Shelter-In-Place Orders Raise 5 Business Operations Issues

Law360

Authored Article, Insight

Author(s) ,

In the wake of COVID-19, cities, counties and states across the nation are issuing shelter-in-place and stay-at-home orders to curb nonessential movement of residents. States and local authorities are invoking powers to evacuate residents through statutes that have historically been used for natural disaster evacuations.

While the ability to order and enforce such evacuations is not in dispute, the orders in this context raise many questions. The latest statistics estimate that over 200 million Americans are under such an order, and that number is only likely to grow as the COVID-19 threat continues.

SIP orders apply to geographic areas, which can be limited to particular counties or as broad as entire states. The typical SIP order contemplates that some essential businesses can continue to operate. The authorities issuing these orders have leeway in what they consider essential businesses during this crisis. However, generally, employees of businesses considered critical or necessary for health, safety or essential services are exempt from these orders.

For example, the Dallas county “Stay Home Stay Safe” order issued on March 22 orders residents to shelter at their place of residence between March 23 and April 3 — allowing residents to leave their residences only for essential activities, to perform essential governmental functions or to operate essential businesses, as defined in the SHSS order.

Because the Dallas SHSS order is not directed to evacuating a physical area due to an environmental threat such as a hurricane, it has some features that differentiate these SIP orders from other historical orders. For example, it requires nonessential businesses to “cease all activities at facilities located within [Dallas] County” but notes that “businesses may continue operations consisting exclusively of employees or contractors performing activities at their own residences (i.e., working from home).”

This raises a question as to what extent a business that shifts its operation to working from home can maintain its own infrastructure. For example, if a server needs manually rebooted is the company violating this order by having information technology personnel go to the office just to address that issue and support others working from home?

At the time of this article, nearly two dozen states (and the Navajo Nation) have issued statewide SIP orders and another 15 states have SIP orders that affect over 84 counties and 17 cities within those states. In order to keep track of the dizzying patchwork of these SIP orders, The New York Times created an interactive and updated map of affected states, counties and cities with links to the SIP order announcements.

Each of the SIP orders differs in scope, magnitude and penalties for failure to comply. As many people commute between home in one county (or even state) to another, it is important to know whether you or your business may be subject to an SIP order.

The authors of this article are currently subject to an SIP order issued for Mecklenburg county, which encompasses Charlotte, North Carolina. The Mecklenburg county order is more detailed and roughly twice as long as the aforementioned Dallas SHSS Order. The Mecklenburg county order has a long list of 22 essential businesses.

These types of orders can affect a business’ ability to continue to operate, even when its employees could continue to operate from home. Below are five questions to consider when evaluating how an SIP order affects your business:

1. Is your business specifically identified as essential and excluded from provisions of the SIP order?

The SIP orders vary significantly in precisely how they categorize what is considered an essential business, so each must be read carefully to determine whether your particular business is identified as essential.

For example, the Dallas SHSS order provides an arguably more limited set of essential businesses than the Mecklenburg county order. It outlines eight categories, including essential health care, government, critical infrastructure, retail, providers of basic necessities to the economically disadvantaged, maintenance of essential operations of residences, media and childcare.

The Mecklenburg order goes well beyond those categories in its list of 22, specifically including businesses of many types, such as dry cleaners, hotels and motels, providers of legal services, insurance services and funeral services.

2. Does the SIP order exclude the 16 critical infrastructure sectors as identified by the National Cybersecurity and Infrastructure Agency, and, if so, does your business qualify as one of those?

The CISA critical infrastructure sectors are:

16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.
 
Whether explicitly referenced as with the Dallas SHSS order, or not, the operations of these critical infrastructures have been designated as vital to the U.S., and, therefore, if your business is in one of these sectors, chances are it is not prohibited from operating by an SIP order.


The 16 sectors are chemical, commercial facilities, communications, critical manufacturing, dams, defense industrial base, emergency services, energy financial services, food and agriculture, government facilities, health care and public health, information technology, nuclear reactors, materials, and waste, transportation systems, and water and wastewater systems.

