Guidance for California Employers: Is Your Business “Essential” or “Non-Essential” and What Does that Mean for Operations?

Effective March 19, 2020, Governor Newsome issued a “Stay-At-Home Order” for the entire state of California (Executive Order N-33-20), that directed all individuals living in California to stay home or at their place of residence, except as needed to maintain continuity of operations of the federal “Critical Infrastructure Sectors” designated by Homeland Security.¹ The Order indicated that Californians working in these Critical Infrastructure Sectors may continue their work because of the importance of these sectors to Californians’ health and well-being.

Prior to issuance of the California Stay-At-Home Order, the counties of San Francisco, San Mateo, Alameda, Contra Costa, Marin, and Santa Clara, along with the City of Berkeley (Northern California), issued a “Shelter- in-Place” Order,² effective March 17, 2020, that directed all residents to shelter at their place of residence, except to obtain or perform “Essential Activities,”³, which includes among other things, working for “Essential Businesses” and governmental services. Other cities and counties have also issued their own orders.

The Northern California Order indicated that all business, except Essential Businesses, are required to cease all activities at facilities located within the County except Minimum “Basic Operations.” It also indicated that Non Essential Businesses may continue operations provided their employees work from home (telework).

Employers are required to follow both the California Stay-At-Home Order and any local county or city Public Health Order applicable where their facilities are located. To the extent there are conflicts between the California Stay-At-Home Order and a local Order, employers must follow the stricter order.

Designation as an Essential Business or a Critical Infrastructure Sector

The California Stay-At-Home Order does not use the phrase “Essential Business,” but it identifies sixteen “Critical Infrastructure Sectors,” including the following: (1) Chemical Sector, (2) Commercial Facilities Sector, (3) Communications Sector, (4) Critical Manufacturing Sector, (5) Dams Sector, (6) Defense Industrial Base Sector, (7) Emergency Services Sector, (8) Energy Sector, (9) Financial Services Sector, (10) Food and Agriculture Sector, (11) Government Facilities Sector, (12) Healthcare and Public Health Sector, (13) Information Technology Sector, (14) Nuclear Reactors, Materials, and Waste Sector, (15) Transportation Systems Sector, and (16) Water and Wastewater Systems Sector.⁴ To help businesses determine whether their business falls within any of the Critical Infrastructure Sectors, the California State Public Health Officer subsequently issued the following list identifying “Essential Critical Infrastructure Workers” that it will update periodically: https://www.cisa.gov/critical-infrastructure-sectors.

The Northern California Shelter-in-Place Orders include a detailed list identifying “Essential Businesses”: https://www.sfdph.org/dph/alerts/files/HealthOrderC19-07-%20Shelter-in-Place.pdf. Examples of businesses identified as “Essential” include the following⁵: (1) Healthcare Operations⁶ and Essential Infrastructure⁷, (2) Grocery stores, markets, and food cultivation businesses that produce, provide, or sell food and other products necessary to maintain the safety, sanitation, and essential operation of residences, (3) Businesses and residential care facilities that provide food, shelter, social services, and care for seniors, adults, children or disadvantaged individuals, (4) Newspapers, television, radio, and other media services, (5) Gas stations, auto-supply, auto-repair, and related facilities, (6) Banks and related financial institutions, (7) Hardware stores, plumbers, electricians, and other service providers that are necessary to maintain the safety, sanitation, and essential operation of residences, Essential Activities, and Essential Businesses, (8) Businesses providing mailing and shipping services, or that deliver food and goods to residences and Essential Businesses, (9) Educational institutions – for purposes of facilitating distance learning, (10) Laundromats, dry cleaners, and laundry service providers, (11) Restaurants and other facilities that prepare and serve food, but only for delivery or carry out, (12) Businesses that supply products or services needed for people to telework and to keep Essential Businesses operating, (13) Airlines, taxis, and other transportation providers necessary for Essential Activities, and (14) Professional services, such as legal or accounting services, when necessary to assist in compliance with legally mandated activities.

The Northern California Order also indicates that first responders, emergency management personnel, emergency dispatchers, court personnel, and law enforcement personnel, and others who need to perform essential services are exempt from the Order.⁸

May Non-Critical/Non-Essential Businesses Continue Operating?

