Effective Friday, March 20, 2020, Governor Newsom imposed a California-wide Shelter-in-Place via Executive Order (Executive Order). This Executive Order comes on the heels of numerous shelter-in-place orders issued by individual counties and cities across the state in the past week. The Governor's Executive Order requires all individuals living in California to stay home or at their place of residence except as needed to maintain the continuity of 16 critical infrastructure sectors. This Executive Order remains in place indefinitely.

The intent of the Executive Order is to preserve the public health and safety, and to ensure the healthcare delivery system is capable of serving all, while maintaining operation of critical infrastructure sectors. It also seeks to establish consistency across the state regarding measures that mitigate the impact of Coronavirus (also known as COVID-19).

What Businesses Are Covered By The Executive Order?

The Executive Order covers all businesses with a facility in California, except for 16 "Critical Infrastructure Sectors." The Executive Order adopted the federal government's list of Critical Infrastructure Sectors, as outlined here. Employees who work in the Critical Infrastructure Sectors may travel to/from their work. The Critical Infrastructure Sectors are:

  • Healthcare/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

Detailed guidelines regarding each Critical Infrastructure Sector are located here.

What Are The Guidelines For Businesses In The Critical Infrastructure Sectors?

The Executive Order strongly encourages Californians working in these 16 Critical Infrastructure Sectors to continue their work because of the importance of these sectors to Californians' health and well-being. When employees of businesses in the Critical Infrastructure Sectors leave their residences to work in the Critical Infrastructure Sectors, they should continue to practice social distancing requirements. These include maintaining at least six-foot social distancing from other individuals, washing hands with soap and water for at least 20 seconds as frequently as possible or using hand sanitizer, covering coughs or sneezes (into the sleeve or elbow, not hands) and regularly cleaning high-touch surfaces, and not shaking hands.

What If My Business Is In A Critical Infrastructure Sector, But A County Order Does Not List It As An "Essential Business"?

The Governor's Executive Order likely preempts any conflicting county and/or city orders. Article XI, section 7 of the California Constitution provides that a county or city may not make and enforce local, police, sanitary, or other ordinances and regulations that conflict with general laws. One of the express purposes of the Executive Order is "to establish consistency across the state in order to ensure that we mitigate the impact of COVID-19." This appears to be a response to the conflicting shelter-in-place orders issued by numerous counties and cities, some of which only closed bars and restaurants, while others closed numerous businesses that were not deemed "Essential Businesses" by a particular county or city. To view our prior alerts on this subject, click here and here.

Further, the Executive Order applies to "all Californians," and identifies certain industries as "critical in order to protect the health and well-being of all Californians." It is therefore likely that where the Executive Order identifies a Critical Infrastructure Sector, such as car manufacturing or defense, and a particular city or county does not list it as "essential" business, the Governor's Executive Order takes precedence. As stated by Governor Newsom: "I order that Californians working in these 16 critical infrastructure sectors may continue their work because of the importance of these sectors to Californians' health and well-being."

Therefore, each business should look first to the Executive Order and the guidance on whether the business falls within a Critical Infrastructure Sector. Next, the business should look to any applicable county orders (at the time of writing more than 20 counties in California have issued their own ordinances) or city ordinances (e.g., Los Angeles, Pasadena, Long Beach, Fresno, Palm Springs) and determine whether the local order is consistent with the Executive Order. Where the orders are inconsistent, the Executive Order should be given precedence.

What Should My Business Do To Demonstrate it is Exempt from the Shelter-In-Place Requirement?

As a best practice, businesses that fall within a Critical Infrastructure Sector should consider providing written letters to employees who will be required to travel to and from work for essential activities or minimum business operations ("Travel Letters"). The Travel Letter should identify the carrying employee as necessary to operations, and cite to the provisions of the various orders that might apply. While news of enforcement of the orders is scarce, the Travel Letters can help explain the situation to employees and provide some peace of mind during such a confusing time. Our team is working closely with many clients to help them understand whether they fit within one of the exceptions to the shelter-in-place orders and prepare Travel Letters.

What If My Business Is Not On The List Of Critical Infrastructure Sectors?

Generally, businesses that are not in the Critical Infrastructure Sectors must send workers home. Some county and city ordinances reference a "skeleton staff" that permits "non-essential" businesses to continue "Minimum Basic Operations" necessary to maintain the value of their inventory, ensure security, process payroll and employee benefits and facilitate their employees’ ability to work remotely from their residences. For example, such provisions are included in the Los Angeles, Long Beach and the Bay Area Shelter-in-Place Orders.

Unlike the shelter-in-place orders issued by some counties, the Executive Order does not contain an express exception for “non-essential” businesses to allow employees to travel to work to perform “minimum basic operations.” Notably, the Executive Order states the Governor “may designate additional sectors as critical in order to protect the health and well-being of all Californians,” and it is unlikely that the Executive Order was intended to create significant harm to businesses that are able to maintain minimal basic operations while employing social distancing and taking other recommended precautions. Therefore, we expect that further exemptions and clarifications may follow and allow for minimum basic operations to continue for non-critical sector businesses. Stay tuned.

Is There A Penalty For Non-Compliance?

Per the Executive Order, a refusal or willful neglect to obey is a misdemeanor punishable by fine, imprisonment, or both. As has been the case for some companies already, perceived non-compliance with the Executive Order can be a source of negative publicity or present public relations challenges.

Are Impacted Employees Eligible For Unemployment Insurance?

If Employees are forced to stay at home under the Orders and unable to work from home, or have their hours reduced, are furloughed or laid off, they may apply for unemployment insurance benefits through the California Employment Development Department. Employees are not eligible for unemployment insurance if they work from home (or are able to work but choose not to) while required to shelter in place under the orders. Individuals do not need to be sick to apply. California has waived the normal one-week waiting period, so an individual employee may collect unemployment insurance benefits for the first week he or she is out of work.

Further, it is possible that affected employees may be entitled to paid sick and family leave under the Families First Coronavirus Response Act (FFCRA), once it takes effect. Information for employers regarding the FFCRA is located here.

How Do I Get More Information?

This is a rapidly evolving area and the law changes on a daily basis. Please contact your Baker McKenzie employment lawyer if you need assistance navigating these issues. You can also click here for our most recent client alerts on employee pay during COVID-19 leaves, furloughs, and closures.

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