3. Are there exceptions in the SIP order for employees to be physically present on the business premises and do they need to follow certain COVID-19 protocols to do so?

This is an area in which the details are very important. Companies should ensure that their employees are complying with the order even if their business is considered essential under an SIP order. For example, the Mecklenburg county order explicitly requires essential businesses to engage in social distancing requirements, which include some specific provisions, such as “[d]esignating with signage, tape, or by other means six foot spacing for employees and customers in line to maintain appropriate distance."

As you can see, this creates an affirmative obligation on the business, one that can easily be checked for compliance. Another requirement under this provision is “[i]mplementing separate operating hours for elderly and vulnerable customers.” These provisions apply to essential business, illustrating the need to read and conform your business’ practices accordingly.

4. If your business or IT employees’ activities are not excluded from the SIP order, does your IT department have a contingency for not being physically present?

The answer to this question will very quickly become apparent. While it may be reasonable for many IT functions to carry on offsite, the scope of the prohibitions in these orders has likely never been seen other than perhaps in hurricane-evacuation prone areas. For most, this means contingency plans being tested like never before. Simple issues, such as a router or server needing to be rebooted, can mean a legal question of whether a particular IT employee is violating an SIP order to go rectify the problem so offsite operations can occur.

As outlined in the next section, some orders on this are clearer than others, but in either case it is important to understand precisely how dependent your business’s offsite contingency is on onsite support and activity, whether ongoing or sporadic.

Similarly, is your business prepared to handle what could be a marked increase in cyberattacks while working remotely? It is anticipated that cybercriminals will take advantage of this pandemic to attack any (perceived) weaknesses in an organization’s work-from-home arrangement. It is important to know when and under what circumstances your IT employees may need to be physically present at the business in order to monitor and prevent cyberattacks.

5. Is it arguable that the SIP order implies the ability to maintain work-at-home operations for nonessential businesses even if it means occasional access to the physical facility for that purpose alone?

The Mecklenburg county order fortunately addresses this issue squarely by only restricting nonessential businesses from “all activities within the County except Minimum Basic Operations” and defines minimum basic operations to include:

The minimum necessary activities to maintain the value of the business’s inventory, preserve the condition of the business’s physical plant and equipment, ensure security, process payroll and employee benefits, or for related functions and [t]he minimum necessary activities to facilitate employees of the business being able to continue to work remotely from their residences.
 
This order provides some comfort that activities necessary to support working remotely are allowed even for nonessential businesses.

By contrast, as noted in the beginning of this article, the Dallas SHSS order does not provide any explicit exception to support nonessential businesses and instead simply prohibits all activities other than activities at one's own residences.

Contrasting these orders raises the question of whether it is reasonable to imply that the Dallas SHSS order is focusing on core business functions and therefore activity that would be necessary to maintain those activities is allowed. While this interpretation is tenuous based on the wording of the order, reading otherwise could lead to absurd results such as a whole business that could otherwise work remotely being stopped because nobody can go reset a router or flip a circuit breaker.

One final note to consider is that because of the source of authority on these issues, enforcement mechanisms and guidance on interpretation are unclear. The statute referred to in the Dallas SHSS order has only a few provisions on enforcement, primarily addressing enhanced penalties for crimes committed to discourage looting in evacuated areas and stating that individuals can be forcibly removed from the area. If there is ambiguity and a potentially large business disruption risk, it may be possible to seek clarifying guidance.

Whether the orders are issued by courts or the governor, state and local health departments are often involved as well and may have contacts that can provide further clarification. The Mecklenburg county order has an explicit enforcement provision in the order and failure to abide is a Class 2 misdemeanor. This has a maximum punishment of 60 days in jail and a $1,000 fine.

These uncertain times and perhaps hastily drafted proclamations require full attention of businesses to protect their employees. It is advisable to get familiar with these orders applicable to the business and its employees as there are likely to be extensions of existing ones and additional orders issued in the coming weeks.

This article was originally published as an Expert Analysis on Law360.com on March 31, 2020