What are Essential Businesses?

By Higginbotham on March 23 , 2020

As more states and municipalities across the country are issuing mandates for employees of “nonessential” businesses to shelter in place, employers are left on their own to determine whether or not they qualify as an “essential” business. This includes understanding their particular status, what to do if they believe they are essential and the penalties associated with a wrong determination. Unfortunately, the answers vary from one jurisdiction to the next, and answers are anything but clear.

States such as California and New York and counties such as Dallas, Texas, have ordered workers of nonessential businesses to stay home. Governors of other states – including Texas – have issued more limited restrictions, including the closure of restaurants with the exception of pickup or delivery, gyms, movie theaters and certain nonessential retail establishments. So, what actually is an “essential” business? Although the determination of what is or is not an “essential” is generally being made on the state or local level, most jurisdictions are using the definitions set forth by the Cybersecurity and Infrastructure Security Agency (CISA) – an agency within the Department of Homeland Security. CISA has issued guidance on Identifying Critical Infrastructure During COVID-19. Under this guidance, there are 16 critical infrastructure sectors whose assets, systems and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety or any combination thereof:

Obviously, there are multiple types of businesses within each sector. What if your business is included on this list? It simply means that it should be considered by state and local government officials as one with prioritized need for access and re-entry into, out of and through areas where shelter-in-place, quarantine, cordons and restricted areas. Different jurisdictions may come to different conclusions as to where essential worker accommodation is warranted based on the prevalence and density of certain infrastructure activity and assets in that area.

What if your business is not on the list? Per CISA, the guidance is merely a starting point for jurisdictions to work with their local businesses and for businesses to communicate their needs to their partners in government. Businesses should identify critical functions within their supply chain (e.g., third-party vendors, suppliers, service providers and contractors) that are necessary to maintain critical operations and services, and solutions if possible interruptions occur to that supply chain. Businesses in certain jurisdictions may be able to lobby for expanded lists or apply for relief online. If you are in a jurisdiction that has not set forth a process, hopefully future guidance will address this.

As a reminder for businesses, the focus during this response is maintaining the businesses and services that enable continued economic and social vitality. It is not focused on maintaining business as usual, nor is it trying to sustain the operating capacity of non-critical businesses and industries.

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Tags: Compliance


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