherwise exempt a business not listed in the order.

Other States that have not yet issued shelter-in-place orders appear to already have a mechanism in place for designating businesses essential, albeit for other purposes. For example, North Carolina Department of Public Safety oversees the State’s emergency reentry certification system for natural disasters like hurricanes.[4]  Businesses that are registered as essential are provided certificates to allow their employees to continue working through mandatory hurricane evacuation orders and imposed curfews.  Businesses can obtain the certification in advance by forwarding required information to the Department by email.

How Nelson Mullins Can Help

Though the shelter-in-place orders for each jurisdiction differ, the impact to your business if you are forced to shut down can be enormous. Business owners rarely have much warning that a shelter-in-place order is coming.  In the case of New York, business owners had about 48 hours to reduce their non-telecommuting workforce by 75%, and then roughly the same amount of time — over the weekend — to make arrangements for the remaining 25% to work from home. In Ohio, businesses had only about 36 hours to close.

Armed with an opinion letter, your business can make the necessary decision about whether to remain open and can then act quickly to seek a waiver from the relevant jurisdiction when the time comes. Being prepared in advance may give your business a greater chance of filing a waiver request before the waiver period lapses or the relevant reviewing agency becomes inundated with such requests.