On March 17 and March 22, 2020, Philadelphia Mayor Jim Kenney, in conjunction with Philadelphia Health Commissioner Dr. Thomas Farley, issued orders prohibiting the operation of all “nonessential” businesses in the City of Philadelphia, and further requiring all businesses remaining in operation to follow “Social Distancing Rules.” Copies of Mayor Kenney’s orders can be accessed on the City of Philadelphia’s website here and here.
Two days after Mayor Kenney’s initial order, on March 19, Pennsylvania Governor Tom Wolf ordered the immediate closure of all non “life-sustaining” businesses within the Commonwealth of Pennsylvania. He further ordered that any life-sustaining business that remained open must follow, at a minimum, the social distancing practices and other mitigation measures defined by the Center for Disease Control (the “CDC”) to protect workers and patrons. A copy of Governor Wolf’s order is available here.
Local and state officials throughout the country have likewise issued orders or proclamations mandating the closure of all nonessential or non-life-sustaining businesses within their jurisdictions. These orders had, and continue to have, an immediate and profound impact on businesses operating in the Commonwealth of Pennsylvania. This document serves as a guide for businesses in navigating the closure orders currently in effect in Philadelphia.
Step 1: Determine whether your business is “life-sustaining” according to the Commonwealth of Pennsylvania.
Governor Wolf’s March 19 Order included a schedule of the categories of businesses considered “life-sustaining,” which has subsequently been updated. The most recent list can be found here. For additional guidance on specific categories of activities considered life-sustaining, see Pennsylvania’s “Life-Sustaining Business Frequently Asked Questions,” available here.
The life-sustaining categories are based on the categories from the North American Industry Classification System (“NAICS”). Businesses’ NAICS codes are generally required for insurance applications, tax filings, and other government forms. If you do not know your NAICS code, check your business records for these documents. You can also use a search feature available on the U.S. Census website here.
If your business is classified as life-sustaining by the Commonwealth, proceed to Step 2. If not, it is already deemed nonessential by the City of Philadelphia, and you must cease in-person operations.
Step 2: Determine whether your business is “essential” according to the City of Philadelphia.
The essential businesses classified in Mayor Kenney’s order are likewise based on the NAICS, and are largely made to be consistent with the Governor’s Order. The City’s shutdown orders state that any business that is non-life-sustaining according to Pennsylvania is nonessential in Philadelphia. That is, Philadelphia can choose to be more restrictive than the Commonwealth, but not less. Thus, only businesses that pass Pennsylvania’s “life-sustaining” definition can potentially pass Philadelphia’s “essential” definition.
Philadelphia’s updated list of essential businesses can be found in Section 1 of the March 22 order here.
If your business is considered both “life-sustaining” and “essential,” you may continue in-person operations in Philadelphia.
Governor Wolf’s March 19 order stated that life-sustaining businesses may maintain in-person operations provided that they adhere to social distancing restrictions and take other mitigation measures to ensure the health and safety of employees and patrons. The CDC maintains updated guidance for employers on social distancing and mitigation best practices here.
On April 5 and April 15, Pennsylvania Department of Health Secretary Dr. Rachel Levine issued supplementary orders prescribing more specific protocols for businesses permitted to maintain in-person operations within the Commonwealth. Copies of Dr. Levine’s articles are available here and here. These protocols include the following:
- Building cleaning protocols: (for owners of buildings of at least 50,000 sq. ft. used for commercial, industrial or other enterprises, where a business is conducting in-person operations):
- Clean and disinfect high-touch areas routinely in accordance with CDC guidelines in spaces that are accessible to customers, tenants, and other individuals;
- Maintain pre-existing cleaning protocols for the facility in all other areas; and
- Maintain a sufficient number of employees to effectively and safely perform these cleaning protocols.
- Social distancing and sanitation protocols:
- Provide masks for employees and require their use while at the work site, except when an employee is using break time to eat or drink;
- Require all customers to wear masks while on premises and deny entry to individuals not wearing masks, unless the business is providing medication, medical supplies or food, in which case the business must provide alternative methods of pick-up or delivery of such goods;
- Maintain a social distance of 6 feet at check-out and counter lines and place signage throughout each site to mandate social distancing for customers and employees;
- Install shields or other barriers at registers and check-out areas or take other measures to ensure social distancing of customers from check out personnel, or close lines to maintain a social distance of 6 feet;
- In businesses with multiple check-out lines, only use every other register (or fewer) and after every hour, rotate customers and employees to previously closed registers while cleaning previously open registers;
- Where carts and handbaskets are available for customers’ use, assign an employee to wipe down these items before they’re made available to customers;
- Provide sufficient space for employees to have breaks and meals while maintaining a social distance of 6 feet and limit the number of employees in common areas;
- Provide employees access to regular handwashing with soap, hand sanitizer and disinfectant wipes, and schedule handwashing breaks for employees at least every hour;
- Ensure that all employees are made aware of these protocols; and
- Ensure that the facility has a sufficient number of personnel to perform all of these measures safely and effectively.
