New Jersey is fourth in a race it does not want to win—only New York, Washington, and California have more COVID-19 confirmed cases. And recent trends suggest our placement on this grim list may continue to move up. The need to “flatten the curve” has left policy makers with little choice but to prioritize critical health concerns over short-term economic ones, and to ensure that vital medical assistance will be available for those who need it most. This afternoon, New Jersey became the latest state to announce the near-term closure of all “non-essential” businesses. A more detailed announcement and Executive Order are expected tomorrow, and many of our clients and friends are asking:
Is my business “essential” or will I be ordered to close?
Based on our experience in the Governor’s Office during the Ebola response and our time in the Attorney General’s Office thereafter, here is what you should expect. In short, businesses such as grocery stores, health practitioners, gas stations, and utility services are almost certainly “essential” and will remain open. Retailers of clothing, recreational materials, and the like must almost certainly close. But in the middle is a gray area that, even with guidelines from Trenton, will remain subject to interpretation. Surely a company that manufacturers a key ingredient used in hand sanitizer should be deemed “essential.” But what if that company manufacturers hundreds of other ingredients that do not have clear public-health benefits? May it remain operational to manufacture its entire product line, or only those materials important to public health? And what are the penalties for alleged violators?
The precise wording of the Executive Order will answer some of these questions, but the rest will be subject to interpretation and discretion. Here are our educated guesses, based on what we know so far.
The Governor has broad powers to define what is “essential”
In responding to the COVID-19 pandemic, the New Jersey Governor invoked the powers under the Civil Defense and Disaster Control Act, N.J.S.A. App. A:9-30 et seq. (a law enacted during the height of World War II to provide the Governor with extensive powers to protect the public welfare), and the Emergency Health Powers Act, N.J.S.A. 26:13-1 et seq. The powers afforded to the Governor under these laws are extensive. He not only can instruct all state and local government actors how best to respond to a public disaster, but he can also commandeer property of private citizens. Compliance with the Governor’s orders is mandatory. Those who disobey are punishable as disorderly persons, and face up to six months in prison and monetary fines up to $1,000. See N.J.S.A. App. A:9-49.
In short, the Governor has extensive discretion to decide that your business is not “essential.” In making his determination, however, the Governor will not be writing on completely clean slate. There are already examples and guidance from other states and the federal government to which Murphy’s administration can look.
Federal agencies have offered their own suggested definitions
On March 19, 2020, the United States Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) issued Guidance on the Essential Critical Infrastructure Workforce: Ensuring Community and National Resilience in COVID-19 Response. The intent of the guidance is to help the private sector, as well as state and local government partners, identify the industry sectors and related workers necessary to maintain essential services while responding to this health emergency. The guidance lists various categories of “essential” businesses that, it is recommended, should be permitted to remain operational. The list is wide-ranging, covering industries from healthcare, to financial services, to energy, to certain manufacturing, and all manner of things in between. The list includes various services that might not seem “essential” on the surface, but most certainly are when viewed from the prism of protecting public health and welfare, e.g., insurance services, petroleum workers, and producers of pesticides, to name but a few.
The New Jersey Governor is not bound by this federal guidance, and could choose his own definitions of what is “essential.” But these rules may provide a window into the anticipated new restrictions to be placed on New Jersey businesses.
Other government actors have taken similar actions with their own definitions of “essential”
Other governments across the country have issued similar orders, and provided specific guidance on what is “essential.” For instance, Pennsylvania government officials issued a comprehensive chart defining what business sectors are “essential” and which are not. The list attempts to make hard, but practical, distinctions, determining for example that oil and gas extraction is “essential” but coal mining is not.
The Mayor of Los Angeles similarly has a detailed list of “essential” businesses in his order to stem the spread of COVID-19. This list includes dozens of industries and workers, including even certain lawyer and accounting professionals “when necessary to assist in compliance with legally mandated activities.” The Governor of Illinois announced his own list today, and one from the Governor of New York is expected in short order.
Will your New Jersey business make Governor Murphy’s list?
While the Governor has the broad emergency power to craft his own list of “essential” businesses as he sees appropriate, he and his administration will no doubt be guided by what federal and other state leaders have already said on this topic. It takes a wide range of industry to manage the “essential” operations of the region, and the upcoming list from Trenton is sure to recognize that. One thing is certain, though: Not every business will have a clear answer to the question of whether or not it is essential.
Making the right decision on whether your business may remain operational is critical, not only to help prevent the unnecessary spread of COVID-19, but also to ensure that your business remains compliant with the law. Penalties for remaining open during a Governor-ordered shutdown are severe, including potential prison terms and monetary sanctions. Interpretation of the terms of the Executive Order will be necessary, along with obtaining guidance from the authorities once the Governor’s directive issues.
To see our prior alerts and other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.