Covid-19 Virus and Small Businesses
DETERMINING "ESSENTIAL BUSINESS" AND IMPLEMENTING "SOCIAL DISTANCING" IN A COVID-19 (CORONA) VIRUS WORLD - Santa Clara and Sacramento Counties, California
QUALIFYING AS AN ESSENTIAL BUSINESS
Under the State of Emergency Proclamation
issued by Governor Newsom on March 4, 2020, and the subsequent SCC Order and Sac Order (both cited in the list below), only Essential Businesses are permitted to continue activities in Santa Clara and Sacramento counties while the state of emergency is in effect. On one hand, failure to comply with "any of the provisions of this Order constitutes an imminent threat and menace to public health, constitutes a public nuisance, and is punishable by fine, imprisonment, or both" (SCC Order, Sec. 2; see Sac Order Sec. 1). On the other hand, if a business is essential, it is "strongly encouraged to remain open" (SCC Order, Sec. 5; Sac Order Sec. 4). How does a business navigate these rules?
Counties (and some cities) play a key role in the emergency legal regime put in place to deal with the Covid-19 epidemic. Local authorities are typically the front line of enforcement, and they look mainly to their own local orders for guidance. It is to those orders that a business should first turn.
Both the SCC Order and Sac Order (cited below) define "businesses that supply other Essential Businesses with the support and supplies necessary to operate" as Essential Businesses that are themselves permitted to operate as an exception to the general order. (SCC Order, Sec. 13(f)(xix); Sac Order, Sec. 10(g)(xv)). The SCC Order further qualifies the order: "only to the extent that they support or supply Essential Businesses". That is, only business lines within a production facility that supply Essential Businesses are permitted to operate.
A threshold question is "How far up the supply chain does the definition of "Essential Business" extend?" For example, can a company continue to operate if it supplies training equipment to a school that trains delivery vehicle drivers, and the operation of those vehicles is an Essential Business (for example, shipping services)?
Clearly, if the equipment is required immediately for training and the training is essential to hiring new drivers that are urgently needed, producing that equipment should be an Essential Business. However, what if the equipment is not needed immediately, but may be needed if the state of emergency continues for more than a month? Or if the equipment is essential but can also be purchased elsewhere? Can the equipment supplier continue its production (and related product support and training) under the relevant county order?
Santa Clara County has attempted to answer some question for specific businesses. For example, automotive dealerships are defined as Essential Businesses, but "only for the purpose of providing auto-supply and auto-repair services (and not, but way of example, car sales and car washes)". The order goes on to permit online purchases of automobiles, but only if they are delivered to a residence or Essential Business.
LINKS TO ORDERS AND GUIDELINES ON "ESSENTIAL BUSINESS" APPLICABLE IN SANTA CLARA AND SACRAMENTO COUNTIES
Santa Clara County (SCC Recommendations): Recommendations for Businesses and Workplaces
Form to Post and Provide to Employees (Appendix A): Appendix A: Social Distancing Protocol
The information on this website is not an invitation for an attorney-client relationship and does not create such a relationship. The information on this website is of a general nature. It is intended for informational purposes only and should not be relied on as legal advice. Readers should obtain advice applying to their circumstances from Marson Law P. C. or other advisors before acting or not acting.
April 6, 2020
In response to the Covid-19 (Corona Virus) epidemic, federal, state, county and city governments have issued orders and guidance regarding essential activities and essential businesses, but ambiguities remain. Owners of businesses can be left with questions as to how the wording in these rules fits together and applies to them. For example,
"We are not listed as an Essential Business and do not directly supply an Essential Business, but we provide equipment to an Essential Business's service supplier. Are we permitted to continue operating?"
"If we can operate, what steps should we take to maximize protection for our employees and minimize exposure to fines and liability of our company in this uncertain time? For certain key activities, it will not be possible for our employees to keep a 6-foot distance from each other."
QUALIFYING AS AN ESSENTIAL BUSINESS
- A selected list of links to federal, state and local rules relating to "Essential Business" that are applicable in Santa Clara and Sacramento counties are set out at the end of this section.
