What Constitutes “Essential Services” and Does My Business and Workforce Qualify?

CLIENT ALERT

by: Michael Lambert

March 25, 2020

With many state and municipal governments restricting “brick and mortar” business to “Essential Services” or permitting only an “Essential Workforce” to be physically present at a place of employment, more questions are being asked than answered. Does my company fall within the list of “Essential Services?” Are all of my employees considered an “Essential Workforce?” Who makes this determination? How should my employees identify themselves as providing “Essential Services?” What if we are wrong in our determination that we provide “Essential Services?”

Many states, including the Commonwealth of Massachusetts, are basing their executive orders on the Guidance Memorandum issued by the Cybersecurity and Infrastructure Security Agency (CISA Memo). The CISA Memo, prepared in response to the COVID-19 crisis, however, specifically states in the preamble “this list is advisory in nature. It is not, nor should it be considered to be, a federal directive or standard in and of itself.” Therefore, unless there is a federal directive (executive order) or a state-issued Emergency Order (such as the one issued by Gov. Baker this on March 23rd), the guidance in the CISA Memo is suggestive only.

How each state will implement the guidance remains to be seen. In Massachusetts, it appears that Gov. Baker has adopted the CISA Memo guidance wholesale. Gov. Baker’s Order references a nine-page list of “COVID-19 Essential Services” and proclaims that businesses and other organizations that provide these services are considered “Essential Workforces.” Companies that do not provide Essential Services must cease in-person operations. Beyond the list attached to Gov. Baker’s Order, the Order does not contain any guidance to businesses on what constitutes or qualifies as “Essential Services” or “Essential Workforces.”

Gov. Baker’s Order states that the Commissioner of Public Health is directed to issue guidance to implement the terms of the Order. The Order directs the DPH (along with any board of health) to enforce the Order with the assistance of state or municipal police. The Order further sets forth the criminal and civil penalties for violating the Order. The DPH, however, has yet to issue any guidance to businesses implementing Gov. Baker’s Order.

The function of the businesses and employees that qualify as Essential Services under the CISA Memo and Gov. Baker’s Order is broad, vague at points and gives companies the ability to argue that they fall within a particular service. For example, one category listed as an Essential Service are “Professional services (such as legal and accounting services) and payroll and employee benefit services, when necessary to assist in compliance with legally mandated activities and critical sector services or where failure to provide such services during the time of the order would result in significant prejudice.” What exactly is “compliance with legally mandated activities?” When does failure to provide legal and accounting services result in “significant prejudice,” and when is this issue adjudicated? This single category of “Essential Services” can be interpreted to cover nearly every lawyer and accountant, which certainly can’t be the intention of the Order. Interestingly, in Massachusetts, the Executive Office of Housing and Economic Development (EOHED), not the DPH, has indicated that it will be publishing content to answer to frequently asked questions from the business community on the COVID-19 page of the EOHED website (https://link.zixcentral.com/u/7d470f9c/trx2fTVt6hGsdNHOhnsoMg?u=https%3A%2F%2Fwww.mass.gov%2Finfo-details%2Fcovid-19-resources-and-guidance-for-businesses). The EOHED, however, has yet to issue any guidance for business. In Massachusetts, companies whose function is not included in the Essential Services/Workforce list can request to be designated as providing an essential function. https://www.mass.gov/forms/essential-service-designation-request

It appears that for the time being, Gov. Baker’s Emergency Order is self-regulating. Businesses are left to make the determination whether they fall within the list of Essential Services. If the DPH or local board believes that a business is operating but not providing Essential Services, they can order a company to close its physical operations, issue a civil fine ($300/violation pursuant to G.L. c. 40 sec. 21D) or file a criminal complaint or motion for injunction with the district court pursuant to G.L. c. 639 sec 8. This is essentially what happened in California, when the Tesla factory continued to operate, believing building automobiles was an “essential business.” Governor Newsome disagreed and ordered the plant to shut down its manufacturing operations and permitted only essential employees to report to duty at its facility. This will certainly happen to companies in Massachusetts and other states that stretch the plain meaning and intent of the Essential Services list. In Massachusetts, unless and until the DPH issues further regulations or the EOHED provides guidance, companies that continue to operate “brick and mortar” services do so at the peril of being challenged by the DPH or their local health board.

Once a company makes a determination that it provides an Essential Service that requires it to operate a physical workplace, it should be prepared to defend that decision if questioned by the DPH, local board of health or state/local police. Companies should provide their Essential Workforce with some designation, whether it is an employee badge or company memorandum, as proof that they are providing “Essential Services” under the CISA Memo or Executive/Municipal Order. Companies should also instruct their Essential Workforce to direct all inquiries from authorities on this issue to a central point person. That company designee should be prepared to justify their determination that their business and workforce is fulling an essential function under the existing order.

Companies are certain to have specific questions about whether a particular facility is performing an “Essential Service” or function under either the CISA Memo or any state’s executive order. Given the unique circumstances each business presents, a case-by-case contextual analysis must be done for each company. Our COVID-19 Task Force stands ready to assist clients in this analysis and put them in the best position to make informed decisions on these issues.