Client Alert

“New York State on PAUSE”: Governor Cuomo Signs Executive Order Curtailing Non-“Essential” Business

23 Mar 2020

On Friday evening, March 20, 2020, in conjunction with the announcement of a 10-point “Policy that Assures Uniform Safety for Everyone,” New York State Governor Andrew Cuomo signed into law Executive Order 202.8, known as the “New York State on PAUSE” order (the “Order”). The Order, which took effect immediately, continues and tightens various statewide restrictions previously announced in other executive orders recently signed by Governor Cuomo in response to the COVID‑19 health crisis. Among the more significant restrictions imposed by the Order, however, is the requirement that all “non-essential” businesses in New York reduce their in-person workforce at all work locations by 100% no later than 8:00 p.m. on Sunday, March 22, 2020. The Order specifically exempts from this restriction “[a]ny essential business” or any “entity providing essential services or functions, whether to an essential business or a non-essential business,” but requires that even such businesses and entities continue to take precautions to prevent the spread of COVID-19, including by: (i) limiting their operations to levels “necessary to provide” essential services or functions; (ii) utilizing, to the maximum extent possible, telecommuting and work-from-home procedures; and (iii) where telecommuting or work-from-home policies cannot safely or feasibly be adopted, by implementing rules that facilitate appropriate “social distancing” at the workplace. The Order is effective at least through April 19, 2020, subject to possible further extension, and is discussed in greater detail below.

Background & Prior Executive Orders

On March 7, 2020, Governor Cuomo signed Executive Order No. 202, which declared the outbreak of COVID-19 “a State disaster emergency” and “authorize[d] all necessary State agencies to take appropriate action to assist local governments and individuals in containing, preparing for, responding to and recovering from this . . . emergency, to . . . protect [the] public health, welfare, and safety.” Thereafter, and also on March 7, 2020, Governor Cuomo signed Executive Order No. 202.1, which temporarily suspended or modified, through April 11, 2020, a series of statutes, local laws, rules and regulations that might “prevent, hinder, or delay” the State’s emergency response.  In addition, the Governor directed that, effective March 13, 2020, and for a period of thirty (30) days thereafter, “[a]ny large gathering or event for which attendance is anticipated to be in excess of five hundred people shall be cancelled or postponed,” and “[a]ny place of business or public accommodation, and any gathering or event for which attendance is anticipated to be fewer than five hundred people, shall operate at no greater than fifty percent occupancy.”

Subsequently, in response to the continued and rapidly expanding spread of COVID-19, the Governor issued a series of supplemental executive orders designed to increase the restrictions originally put in place. Specifically, by Executive Order No. 202.3, the Governor on March 16, 2020, amended and modified Executive Order No. 202.1 by requiring that, until further notice, any large gathering or event be cancelled or postponed if more than fifty persons were expected to attend.  He also directed that certain specifically enumerated businesses—such as restaurants, bars, casinos, gyms, and movie theaters—curtail their on-premises operations, or cease operations altogether, as of 8:00 p.m. on March 16, 2020, and until further notice. Thereafter, by Executive Order Nos. 202.4 and 202.5, Governor Cuomo ordered the closure of every school in the State (from March 18, 2020, until at least April 1, 2020), and the closure of indoor shopping malls and indoor and outdoor places of public amusement (from 8:00 p.m. on March 19, 2020 until at least April 17, 2020). And on March 18, 2020, the Governor further expanded the earlier restrictions to impose requirements not only on the small subset of businesses specifically enumerated in earlier orders, but on “all businesses and not-for-profit entities in the State.” 

Specifically, by Executive Order No. 202.6, the Governor directed that: (i) “[a]ll businesses and not‑for-profit entities in the state shall utilize, to the maximum extent possible, any telecommuting or work‑from‑home procedures that they can safely utilize; and (ii) “[e]ach employer shall reduce the in-person workforce at any work locations by 50% no later than March 20 at 8:00 p.m.”  Executive Order No. 202.6 specifically provided, however, that “[a]ny essential business or entity providing essential services or functions shall not be subject to the in-person restrictions,” and directed the New York State Department of Economic Development d/b/a the Empire State Development Corporation (“ESDC”) to “issue guidance as to which businesses are determined to be essential” no later than March 19, 2020.

By Executive Order No. 202.7, and before ESDC promulgated any guidance about what constitutes an “essential business,” Governor Cuomo later amended Executive Order 202.6 to provide that, by 8:00 p.m. on March 21, 2020, employers were required to “reduce the in-person workforce at any work locations by 75%.”

