In Arizona, Ask These Five Questions Before Closing a Business You Think Isn’t Essential

By Adam E. Lang and Helen Goldstein

Last week, we posted a legal update discussing Governor Ducey’s Executive Order 2020-12 (EO-12), which delineated an expansive list of essential services, functions, and businesses that counties, cities, and towns in Arizona could not restrict in any order they might want to issue as a result of the COVID-19 crisis.  By doing so, Governor Ducey made it clear that any such orders relating to further restrictions on essential services, functions, and businesses would be his to make.

On March 30, with COVID-19 infections exponentially growing throughout the state and affecting every county, the Governor issued an Arizona‑wide stay-at-home Executive Order (“EO-18”).  In doing so, the Governor emphasized that individuals engaged in the essential services, functions, and businesses set forth in EO-12 need not “stay at home” in carrying out those essential roles.  EO-18 became effective on March 31, at 5 p.m.

This legal alert answers key questions about the interplay between EO-12 and EO-18.  Consider carefully whether EO-12 and EO-18 truly have an impact on your business, and make sure you consult with counsel to determine what you should do next.

Questions to consider include the following:

1. Are You Expressly Listed as Essential?

Before rushing to padlock your doors, it is advisable to read EO-12, in connection with EO-18, and consult your counsel.  EO-12 is expansive and “defined broadly” throughout.  To your surprise, you may find that your business is expressly listed.  For example, “essential trades” include, as would be expected, plumbers, but also include, maybe more surprisingly, painters, movers, and those that “provide services that are necessary to maintaining the safety, sanitation and essential operation of residences.”  Specific services and functions you might not have guessed are essential are expressly listed as such, for example, golf courses, personal hygiene services, and bicycle shops.  So, we encourage you to review EO-12 carefully; you just might find your business listed in it.

2. Are You Promoting the Public Health, Safety, or Welfare of the State or Assisting Others in Fulfilling Their Essential Functions?

EO-12 specifically identified essential services, functions, and businesses which may not be restricted.  But EO-12 goes further than that, defining an essential function also as “a function that promotes the public health, safety and welfare of the state or assists others in fulfilling such functions.”  Accordingly, such a broad definition may logically extend protection to businesses that may not be specifically listed in EO-12, but that provide goods or services to other businesses that are deemed essential.  Accordingly, businesses should take a critical look at their customer base and determine whether they are in fact “promot[ing] the public health, safety and welfare of the state” or “assist[ing] others in fulfilling” their essential functions.  If your business falls under either category, it may be an essential service, function, or business and permitted to stay open under EO-18.

3. Is It Business As Usual for Companies Engaged in Essential Functions?

EO-18 makes it clear that “[a]ll businesses that are classified as Essential Functions may remain open and maintain operations.”  However, that right does not appear to be without certain conditions.  Specifically, in order to remain open and maintain operations, the businesses “shall establish and implement social distancing and sanitization measures established by the United States Department of Labor or the Arizona Department of Health Services.”  In other words, even Essential Businesses need to take measures to comply with such standards.  Such guidance can be found on the OSHA website here. 

4. If Your Business Is Considered Non-Essential, Does It Have to Close?

Although certain businesses, such as movie theaters, restaurants (for dine-in purposes), and bars have been closed down for the past couple of weeks, EO-18 does not shut down any particular business.  Instead, to the contrary, it encourages non-essential businesses to, among other things, maintain operations, preserve the condition of the businesses’ physical plants and equipment, process payroll and employee benefits, and to work remotely from home.  EO-18 simply makes it clear that “non-essential businesses” may only continue to operate those activities if they do not require “in-person” or “on-site transactions.”  Many businesses around Arizona are already working remotely.  EO-18 simply mandates it for non-essential businesses. 

5. What Should Businesses Consider Doing in Light of EO-12 and EO-18?

EO-18 is now in effect.  Accordingly, businesses are going to need to make sure they comply with its mandates.  Among other immediate actions, businesses should consider the following actions:

• Analyze and interpret the Executive Orders to determine if your business is, or the functions in which it engages are, “essential.”
• If your business is non-essential, prepare and implement a work-from-home policy.
• If your business is essential, you may want to look into:
  • preparing and implementing a social distance policy;
  • preparing a statement for employees, customers, or third-parties as to why your business is essential;
  • creating safe passage or safe transit letters that employees can keep in their possession in case they are questioned by law enforcement while in transit to and from work activities (although EO-18 does not require such documentation, it may be desirable); and
  • implementing other employee-related policies related to handling COVID-19 in your places of business. 

In conclusion, with EO-12 and EO-18, it is expected that businesses and their employees will have concerns as they navigate their way through the COVID-19 pandemic.  There are many actions businesses can take to minimize those concerns in the coming days and weeks.  You may wish to contact your attorneys and see how they can assist you.