Employers that are not part of the Critical Infrastructure and do not meet the definition of an Essential Business are encouraged to continue operations, provided their employees can work from home (telework).

If telework is not possible, both the California state Order and the Northern California Order require the business to cease normal operations indefinitely. However, the Northern California Order allows Non-Essential Businesses to continue “Minimum Basic Operations.” There is no similar provision in the California Order.

“Minimum Basic Operations” include basic activities necessary to maintain the value of the business’s inventory; ensure security; process payroll and employee benefits, or related functions; and to engage in other minimum necessary activities to facilitate employees of the business being able to continue to telework.⁹.

May Critical/Essential Businesses Require Employees to Report to Work?

The California state Order recognizes that Critical Infrastructure Structure businesses are so vital to the United States, that their incapacitation or destruction would have a debilitating effect on security, economic security, public health or safety. The Norther California Order strongly encourages all Essential Businesses to remain open. To remain open, these business need their employees to report to work. Thus, Critical/Essential businesses may require their employees to report to work, subject to certain exceptions discussed below, when the employees are entitled to leave. In addition, employees who have health conditions that make them more susceptible to infection, or employees who are more susceptible because of their age, may be entitled to an accommodation. To avoid legal claims, consult with an employment attorney before denying a requested accommodation. Lagasse Branch Bell + Kinkead attorneys are available to answer any questions you may have.

Compensation for Work at Critical/Essential Businesses

Absent a contractual commitment, employers are generally not required to pay a “hazard pay” or any other premium or extra compensation to employees who report to work in Critical/Essential Businesses. Non-exempt employees must continue to be paid their regular hourly rate for all hours they work, and exempt employees must continue to be paid their regular salary for any week in which they perform work.

Although an employer is not required to pay a premium, it may elect to do so voluntarily. Employers should keep in mind that any type of premium pay and most types of extra compensation must be considered when calculating employees’ regular rate of pay and their overtime rate. To avoid wage and hour claims, consult with an employment attorney before offering any type of extra compensation. Lagasse Branch Bell + Kinkead attorneys are available to answer any questions you may have.

Safe Workplace Practices

If employees in Critical/Essential Businesses are required to leave home and report to work, both the California state Order and the Northern California Order require the employees to practice social distancing to avoid to transmission of coronavirus (COVID-19). The Northern California Order requires employees, to the extent possible, to maintain at least six-foot social distancing from other individuals, wash hands with soap and water for at least twenty seconds as frequently as possible or use hand sanitizer, cover coughs or sneezes (into a tissue, the sleeve or elbow, not hands), regularly clean high-touch surfaces, and not shake hands.¹⁰. 

If employees must report to work, employers should enforce social distancing and provide increased sanitation. In fact, some counties, such as San Diego, have issued an Order requiring these precautionary measures. ¹¹ Employers must also take other reasonable steps to provide a safe and healthful workplace.¹² The Centers for Disease Control and Prevention (CDC) recommends the following preventative measures:¹³

• Encourage sick employees, or employees with sick family members to stay home; ¹⁴
• Immediately send employees home if they display fever, cough, and shortness of breath;
• Perform routine cleaning of frequently touched surfaces;
• Emphasize respiratory etiquette and hand hygiene, including: covering nose and mouth when coughing or sneezing; frequently wash hands with soap and water, or using alcohol-based hand sanitizers; avoid touching eyes, nose, mouth, or face; and do not shake hands;
• Allow flexible worksites, telecommuting, and flexible work hours to increase physical distance between employees;
• Avoiding large meetings and events; and
• Minimize travel.

Employers are not required to provide personal protective equipment, such as face masks and gowns, unless the employee is likely to be exposed to hazards like COVID-19, such as in a healthcare setting. When employees are likely to be exposed, OSHA requires the employer to: (1) conduct a “hazard assessment” of its worksite, including potential for interaction with infectious people and contamination of the work environment; (2) conduct employee awareness training; (3) develop procedures for issuing and using “personal protective equipment” like gloves and masks; (3) develop a reporting and surveillance mechanism for exposed employees; and (4) maintain records of all illness-related conduct.¹⁵

Inability to Work

Critical/Essential businesses may require their employees to report to work, except when the employees are entitled to a leave of absence or other time off. Subject to certain exceptions, employees may be entitled to time off under California’s Paid Sick Leave law; under the employer’s vacation, sick or other paid time off policies; or under the new Families First Coronavirus Response Act (FFCRA) – either the new Federal Emergency Paid Sick Leave Act or the new Expanded Family and Medical Leave Act (FMLA).

