The Texas response to COVID-19 remains a patchwork of local and statewide directives. Governor Greg Abbott has so far declined to follow other states, including California, Louisiana, and Illinois, that have issued statewide shelter-in-place orders. Instead, he invited local officials to take more restrictive measures if they believed they were needed. Dallas County accepted his invitation hours later, issuing the state's first shelter-in-place order, effective at 11:59 pm on 23 March 2020. Although the restrictions differ from county to county, a few trends have emerged.
What businesses must close?
The current statewide order requires the closure of bars, restaurants, food courts, gyms and massage parlors, and limits social gatherings to no more than 10 people. Travis County limits all gatherings to 10 people, who must maintain a six-foot distance from each other. This includes places of business, but exempts "critical infrastructure" (including airports, transit facilities, financial institutions, communications, emergency services, energy, transportation systems, water and wastewater systems), grocery stores, pharmacies and medical facilities. Bexar County and Tarrant County are slightly less restrictive, limiting gatherings of 10 or more people within a single enclosed space.
Dallas County has ordered the closure of all businesses not deemed essential, and instructed any business remaining open to maintain a six-foot distance between all individuals. Harris County has not yet issued an order more restrictive than the statewide instructions, and on the morning of 23 March Harris County Judge Lina Hidalgo held a press conference but did not issue a shelter-in-place order at that time.
What is an "essential" business?
The Dallas County order broadly defines essential businesses. All 16 "Essential Critical Infrastructure" sectors identified by the National Cybersecurity and Infrastructure Agency (CISA) are incorporated into the Dallas County order, following the lead of states like California and Louisiana in exempting industries such as residential and commercial construction, oil refining, roads and highways, solid waste collection and removal, telecommunications systems, financial institutions and essential manufacturing operations. Healthcare operations, excluding fitness and exercise facilities and elective procedures, remain open.
"Essential retail" is also exempt, including stores that "sell food products and household staples," laundromats and dry cleaners, gas stations, auto supply and repair shops, hardware stores and related facilities, warehouses or distribution and fulfillment centers, storage centers, funeral homes and business providing products for people working remotely. Service providers including mail and shipping services, cleaning, maintenance, security, trash and recycling collection and disposal, electricians, exterminators and others are also exempt, as are those providing professional services that "assist in compliance with legally mandated activities." Lastly, there is a broad catchall for "businesses that supply other essential businesses with support or supplies needed to operate."
How are the energy and chemical industries treated?
The CISA's Essential Critical Infrastructure guidance considers a broad range of electricity, petroleum, natural and propane gas and chemical workers as critical infrastructure. In effect, the entire supply chain for these industries is deemed essential. Further, any operations that are "necessary for the manufacturing of materials and products" demanded by the energy or chemical manufacturing supply chains are also exempt from closure. Nevertheless, the guidance generally encourages employers to allow employees to work remotely when possible, and if that is not possible, to implement social distancing or to stagger shifts.
If I continue operating my essential business, what precautions should I take?
Dallas County, Tarrant County and Travis County have all specifically ordered that six-foot social distancing precautions should be taken, even in private settings or at work. Ensuring adequate space for employees and the general public to comply with this order is also advisable. This is also in-line with the CISA's recommendations, which encourage essential operations to utilize remote working setups as frequently as possible and, where remote work is not possible, to stagger shifts in order to limit direct interaction.
In counties where a shelter-in-place order is in effect, such as Dallas County, businesses may consider issuing written letters to employees who will be required to travel to and from work at an essential business. These letters should identify the employee as necessary to operations, and cite the provisions of the various orders that might apply to the business. Travel Letters can help explain the situation to employees and provide peace of mind during such a confusing time. Large operations, such as construction projects, refineries or petrochemical plants, may consider providing notice to local authorities that they are remaining open in accordance with the applicable orders. Dallas County's order also suggests that impacted businesses post the order and make copies available upon request.
If I have to shut down operations, what should I do to limit my losses?
If your business must shut down under any statewide or local order, review your insurance policies and contracts for any claims you may have under primary and excess insurance policies. Businesses can also consider issuing force majeure notices to any entity they supply or service, if these orders make it difficult or impossible to meet any contractual obligations. More analysis of force majeure clauses can be found in the following client alerts, with specific guidance for the energy industry forthcoming:
- US: When Is Force Majeure Really Force Majeure?
- No Force Majeure Clause? Other Potential Options to Excuse Contractual Performance Under US Law in the Face of COVID-19
Businesses may also have to consider ways to reduce workforce costs through layoffs, furloughs, salary reductions or schedule changes. See the next section for more information.
How does this affect my employees?
If employees are forced to stay at home under any of the various orders and are unable to work from home or have their hours reduced enough, are furloughed or laid off, they may apply for unemployment insurance benefits through the Texas Workforce Commission. 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. Texas has waived the normal one-week waiting period, so an individual employee may collect unemployment insurance benefits for the first week they are out of work.
Further, it is possible that affected employees will be entitled to paid sick and family leave under the Families First Coronavirus Response Act (FFCRA), once it takes effect. Access information for employers regarding the FFCRA.
Is there a penalty for noncompliance?
The orders differ on enforcement, but nearly all instruct that noncompliance could be punished by a fine of up to USD 1,000 and 180 days imprisonment. While the statewide order does not contain this information, Governor Abbott listed these punishments at a press conference on Sunday, 22 March, while adding mandatory quarantine orders to the list of available remedies for violations.
When do the orders end?
The Dallas County order is currently set to end on 3 April 2020, although that may be extended. Tarrant County is currently issuing one-week orders, although it is updating them more frequently. Harris County's restaurant and bar ban extends until 30 March 2020. Travis County and the City of Austin's orders expire on 1 May 2020, while Bexar County has the longest order, expiring on 16 June 2020. Nearly all of these orders recognize that it is difficult to predict their duration, and that they may be extended or altered at any time.