Counties (and some cities) play a key role in the emergency legal regime put in place to deal with the Covid-19 epidemic. Local authorities are typically the front line of enforcement, and they look mainly to their own local orders for guidance. It is to those orders that a business should first turn.
Both the SCC Order and Sac Order (cited below) define "businesses that supply other Essential Businesses with the support and supplies necessary to operate" as Essential Businesses that are themselves permitted to operate as an exception to the general order. (SCC Order, Sec. 13(f)(xix); Sac Order, Sec. 10(g)(xv)). The SCC Order further qualifies the order: "only to the extent that they support or supply Essential Businesses". That is, only business lines within a production facility that supply Essential Businesses are permitted to operate.
A threshold question is "How far up the supply chain does the definition of "Essential Business" extend?" For example, can a company continue to operate if it supplies training equipment to a school that trains delivery vehicle drivers, and the operation of those vehicles is an Essential Business (for example, shipping services)?
Clearly, if the equipment is required immediately for training and the training is essential to hiring new drivers that are urgently needed, producing that equipment should be an Essential Business. However, what if the equipment is not needed immediately, but may be needed if the state of emergency continues for more than a month? Or if the equipment is essential but can also be purchased elsewhere? Can the equipment supplier continue its production (and related product support and training) under the relevant county order?
Santa Clara County has attempted to answer some question for specific businesses. For example, automotive dealerships are defined as Essential Businesses, but "only for the purpose of providing auto-supply and auto-repair services (and not, but way of example, car sales and car washes)". The order goes on to permit online purchases of automobiles, but only if they are delivered to a residence or Essential Business.
If you are a supplier and not expressly covered in the wording of the county orders, there are several steps you can take to determine if your business qualifies as "essential":
- Call the office of the County Health Officer that issued the orders to request clarification. Be prepared, however, to find such guidance less than helpful, especially in these early days. The county authorities themselves are often struggling with the scope and meaning of the wording and may not be able to provide definitive help.
- Check federal or state guidance regarding the business you are supplying. For example, workers in Critical Infrastructure Industries, as defined by the Department of Homeland Security and including subcontractors, have a special responsibility to maintain a normal work schedule. The DHS Guidance, cited below, lists workers in key industries. The DHS Guidance is not mandatory by its own terms but it has been expressly referenced by Order N-33-20, cited below, as an exception to the Governor's order to stay at home. This exception for Critical Infrastructure Workers that are listed in the DHS Guidance should apply throughout the state.
- Although not identified in the county orders, workers for businesses supplying the Defense Industrial Base are expressly identified in both the Federal Guidance and State List (both cited below). The businesses where such workers are employed (and businesses that supply those businesses) have a strong basis for asserting they are Essential Businesses.
- Certain sector categories in the State List, such as Transportation and Logistics, are both broader and more detailed than the county orders. Inclusion of a business activity (and/or workers engaged in such activity) within a production or service "mode" in the State List affords statutory support to qualify such a business as essential and even though that activity is not expressly included in the county lists.
If a business is not expressly within any list of Essential Businesses but is under pressure from customers that are, directly or indirectly, considered Essential Businesses, what steps can it take to achieve some comfort as to its status?
- Ask customers the basis for considering that they are Essential Businesses as their reasoning may apply to your business.
- Review reasons, both pro and con, that your business is essential to an Essential Business.
- Formally adopt a course of action by management decision and/or board resolution.
- Document your actions to show that your company did reasonable research and made reasoned decision in light of the relevant orders and guidances - include legal counsel supporting your decision if needed.
While the rules remain unclear, documented efforts to reach a reasonable decision after careful consideration should be a substantial (often the best available) defense to a criminal charge or employee or customer claim of injury.
LINKS TO ORDERS AND GUIDELINES ON "ESSENTIAL BUSINESS" APPLICABLE IN SANTA CLARA AND SACRAMENTO COUNTIES
Federal (DHS Guidance): Guidance on the Essential Critical Infrastructure Workforce (Identifying ECI Workers)
State (Order N-33-20): Executive Order N-33-20
State (State List): Essential Critical Infrastructure Workers
State (Order N-33-20): Executive Order N-33-20
State (State List): Essential Critical Infrastructure Workers
Santa Clara County (SCC Order): Order of the Health Officer of the County of Santa Clara, March 31, 2020
Sacramento County (Sac Order): Order of the Health Officer of the County of Sacramento Directing All Individuals Living in the County to Stay at Home, Etc. March 19, 2020
GUIDANCE FOR EMPLOYERS - SOCIAL DISTANCING
- A selected list of federal, state and local guidance on "Social Distancing" are set out at the end of this section.