The FFCRA provides that private employers with fewer than 500 employees (and public employers with at least one employee) must provide time off to eligible employees if the employee is unable to work (or telework) due to a need for leave because of any of the following COVID-19 related reasons:

• The employee is subject to a Federal, State or local quarantine or isolation order because of COVID-19;
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
• The employee is caring for an individual who is subject to a Federal, State or local quarantine or isolation order because of COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
• The employee is caring for a child of such employee if the school or place of care of the child has been closed or the child care provider is not available, because of COVID-19 precautions.¹⁶

Find out more about these new laws in our articles: Families First Coronavirus Response Act and its Emergency Paid Sick Leave Act and FMLA Temporarily Expanded for Coronavirus.

For more information on employers’ obligations to employees during the COVID-19 pandemic, suggested policies, or other employment issues, please contact your Lagasse Branch Bell + Kinkead attorney or any member of our COVID-19 taskforce: Jennifer Branch (jbranch@albblaw.com), Kelly Folger (kfolger@albblaw.com), Melissa A. Lewis (mlewis@albblaw.com), Lara P. Besser (lbesser@albblaw.com) and Jessica Yang (jyang@albblaw.com). 

End Notes:

1. California Executive Order N-33-20, https://covid19.ca.gov/img/N-33-20.pdf.
2. See, e.g., Order of the Health Officer of the County of San Mateo (March 16, 2020), https://www.smcgov.org/sites/smcgov.org/files/HO%20Order%20Shelter%20in%20Place%2020200316.pdf.
3. Essential Activities” include the performance of tasks essential to health and safety, such as obtaining medical care, supplies or medication; obtaining food, and other products to maintain the safety, sanitation, and essential operation of residences; engaging in outdoor activity; caring for a family member or pet in another household; or obtaining supplies needed to work from home, performing work at an Essential Business, or engaging in Minimum Basic Operations at a Non Essential Business. (Id. at ¶ 10(a).)
4. See https://www.cisa.gov/identifying-critical-infrastructure-during-covid-19; see also Guidance from the California State Public Health Officer identifying “Essential Critical Infrastructure Workers,” https://www.cisa.gov/critical-infrastructure-sectors
5. See e.g. Order of the Health Officer of the County of San Mateo (March 16, 2020) at ¶ 10(f), https://www.smcgov.org/sites/smcgov.org/files/HO%20Order%20Shelter%20in%20Place%2020200316.pdf.
6. “Healthcare Operations” include hospitals, clinics, dentists, pharmacies, pharmaceutical and biotechnology companies, other healthcare facilities, healthcare suppliers, home healthcare services providers, mental health providers, or any related and/or ancillary healthcare services; veterinary care and all healthcare services provided to animals. “Healthcare Operations” does not include fitness and exercise gyms and similar facilities. (Id. at ¶ 10(b).)
7. “Essential Infrastructure,” includes public works construction, construction of housing (in particular affordable housing or housing for individuals experiencing homelessness), airport operations, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet, and telecommunications systems (including the provision of essential global, national, and local infrastructure for computing services, business infrastructure, communications, and web-based services). (Id. at ¶ 10(c).)
8. Id. at ¶ 10(d).
9. Id. at ¶ 10(g).
10. Id. at ¶ 10(j).
11. https://www.sandiegocounty.gov/content/dam/sdc/hhsa/programs/phs/Epidemiology/HealthOfficerOrderCOVID19.pdf
12. CA Labor Code § 6401.
13. Interim Guidance for Businesses and Employers, CDC, https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html.
14. Currently, the CDC recommends that employees remain at home until at least 24 hours after they are free of fever (100 degrees F or 37.8 degrees C) or signs of a fever without the use of fever-reducing medications.
15. See 29 CFR 1910.132.
16. Families First Coronavirus Response Act (FFCRA) § 5102(a).