Executive Order No. 202.8

In Executive Order No. 202.8, the Governor went even further, and, once again, amended the provisions of Executive Order No. 202.6, this time mandating a complete reduction of in-person workforce at all non-essential businesses. Indeed, in Executive Order No. 202.8, the Governor declared that:

Effective on March 22, at 8 p.m.: All businesses and not-for-profit entities in the state shall utilize, to the maximum extent possible, any telecommuting or work-from-home procedures that they can safely utilize. Each employer shall reduce the in-person workforce at any work location by 100% no later than March 22 at 8 p.m.

As with Executive Order 202.6, the Order continued specifically to exempt from this restriction any “essential business” and any “entity providing essential services or functions,” declaring that: “Any essential business or entity providing essential services or functions shall not be subject to the in-person restrictions.” The Order makes clear, however, that such businesses and entities may only “operate at the level necessary to provide such [essential] service or function.”

Guidance About What Constitutes “Essential Business”

On March 19, 2020, ESDC published guidance to assist businesses in determining whether they are an “essential business” within the meaning of Executive Order No. 202.6, as amended by Executive Orders No. 202.7 and 202.8. Per ESDC’s guidance document, an “essential business” is a one that falls within any of the following twelve (12) broadly-defined categories:

1. Essential health care operations, including: research and laboratory services; hospitals; walk-in-care health facilities; emergency veterinary and livestock services; elder care; medical wholesale and distribution; home health care workers or aides for the elderly; doctor and emergency dental; nursing homes, or residential health care facilities or congregate care facilities; and medical supplies and equipment manufacturers and providers.

2. Essential infrastructure, including: utilities including power generation, fuel supply and transmission; public water and wastewater; telecommunications and data centers; airports/airlines; transportation infrastructure such as bus, rail, or for-hire vehicles, garages; and hotels and places of accommodation.

3. Essential manufacturing, including: food processing, manufacturing agents, including all foods and beverages; chemicals; medical equipment/instruments; pharmaceuticals; sanitary products; telecommunications; microelectronics/semi-conductor; agriculture/farms; and household paper products.

4. Essential retail, including: grocery stores including all food and beverage stores; pharmacies; convenience stores; farmer’s markets; gas stations; restaurants/bars (but only for take-out/delivery); and hardware and building material stores.

5. Essential services, including: trash and recycling collection, processing and disposal; mail and shipping services; laundromats; building cleaning and maintenance; child care services; auto repair; warehouse/distribution and fulfillment; funeral homes; crematoriums and cemeteries; storage for essential businesses; animal shelters.

6. News media

7. Financial institutions, including: banks; insurance; payroll; accounting; services related to financial markets. 

8. Providers of basic necessities to economically disadvantaged populations, including: homeless shelters and congregate care facilities; food banks; human services providers whose function includes the direct care of patients in state-licensed or funded voluntary programs; the care, protection, custody, and oversight of individuals both in the community and in state-licensed residential facilities; those operating community shelters and other critical human services agencies providing direct care or support.

9. Construction, including: skilled trades such as electricians, plumbers other related construction firms, and professionals for essential infrastructure or for emergency repair and safety purposes.

10. Defense, including: defense and national security-related operations supporting the U.S. Government or a contractor to the US government.

11. Essential services necessary to maintain the safety, sanitation, and essential operations of residences or other essential businesses, including: law enforcement; fire prevention and response; building code enforcement; security; emergency management and response; building cleaners or janitors; general maintenance whether employed by the entity directly or a vendor; automotive repair; and disinfection.

12. Vendors that provide essential services or products, including logistics and technology support, child care and services, such as: logistics; technology support for online services; child care programs and services; government owned or leased buildings; and essential government services.

The ESDC guidance explains that if a business or entity believes it should qualify as an “essential business,” but does not fall within the scope of any of the above-listed categories, it may request designation as an “essential business” by completing and submitting to the ESDC this form. It further makes clear, however, that, to the extent a business or entity operates or provides both “essential” and “non-essential” services, supplies, or support, only those lines and/or business operations that are necessary to support the “essential” services, supplies, or support will be exempt from the in‑person workforce restrictions imposed by Executive Order No. 202.8. 

