How Does Washington’s Stay Home Order Affect My Business?

Overview

On March 23, 2020, Governor Jay Inslee issued an Executive Order directing all Washington residents to stay at home, with certain exceptions for “essential businesses” and limited nongroup activities. The restrictions on business activities in this “Stay Home – Stay Healthy” order are initially scheduled to last two weeks, from midnight March 25 to midnight April 8. A violation of the order is punishable as a gross misdemeanor (up to 364 days in jail and/or $5,000 fine).

In general, the order instructs nonessential businesses to cease operations, except for “minimum basic operations.” The order defines minimum basic operations as activities necessary to maintain the value of a business’s inventory, preserve the condition of the physical plant and security, ensure security, process and provide payroll and employee benefits, facilitate remote working, and related functions. The order does not prohibit telecommuting or working remotely, which many enterprises have already experienced on a widespread basis. Nonessential businesses may continue to operate as long as employees work from home and refrain from in-person contact with clients.

As to essential businesses that may continue operations, the order exempts businesses and organizations in 13 specifically identified critical infrastructure sectors, so long as they establish and implement social distancing and sanitation measures in line with federal and state standards. The sectors exempted are:

1. Healthcare and Public Health
2. Emergency Services
3. Food and Agriculture
4. Energy
5. Water and Wastewater
6. Transportation and Logistics
7. Communications and Information Technology
8. Community-Based Government Operations and Essential Functions
9. Critical Manufacturing
10. Hazardous Materials
11. Financial Services
12. Chemical
13. Defense Industrial Base

Below, we briefly review the exemption for each sector and some other issues of general interest, such as activities that are allowed, general principles for sanitation and social distancing, and implications of the order for business interruptions. In addition to considering this overview, we encourage you to carefully study the order to understand its scope and application to your business. Please keep in mind that not all not employees of a business within a given sector will necessarily be covered by the exemptions. You will need to determine whether particular individuals or job positions qualify under an exemption.

Essential Businesses – Exempt Sectors

1. Healthcare and Public Health. As you would expect, healthcare workers enjoy some of the broadest exceptions. Essential workforce includes virtually all healthcare workers and individuals supporting and facilitating healthcare services, including all healthcare providers and caregivers, hospital and laboratory personnel, workers at other medical facilities, and workers related to the medical equipment supply chain. Also included are blood donors, health plan personnel, workers who conduct community-based public health functions, cannabis retailers, and workers who support food, shelter, and social services for vulnerable individuals.

2. Emergency Services. The emergency services sector is, of course, broadly defined to include law enforcement and fire departments (including state, local, and Department of Defense), emergency dispatchers, EMTs, public works departments, private security firms, and employees and contractors who maintain digital systems infrastructure supporting law enforcement and emergency service operations. Also deemed essential are workers that maintain bridges, sewers, or water or that maintain or support the operation, inspection, and maintenance of essential dams, locks, and levees; hazardous material responders and hazardous devices teams; businesses that support the effective removal, storage, and disposal of residential and commercial solid waste and hazardous waste; and private sector businesses that help homeowners and property owners maintain and repair their homes, such as plumbers, electricians, exterminators, and others.

3. Food and Agriculture. The food and agriculture sector exemption covers nearly all aspects of the supply chain across a broad array of industries. It applies to producers, processors, suppliers, transporters, and distributors critical to maintaining and securing food and beverage supplies. Retail or customer-facing businesses that are exempt include grocery stores, pharmacies, convenience stores, farmers markets, food banks, liquor stores that sell food, supermarkets, and big box stores and restaurants that offer carry-out or delivery. The exemption applies to food manufacturers and processors, including those in the beverage industry and shellfish industry; farm workers and companies that support agriculture; forest products workers and manufacturers, including timber, paper, and other forest products; employees of companies engaged in the production of chemicals, medicines, vaccines, and other substances used by the food and agriculture industry; cannabis stores; and other businesses and workers involved in the support of production, safety, sanitation, transportation, storage, maintaining infrastructure support, and inventory control of food, feed, and beverage.

