Is Your Business COVID-19 Essential?

As dozens of cities and states order businesses to close unless they constitute “essential” businesses or provide “essential” services to residents, the question on everyone’s mind is: Am I essential?

While there are certain businesses that are universally recognized as “essential”—think healthcare providers, grocery stores, and pharmacies—there are plenty of other companies that are not so easily categorized. Would you have thought of Napa Auto Parts?  How about Morgan & Morgan?  Yes, attorneys and accountants, along with auto repair, construction, liquor stores, and marijuana dispensaries, depending on the specific government order, are often deemed essential businesses or services.

Many businesses fall into gray areas under these orders, causing additional stress for owners grappling with difficult questions surrounding their workforce, operations, and accounts payable.  And, many businesses would rather not be “essential,” so they can invoke contract clauses that allow them to close in a crisis such as the one created by COVID-19.  If these companies have to stay open and pay rent, they will lose money and could eventually go out of business for good.  So, the future of your business may depend on it not being essential.

To determine whether your business falls in the category of “essential,” start with the text of the order.  Most orders contain a detailed list of what constitutes an “essential business,” and if they don’t, they will refer to guidance from either the state or local department of health.  Many expressly incorporate the Department of Homeland Security’s list of “critical infrastructure workers,” which can be found here.

Of course, what constitutes an “essential” business differs considerably from city to city and state to state. For instance, medical marijuana dispensaries are “essential” in Boulder, Colorado, where they are legal, but not in Dallas, Texas, where they are not.  Sometimes it is more arbitrary.  In New York state, liquor stores are essential.  In Pennsylvania, they are closed.  Retail businesses that sell clothing, jewelry, or shoes are generally not considered “essential,” but jurisdictions differ on whether such businesses may maintain a small staff on sight to conduct minimum basic operations, such as payroll, maintenance, and security; whether they can offer curbside pickup; or whether they can even permit shoppers, provided that shoppers are able to maintain six feet of distance from each other. In some instances, there are notable variations between orders within a state itself. As of today, Georgia has not defined “essential” or “non-essential” businesses at all, but instead has only ordered the closure of “bars and night clubs.” Atlanta, on the other hand, has ordered all “non-essential” businesses to close for at least 14 days.

As the number of COVID-19 cases continue to rise at an alarming rate, we expect more cities and states to come out with orders requiring “non-essential” businesses to close until their communities can control the spread of the virus.  This moving target impacts the enforcement of contracts in all industries. AGG monitors the status of these orders daily and tracks them nationwide.