The Sac Order (cited above) requires all businesses that operate during this State of Emergency to maintain Social Distancing Requirements (Sec. 4). Section 10(k) lists basic requirements:
- Maintain 6 feet apart
- Wash hands frequently with soap and water or hand sanitizers for 20 seconds
- Cover coughs and sneezes
- Regularly clean high touch surfaces
- Do not shake hands
The SCC Order additionally requires businesses to implement a Social Distancing Protocol at each operating facility (Sec. 5). That Protocol must be posted and also delivered to each employee. Section 14(h) of the SCC Order requires that the Social Distancing Protocol explain how the business is achieving a set of goals, including the following:
- Limiting the number of people who can enter the facility at one time
- Marking where lines may form and adding 6 foot increment markings
- Adding hand-sanitizer and other items at the entrance and other appropriate areas
- Providing for contactless payment systems, or disinfecting payment means after each use
- Regularly disinfecting high touch services
- Posting a sign at the entrance warning against entering the facility with a cough or fever, requiring maintenance of a 6-foot distance, etc.
- Other social distancing methods being implemented in the facility, including those listed in the CDC Guidance (cited below)
Section 14(h) clearly applies to facilities that are open to the public. However, please note that by its terms, it also applies to production and service facilities that are not open to the public.
The SCC Order very helpfully attaches an Appendix A (cited below) that is a checklist of actions that business owners are required to meet under Section 5 of that order. Additional guidance is provided in the SCC Recommendations and the OSHA Rules (both cited below). Although the SCC Order applies only in Santa Clara County, these materials can be referenced and followed by business owners operating anywhere to demonstrate reasonable efforts to protect employees.
What if certain business activities of an Essential Business require approaching other employees or clients/customers closer than 6-feet?
The Sac Order requires businesses to meet Social Distancing Requirements, including a 6-foot separation, "to the greatest extent possible" (Sec. 4), leaving open the possibility of closer contact at times. Section 5 and Appendix A of the SCC Order spell out 6-foot social distancing requirements in detail without providing any exceptions. However, Section 13(k) of the SCC Order, while requiring strict compliance, does include an exception: "as necessary to carry out the work of Essential Business".
If closer contact is unavoidable, businesses should implement protective measures to the extent feasible, such as wearing gloves, masks and face shields and/or installing clear plastic barriers, following guidelines on sanitization and washing facilities, and ensuring employees are instructed on how to use the equipment provided. An employment attorney should be consulted regarding details of the applicable rules and proposed measures before implementing an employee protection plan.
LINKS TO ORDERS AND GUIDELINES ON "SOCIAL DISTANCING" APPLICABLE IN SANTA CLARA AND SACRAMENTO COUNTIES
Federal (CDC Guidance): CDC Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)
Federal (OSHA Rules): OSHA Rules on Control and Prevention, including guidance for U.S. workers and employers
Federal (OSHA Rules): OSHA Rules on Control and Prevention, including guidance for U.S. workers and employers
California/OSHA (Cal/OSHA Guidelines): Cal/OSHA Interim Guidelines for General Industry on 2019 Novel Coronavirus Disease (COVID-19)
Santa Clara County (SCC Recommendations): Recommendations for Businesses and Workplaces
Form to Post and Provide to Employees (Appendix A): Appendix A: Social Distancing Protocol
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By Allan Marson, Esq. Allan is principal and founder of Marson Law P.C.
info@marsonlaw.com
The information on this website is not an invitation for an attorney-client relationship and does not create such a relationship. The information on this website is of a general nature. It is intended for informational purposes only and should not be relied on as legal advice. Readers should obtain advice applying to their circumstances from Marson Law P. C. or other advisors before acting or not acting.