4. Energy. The energy sector exemptions are divided into the interrelated electricity, petroleum, and natural gas/propane sectors, and include the production, refining, storage, and distribution of oil, gas, and electric power. The essential workforce includes multiple categories of workers and businesses that maintain, ensure, support, or restore the generation, transmission, and distribution of electric power, including call centers and utility workers; gas stations and truck stops; petroleum manufacturers; and others.

5. Water and Wastewater Facilities. Workers and businesses needed to operate and maintain drinking water and wastewater/drainage infrastructure are deemed essential under the order, including operational staff at water authorities, community water systems, and wastewater treatment or collection facilities; water distribution and testing workers; workers repairing water and wastewater conveyances and performing required sampling or monitoring; chemical disinfectant suppliers for wastewater and personnel protection; workers that maintain digital systems infrastructure supporting water and wastewater operations; and others.

6. Transportation and Logistics. Virtually all workers supporting and facilitating commercial and cargo aircraft are essential. On the roadways, nearly all commercial drivers are essential, including taxis and delivery services. Maritime essential workers include vessel operators, shipyard foreman, and marina workers. All workers that operate or support buses, light rail, vanpool/rideshare, passenger and freight rail, mass transit, and freight terminals are also essential. Also included are pipelines carrying natural gas, chemicals, and related above-ground assets such as pumping stations. All courier, mail, postal, and shipping workers are essential, as are workers that enable logistics operations, including cooling, storage, packaging, and distribution of products for wholesale or retail sale or use, and workers that enable packaging materials and other supplies for packaging operations. Finally, all employees supporting or enabling all of these transportation sectors, such as mechanics, warehouse workers, and maintenance workers, are all essential.

7. Communications and Information Technology. Essential workforce includes all persons maintaining our communications infrastructure, such as wireless, cable, satellite, and internet providers, and operators, engineers, technicians, and manufacturers who support, maintain, and repair communications. Essential workforce also includes all workers in radio, television, newspaper, and media services, including front line reporters. Also included are communications customer service and support staff and persons setting up and maintaining home offices. Essential IT workers include data center operators, HVAC and electrical engineers, software engineers, supply chain vendors of hardware and software, and workers supporting the provision of global, national, and local computing services infrastructure.

8. Community-Based Government Operations and Essential Functions. This diverse sector includes myriad civil servants, such as staff of the Governor’s Office, the courts (subject to the Washington Supreme Court’s direction), elections personnel, state and county benefits workers, workers supporting public and private childcare, pre-k, k-12, and college-level schooling for purposes of “distance learning,” hotel workers, construction workers on “essential facilities,” tradespersons (plumbers, electricians, etc.), and commercial retail including pet, home and garden improvement, and office supplies. Also included are legal and accounting services necessary to comply with legally mandated activities, and payroll and HR workers.

9. Critical Manufacturing. This sector largely overlaps with other sectors and includes manufacturers of supplies for the medical, energy, communications, food and agriculture, water and wastewater treatment, emergency services, and defense industries.

10. Hazardous Materials. Recognizing that the work to safely handle certain hazardous materials must continue and is, in fact, integral to the COVID-19 response, the order exempts nuclear facility workers and individuals managing medical waste, processing laboratory test kits, and managing waste from pharmaceutical and medical material production. HazMat response and cleanup and management of digital infrastructure and systems supporting hazardous material management are also exempt.

11. Financial Services. The order acknowledges the need for continued operation of banks, credit unions, investment firms, insurance companies, and other types of financial institutions. Accordingly, the essential workforce exemption extends to employees needed to run systems for processing financial transactions, provide access to banking and lending services, including ATMs, move currency (e.g., armored trucks and exchanges), and provide behind-the-scenes support, such as data security.

12. Chemical. Whether they are chlorine or ethyl alcohol added to cleaning and sanitation supplies or nitrogen compounds in fertilizers, chemicals are essential to contemporary life. The order exempts workers in virtually all components of the chemical and industrial gas supply chains, including research and development, manufacturing, distribution, transportation, and cleaning. It also applies to attendant supporting functions, such as fabrication of equipment and packaging for storage and distribution and operation of essential operational systems.

