COVID-19: New York State provides new guidance on essential businesses

In an effort to slow the rapidly evolving coronavirus disease (COVID-19) pandemic, Governor Andrew M. Cuomo signed the “New York State on PAUSE” Executive Order (the “Order”) on March 20, 2020. Among other measures, New York State required all non-essential businesses to cease in-person operations effective 8:00 PM on March 22, 2020, and subsequently extended the Order until April 29, 2020. DLA Piper previously provided guidance concerning the shelter-in-place” orders in New York and several other states. 

On April 9, 2020, the New York State Department of Economic Development (d/b/a Empire State Development Corporation) (“ESD”) issued new guidelines (the “Guidelines”) to help New York businesses determine whether they are an essential business or a business providing essential services or functions that is exempt under the Order. The Guidelines substantially revise and supplement the prior ESD guidance, which was last updated on March 27, 2020, and there are several important changes outlined below − particularly with respect to New York’s construction industry and the provision of legal services. 

DLA Piper will continue to monitor COVID-19 stay-at-home / shelter-in-place orders in this rapidly changing area; please contact your DLA Piper relationship attorney for the most current information.

I.  What constitutes an “essential business” in New York?

The Guidelines identify 14 essential business categories that generally correspond to specific sectors. Below is a summary of each of these categories, with specific examples provided by the ESD, as well as changes made by ESD to its prior guidance.^[1]

1. Healthcare operations, including, but not limited to, hospitals, research and laboratory services, home health care workers, doctors and emergency dental services, and medical suppliers and manufacturers. On April 9, ESD added emergency chiropractic services, physical therapy (prescribed by a medical professional), and occupational therapy (prescribed by a medical professional).
   
   
2. Infrastructure, including, but not limited to, public utilities, transportation providers (including for-hire vehicles), hotels, commercial shipping vessels, ports, seaports, and airports.
   
   
3. Manufacturing, including, but not limited to, food processing, pharmaceuticals, medical equipment/instruments, and household paper products. On April 9, ESD added automobile manufacturing and component manufacturers of parts necessary for essential products referred to in the Guidelines.
   
   
4. Retail, including, but not limited to, grocery stores, convenience stores, gas stations, hardware stores, and restaurants and bars (for take-out or delivery only). On April 9, ESD added telecommunications to service existing customers and accounts (i.e., mobile phone stores), and delivery for orders placed remotely via phone or online at non-essential retail establishments; provided, however, that only one employee may be physically present at the business location to fulfill orders.  
   
   
5. Services, including, but not limited to, trash and recycling collection, mail and shipping services, laundromats, building cleaning and maintenance, child care, bicycle and auto repair, auto sales (if conducted remotely or electronically), non-recreational marine repair and marinas, funeral homes, and animal shelters. ESD added three businesses to this category in its April 9 guidance update: landscaping (but only for maintenance or pest control and not cosmetic purposes), print and design shops (to the extent they support essential businesses), and remote instruction classes for schools or health/fitness centers.
   
   
6. News media. 
   
   
7. Financial institutions, including banking and lending institutions, insurance, payroll, accounting, and services related to financial markets. However, ESD clarified on April 9 that these services must not relate to debt collection.
   
   
8. Providers of basic necessities to economically disadvantaged populations, including homeless shelters and food banks.
   
   
9. Construction (as further described below).  
   
   
10. Defense, including defense contractors and national security related operations. 
    
    
11. Essential services to maintain the safety, sanitation and essential operations of residences or other businesses, including police, fire, building code enforcement, emergency management services, janitors, auto repair, and disinfection.
    
    
12. Vendors that provide essential services or products, including logistics, technology support for online services, child care programs and services, and personnel necessary for online or distance learning or classes delivered via remote means.
    
    
13. Recreation, including parks and open spaces, except playgrounds, so long as social distancing can be achieved. Golf courses and boat launches are not considered essential. ESD added this category of businesses on April 9.  
      
14. Professional services with extensive restrictions, namely, legal work and real estate services. With respect to legal services, lawyers may continue to perform all work necessary for any service so long as it is performed remotely. The Guidelines provide that “[a]ny in-person work presence shall be limited to work only in support of essential businesses or services,” and even in this case legal services should be conducted as remotely as possible. Real estate services can be conducted in person only to the extent “legally necessary.” ESD added this category on April 9.    

II.  ESD’s new guidance on “essential” construction activities

ESD’s Guidance significantly changes whether and under what conditions construction may constitute an essential service in New York. Construction now is essential if it (a) is for an ongoing project for an essential business, (b) can be completed by a single worker who is the sole employee/worker on the site, or (c) satisfies public policy or project-specific criteria. These criteria encompass, among other projects, construction to protect the health and safety of occupants, to support roads, bridges, transit facilities, utilities, hospitals/healthcare facilities, homeless shelters, schools, and certain affordable housing projects. In all events, however, construction sites must maintain appropriate social distancing and the failure to comply may result in fines of up to $10,000. Local governments, while exempt from the essential business restrictions, are urged to halt all construction work except for essential projects that have a “nexus to health and safety of the building occupants or to support the broader essential services that are required to fulfill the critical operations of government or the emergency response to the COVID-19 public health crisis.” 

III.  Procedures for businesses to seek designation as an essential business

As DLA Piper previously advised, New York State offers an avenue for businesses to request designation as an essential business if they believe that they are an essential business and are not covered by the specific categories in the Guidelines.^[2] However, in its April 9 update to the Guidelines, ESD specifically enumerated businesses that do not qualify as an essential business and should not apply, including: event venues/concert halls, movie theaters, gyms/fitness centers, indoor malls with 100,000 or more square feet of retail, barbershops, hair salons, tattoo or piercing parlors, nail salons, places of public amusement whether indoor or outdoor, including, but not limited to, locations with amusement rides, carnivals, aquariums, zoos, and family and children’s attractions.

IV.  Questions and commentary

The Guidelines raise a number of immediate questions and considerations for New York businesses:

• How will New York State enforce the Guidelines, and what fines, if any, will be imposed?  
  
  
• What due process rights will be afforded to businesses subject to enforcement activities?
    
• Can businesses required to close make insurance claims for business interruption or otherwise?
  
  
• Once the public health emergency begins to subside, will New York State prioritize adding particular business categories to the list of essential businesses, and, if so, what public policy goals will these priorities reflect? 
   
• ESD’s new Guidance permits otherwise non-essential businesses to provide deliveries or in-person pick-up for orders placed online. This change should benefit many small business owners in communities across the state. 

We expect ESD will continue to update the Guidelines as the situation in New York evolves over the coming days and weeks. We are continuing to monitor developments impacting businesses in New York and other states and cities.

If you have any questions regarding these new requirements and their implications, please contact your DLA Piper relationship attorney or any member of the DLA Piper Litigation group.

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This information does not, and is not intended to, constitute legal advice.  All information, content, and materials are for general informational purposes only.  No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.