“Essential Business” vs. “Critical Infrastructure”

On March 19, 2020, the United States Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (“CISA”) issued an advisory emphasizing that the “[f]unctioning critical infrastructure is imperative during the response to the COVID-19 emergency for both public health and safety as well as community well-being,” and that “[c]ertain critical infrastructure industries [thus] have a special responsibility in these times to continue operations.” The CISA therefore published a guidance document “intended to support State, Local, and industry partners in identifying the critical infrastructure sectors and the essential workers needed to maintain the services and functions Americans depend on daily and that need to be able to operate resiliently during the COVID-19 pandemic response.”

The CISA guidance document broadly identifies 16 industry sectors that are considered by CISA to represent “essential critical infrastructure” whose functions should continue during the COVID-19 response, including the following sectors (and certain sub-sectors within each): Chemical; Commercial Facilities, Communications, Critical Manufacturing, Dams, Defense Industrial Base, Emergency Services, Energy, Financial, Food & Agriculture, Government Facilities, Healthcare & Public Health, Information Technology, Nuclear Reactors, Materials & Waste, Transportation Services, and Water.

Neither Executive Order No. 202.8 nor the guidance published by ESDC makes mention of the CISA guidance document, and the CISA advisory specifically notes that “State, local, tribal, and territorial governments are ultimately in charge of implementing and executing response activities in communities under their jurisdiction.” The CISA guidance document thus expressly states that the CISA’s guidance is “advisory in nature” and “is not, [and] should [not] be considered to be, a federal directive or standard in and of itself.” Nevertheless, other state governments that have issued executive orders somewhat akin to Executive Order No. 202.8 have interpreted the restrictions embodied on those orders in a manner consistent with the CISA guidance,[1] and the CISA advisory explains that “State and local officials can use [its] guidance to help manage the response and harmonize guidance across jurisdictions.” It is therefore likely that businesses or entities that qualify as “critical infrastructure” under the CISA guidance, or as suppliers to such businesses or entities, would be considered to qualify as an “essential business,” or as an “entity providing essential services or functions,” under Executive Order No. 202.8, even if not expressly identified in the guidance published by ESDC. Obviously, however, the situation is still evolving, and it remains to be seen how the term “essential business,” as used in Executive Order No. 202.8, will ultimately be interpreted and enforced.  

Other Measures Effected In Executive Order No. 202.8

In addition to expanding the in-person workforce restrictions set out in Executive Order No. 202.6, Executive Order No. 202.8 also effected a number of other significant changes that will be of interest to the business community. Among other things, for example, the Order: (i) tolled until April 19, 2020, all otherwise applicable time limits for the commencement, filing, or service of any legal action or other legal process or proceeding, including the filing of any notice or motion required pursuant to any order, rule, or statute; (ii) suspended, until April 19, 2020, application of certain sections of the New York Business Corporation Law to the extent they otherwise would have required the notification and holding of physical shareholder meetings; and (iii) authorized the abatement of interest, for a period of sixty (60) days, for taxpayers required to file returns and remit sales and use taxes by March 20, 2020 for the sales tax quarterly period ending February 29, 2020.


Morrison & Foerster continues to monitor developments relating to Executive Order No. 202.8—and to the federal and state response to the COVID-19 outbreak more generally—and invites anyone with questions or concerns about any of the matters described above to consult with our attorneys as they attempt to navigate and react to these rapidly-evolving developments.

For assistance with issues related to Executive Order No. 202.8 or similar orders, please contact David Newman or David Fertig at Morrison & Foerster LLP.

For assistance with issues related to employment practices, please contact Janie Schulman at Morrison & Foerster LLP.

Please visit Morrison & Foerster’s Coronavirus (COVID-19) Resource Center for additional Client Alerts and other resources pertaining to COVID-19-related business and legal issues.


[1] For instance, in a guidance document published on March 20, 2020, the California State Public Health Officer explained that a list of “Essential Critical Infrastructure Workers,” which largely tracked the list embodied in the CISA guidance document, are exempt from the restrictions imposed by Executive Order N-33-20 signed by California Governor Gavin Newsom on March 19, 2020, which directed all residents of California to heed current State public health directives to stay home, except as needed to maintain continuity of operations of essential critical infrastructure sectors.

Close
Feedback

Disclaimer

Unsolicited e-mails and information sent to Morrison & Foerster will not be considered confidential, may be disclosed to others pursuant to our Privacy Policy, may not receive a response, and do not create an attorney-client relationship with Morrison & Foerster. If you are not already a client of Morrison & Foerster, do not include any confidential information in this message. Also, please note that our attorneys do not seek to practice law in any jurisdiction in which they are not properly authorized to do so.