13. Defense Industrial Base. The order exempts businesses engaged in the research and development, design, production, and provision of military weapons systems and components to meet U.S. military requirements. The essential workforce in this sector includes contractors providing qualifying materials and services to the Department of Defense and individuals supporting essential services for national security commitments in industries such as aerospace, mechanical, and software engineering, IT support, security personnel, intelligence support, and aircraft and weapons systems support and maintenance.

If My Business Is Not Exempt Or I’m Unclear, What Can I Do?

If your business does not obviously meet an exemption as an “essential business” or you are unclear whether an exemption applies, you should consult your attorney for guidance. You may also seek clarification or designation as an essential business by emailing business@mil.wa.gov.

What Is Required for Social Distancing and Sanitation?

To remain open and operating in compliance with the order, essential businesses must follow federal and state COVID-19 social distancing and sanitation requirements and guidance. This overview is not an exhaustive analysis of these regulations, and you should carefully study and follow them for your business. But generally speaking, social distancing requirements include placing staff members at least six feet away from each other, limiting visitors, and telling sick employees to stay home. Mandatory sanitation measures include regularly cleaning high touch areas, stocking the premises with tissues, trash cans, and handwashing supplies, and encouraging employees to wash hands with soap and water for at least 20 seconds, or use a hand sanitizer gel that has at least 60% alcohol in it.

Remember that failure to comply with any of these requirements runs the risk of employment and labor code violations, civil and criminal liability, rejected insurance claims, and poor publicity.

What Else Does the Order Allow?

As noted above, nonessential businesses may engage in basic minimum operations and remote work activities that do not involve in-person contact between coworkers or with clients or customers.

On a personal level, individuals are permitted to leave their residences to obtain necessary supplies and services for family, household members, and pets, such as groceries, household supplies, and materials needed to work from home. Restaurant takeout, if offered, is still permitted.

Individuals may, of course, engage in activities essential for health and safety of themselves, family and household members, and pets, such as seeking medical or behavioral health services or obtaining medical supplies or medication.

Persons may engage in activities necessary to provide care for family, household members, and pets. And outdoor exercise activities are encouraged, so long as appropriate social distancing practices are used.

What Are the Impacts on Insurance? Contracts?

Your business’s insurance policies might require you to comply with all state, federal, and local laws and regulations, including Washington’s “Stay Home – Stay Healthy” order. If your business continues to operate while the order is in effect in a manner that does not comply with the specified exemptions or sanitation and distancing requirements, and an accident, claim, or other insurable event occurs, your insurance carrier might assert a basis to deny your claim. Insurance carriers are likely to read the orders broadly to require most businesses to shut down, permitting them to potentially exclude more claims. You should take this risk into consideration when deciding whether to stay open, especially if you are not sure whether you qualify as an essential or critical business.

Similarly, your business contracts may have provisions that require you to comply with all state, federal, or local laws and regulations during their performance. If you do have a contract with this provision, make sure that the other party will not use such a provision to withhold payment or other performance if you stay open and continue to perform.

If the order makes it impossible for you or a contracting partner to fulfill a contractual obligation, your contract might contain a force majeure that addresses contractual performance in this situation. Generally, force majeure clauses excuse performance or permit delayed performance under a contract if the nonperformance or delayed performance is caused by an unexpected occurrence outside of the parties’ control. These events might include natural disasters, civil disturbances, violence, or war, or emergency governmental actions or orders. In assessing obligations due under a contract, you should first look for a force majeure clause and study related contract provisions. Click here more information on force majeure.

If your business cannot continue to operate, your insurance policy might contain business interruption coverage. Many businesses purchase business interruption insurance to cover losses from a halt or slowdown of operations, including lost revenue, utility costs, and other expenses resulting from the interruption. Unfortunately, most business interruption insurance policies require the interruption to be caused by some kind of physical damage to insured property (e.g., harm caused by a hurricane). Carefully study your policy terms and consult your broker or counsel for assistance in assessing coverage. Additional insight regarding business interruption insurance is available here.