Hunton Employment & Labor Perspectives

COVID-19 presents an array of new challenges and an abundance of uncertainty for employers. Notable among them, is the possibility that communities and states will begin to issue mandatory business closures and shelter in place orders. Interpreting and complying with these orders raises a host of issues for employers to consider.

In recent days, we’ve seen a number of shelter in place orders issued. Notably, on March 19, 2020, the state of Pennsylvania ordered all non-life-sustaining businesses to close physical locations, providing affected businesses less than four hours to comply. The state of California also has implemented a stay at home order, the parameters of which are not entirely clear. Other states and cities have hinted that similar actions may be coming.

Mandatory closure and shelter in place orders differ by jurisdiction, but most so far have provided exceptions for critical infrastructure, essential services, and life-sustaining businesses. The statutory definitions of these terms are often broad (and open to interpretation), including language like “systems and assets vital to security, the economy, and public health,” and the production, transportation, and distribution of “essentials, such as goods consumed or used to preserve, protect, or sustain life.”  In some instances, one part of a company’s business may qualify for an exemption, while other parts may not.

State and local governments usually prepare disaster plans, which may provide additional insight into the types of businesses that will be permitted to remain operational during states of emergency, generally on an industry-basis. Examples of industries often deemed vital include transportation, energy, agriculture, water, critical manufacturing, communications, and health care. However, the best guidance is provided in tandem with specific mandatory closure and shelter in place orders. For example, Pennsylvania released guidance for employers identifying the specific types of businesses permitted to operate during the mandatory closure. Businesses permitted to continue operating physical locations include those involved in farming, natural gas extraction, food and paper products manufacturing, and grocery; businesses required to shut down physical locations include textile production, apparel manufacturing, and construction. In each case of a shutdown order, it will be important to carefully review the specific terms of the applicable order.

In addition to navigating the applicability of the shelter in place order, employers also have to consider the ripple effect, including the interplay between such orders and the recently passed Family First Bill, state paid leave laws and, potentially, the federal WARN Act and state equivalents.

Employers are justifiably concerned about the effects of mandatory closure and shelter in place orders on their businesses. Whether an employer is or is not able to operate a physical location despite mandatory closure and shelter in place orders is a fact-intensive inquiry, and the attendant consequences can be complex.  It is prudent for employers that are unsure to seek the advice of counsel to help navigate these uncertain times.