Managing the Commercial Impact of the Coronavirus: San Francisco Bay Area Shelter in Place Orders

EDITOR'S NOTE: An update to this alert has been published here. For the most up to date information on Shelter in Place Orders in California, please click here.

“My fellow San Franciscans, what we are asking for everyone to do is to remain at home for all but the most essential outings for your safety and the safety of those around you.” ( ~ San Francisco Mayor London Breed speaking at a news conference Monday)

As the coronavirus (“COVID-19”) outbreak continues to wreak havoc on markets and industries in the U.S. and around the world, businesses are now confronting significant and unique challenges.  Successful navigation of these challenges will require thoughtful and comprehensive planning.  Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources (see Foley’s Coronavirus Resource Center) and is prepared to help our clients meet the legal and business challenges that the COVID-19 outbreak is creating for stakeholders across a range of industries, including automotive, manufacturing, technology, solar, hospitality and travel, healthcare, food, fashion and apparel, and sports & entertainment.  

In an unprecedented move, seven counties in the San Francisco Bay Area have issued “shelter in place” orders, which will last from March 17, 2020 through April 7, 2020. The seven affected counties are San Francisco, Alameda, Contra Costa, Marin, Santa Clara, San Mateo and Santa Cruz. The Orders aim to limit the spread of COVID-19 by ensuring people self-isolate as much as possible while still allowing for essential services to continue. The first such Order issued was from San Francisco County and takes effect as of Midnight on March 17, 2020.  The other six (6) counties have similar orders. 

In brief, residents of each county must remain at home. Gatherings outside the home are generally prohibited, with certain exceptions for essential activities (e.g., healthcare, grocery shopping, etc.), essential travel, to perform work for essential businesses (e.g., healthcare, grocery stores, etc.), to perform work for governmental activities or to perform essential infrastructure work (e.g., testing, housing, etc.).  However, these limited circumstances where people may interact with one another include the requirement to observe the past COVID-19 protocols (“social distancing”) such as staying 6 feet apart, not going to work if you are ill, and frequent washing of hands.  There are exceptions to the Orders and other details worthy of note as highlighted below:

Exemptions. Individuals may leave their place of residence to:

Operate an Essential Business, which includes:

• Healthcare operations, including home health workers;
• Essential Infrastructure, including construction of housing and operation of public transportation and utilities; 
• Grocery stores, farmers’ markets, food banks, convenience stores;
• Businesses that provide necessities of life for economically disadvantaged individuals and shelter facilities;
• Pharmacies, health care supply stores, and health care facilities;
• Gas stations and auto repair facilities;
• Banks;
• Garbage collection;
• Hardware stores, plumbers, electricians, and other service providers necessary to maintain the safety, sanitation, and essential operation of residences and other essential businesses;
• Educational institutions, for the purposes of facilitating distance learning;
• Laundromats, dry cleaners, and laundry service providers;
• Businesses that ship or deliver groceries, food, and goods directly to residences;
• Childcare facilities providing services that enable essential employees to go to work;
• Roles required for any Essential Business to “maintain basic operations,” which include security, payroll, and similar activities.

Further, the Order includes certain professional services as "essential business" (e.g., Professional services, such as legal or accounting services, when necessary to assist in compliance with legally mandated activities).  

Also - all businesses are allowed to continue “minimum basic operations” per the following provision:

For the purposes of this Order, “Minimum Basic Operations” include the following, provided that employees comply with Social Distancing Requirements as defined this Section, to the extent possible, while carrying out such operations: i. The minimum necessary activities to maintain the value of the business’s inventory, ensure security, process payroll and employee benefits, or for related functions. ii. The minimum necessary activities to facilitate employees of the business being able to continue to work remotely from their residences. 

Key FAQs:

• What activities are exempt from the Order?
  
  “Essential activities,” include:
  • Essential travel (e.g. travel relating to “essential activities,” “essential businesses,” or “minimum basic operations”)
  • Activities that support “essential businesses” (e.g. healthcare operations, first responders, grocery stores, convenience stores, media services, gas stations/auto-repair facilities, banks and related financial institutions, shipping services)
  • Activities that support government agencies, restaurants providing delivery or carry out services, and certain professional services, such as legal or accounting services, when necessary to assist in complying with legally mandated activities
  • Activities that support essential infrastructure work, including public works construction, housing construction, airport operations, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet, and telecommunications systems.

• Are non-essential businesses required to end their activities? 
  
  No.  Businesses are not ordered to go out of business. If you are not an essential business and have a facility within any of the affected counties, you may continue “minimum basic operations,” which include performing activities necessary to maintain the value of the business’s inventory, ensure security, process payroll and employee benefits, or for functions related to this list. You are also permitted to conduct the necessary activities to facilitate employees of the business to be able to continue to work remotely from home. You must, however, observe the past COVID-19 social distancing protocols.

• What can your employees do if they cannot work or their hours are reduced?
  
  The California Employment Development Department (CEDD) is advising that employees who cannot work or who are experiencing reduced hours due to COVID-19 may apply for disability insurance or unemployment insurance. The CEDD’s guidance is available here.  

• How long are the Orders in place?
  
  The Orders currently run through April 7, 2020, though they could be rescinded earlier or extended.

• How will the Orders be enforced?
  
  Law enforcement (the police and local sheriff) is tasked with ensuring compliance with and enforcing the Orders, and violation may constitute a misdemeanor. However, local officials have indicated that they do not want to resort to criminal liability unless flagrant violations are observed.

In summary, it is important for all businesses to take additional steps now in order to mitigate their risk of suffering negative impacts from COVID-19. For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of COVID-19 on a global basis, you may wish to visit the CDC and the World Health Organization. 

Foley will continue to keep you apprised of relevant developments. Click here for Foley’s Coronavirus Resource Center for insights and resources to support your business during this challenging time.