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:

Exenciones. Las personas físicas pueden abandonar su lugar de residencia para:

Operate an Essential Business, which includes:

• Operaciones sanitarias, incluido el personal sanitario a domicilio;
• Infraestructuras esenciales, incluida la construcción de viviendas y el funcionamiento del transporte público y los servicios públicos; 
• Tiendas de comestibles, mercados agrícolas, bancos de alimentos, tiendas de conveniencia;
• Empresas que proporcionan artículos de primera necesidad a personas económicamente desfavorecidas e instalaciones de acogida;
• Farmacias, tiendas de suministros sanitarios y centros de salud;
• Gasolineras y talleres de reparación de automóviles;
• Bancos;
• Recogida de basura;
• Ferreterías, fontaneros, electricistas y otros proveedores de servicios necesarios para mantener la seguridad, la salubridad y el funcionamiento esencial de las residencias y otros negocios esenciales;
• Instituciones educativas, con el fin de facilitar la enseñanza a distancia;
• Lavanderías, tintorerías y proveedores de servicios de lavandería;
• Empresas que envían o entregan comestibles, alimentos y productos directamente a los domicilios;
• Guarderías que prestan servicios que permiten a los empleados esenciales acudir al trabajo;
• Funciones necesarias para que cualquier Empresa Esencial "mantenga operaciones básicas", que incluyen seguridad, nóminas y actividades similares.

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).  

Además, se permite a todas las empresas continuar con las "operaciones básicas mínimas" de acuerdo con la siguiente disposición:

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. 

Preguntas clave:

• ¿Qué actividades están exentas de la Orden?
  
  "Actividades esenciales", incluyen:
  • Essential travel (e.g. travel relating to “essential activities,” “essential businesses,” or “minimum basic operations”)
  • Actividades de apoyo a "empresas esenciales" (por ejemplo, operaciones sanitarias, primeros intervinientes, tiendas de comestibles, tiendas de conveniencia, servicios de medios de comunicación, gasolineras/reparaciones de automóviles, bancos e instituciones financieras relacionadas, servicios de transporte).
  • Actividades de apoyo a organismos gubernamentales, restaurantes que prestan servicios de reparto o ejecución y determinados servicios profesionales, como servicios jurídicos o contables, cuando sean necesarios para ayudar a cumplir con actividades legalmente obligatorias.
  • Actividades de apoyo a obras de infraestructura esenciales, como construcción de obras públicas, construcción de viviendas, operaciones aeroportuarias, agua, alcantarillado, gas, electricidad, refino de petróleo, carreteras y autopistas, transporte público, recogida y eliminación de residuos sólidos, Internet y sistemas de telecomunicaciones.

• 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 seguirá manteniéndole informado sobre los acontecimientos relevantes. Haga clic aquípara acceder al Centro de recursos sobre el coronavirus de Foley, donde encontrará información y recursos para ayudar a su empresa en estos momentos difíciles.