- Business operations and security protocols:
- Where feasible, conduct business with the public by appointment only, or if not feasible, limit occupancy to no greater than 50% of the number stated on the applicable certificate of occupancy;
- Based on the building size and number of employees, alter hours of business so that the business has sufficient time to clean or restock or both;
- Encourage use of online ordering by providing delivery or pick-up options;
- Designate a specific time for high-risk and elderly persons to use the business at least once every week if there is a continuing in-person customer-facing component;
- Prohibit non-essential visitors from entering the business;
- Stagger work start and stop times and break times for employees when practical;
- Conduct meetings and trainings virtually or, if necessary to hold in person, limit to 10 persons and maintain a social distance of 6 feet; and
- Ensure the business has a sufficient number of personnel to control access, maintain order, and enforce social distancing of at least 6 feet.
- Response protocols: (when the business is exposed to a person who is a probable or confirmed case of COVID-19)
- Close off areas visited by the infected person and increase air circulation in these areas;
- Wait a minimum of 24 hours (or as long as practical) before beginning cleaning or disinfection;
- Clean and disinfect all spaces, especially commonly used rooms and shared electronic equipment;
- Identify and notify employees who were in close contact with the infected person;
- Implement temperature screening before employees enter the business and send employees home who have an elevated temperature or fever; and
- Ensure the business has a sufficient number of employees to perform these protocols.
Mayor Kenney’s March 22 Order likewise requires adherence to CDC social distancing and mitigation guidance, and includes the following “Social Distancing Rules” for essential businesses:
- Making efforts to maintain at least 6 feet of space between individuals;
- Frequently washing hands with soap and running water for at least 20 seconds and/or using hand sanitizer;
- Refraining from shaking hands;
- Covering coughs or sneezes with a sleeve or elbow (not hands); and
- Regularly cleaning frequently touched surfaces such as desks, tables, countertops, computers, phones and door handles.
Businesses operating in Philadelphia should ensure they comply with both the protocols detailed in Secretary Levine’s April orders as well as the Social Distancing Rules outlined in Mayor Kenney’s March 22 Order.
Pennsylvania instituted a process for businesses to file a waiver to obtain an exemption from Governor Wolf’s shutdown order, which has now closed. All exemption requests were required to be submitted to the Department of Community and Economic Development (the “DCED”) no later than 5:00 P.M. on April 3.
The DCED is currently reviewing exemption applications and granting exemptions based on guidance issued by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) for identifying critical infrastructure. The DCED will grant exemptions for activities defined in the CISA guidance if they provide a good or service directly to a “critical infrastructure category.”
Any business that requested an exemption must suspend in-person operations until the exemption is approved and written confirmation is provided. If the exemption request was limited to certain activities that the applicant identified as essential to healthcare or another life-sustaining operation, the exemption granted will only apply to the specific activities identified, and not the business generally.
Manufacturing businesses that would not normally be classified as life-sustaining, but are in the process of converting to a life-sustaining manufacturing process, should submit their information to the Pennsylvania Manufacturing Call to Action Portal here.
Even if your business is not considered life-sustaining or essential, you are permitted to retain essential personnel at your place of business to conduct certain critical functions, including processing payroll and insurance claims and maintaining security of the facility, and conducting emergency repairs. Personnel who remain at your place of business must practice social distancing and follow the mitigation guidance provided by the Pennsylvania Department of Health and the CDC.
If you cannot operate out of your place of business because your business is not considered life-sustaining and essential, you can still continue to operate remotely, with employees working from home, to the extent possible. In addition, businesses may continue to fulfill mail, phone and online orders and maintain essential staff at the place of business as necessary to fulfill these orders, so long as payment is made by mail, phone or online and the order is delivered to the customer at the customer’s home.
Restaurants and bars must close all dine-in operations, but may continue to take orders for pick-up or delivery. In addition, liquor license holders are permitted to provide alcohol with individual orders, subject to additional guidance from the Pennsylvania Liquor Control Board, available here.
Telework options should still be employed whenever possible in fulfilling remote orders, and essential personnel must abide by social distancing guidelines. For additional guidance on migrating your business to remote service, see Pivoting A Business.
To the extent remote operations fail to adequately replace the income from your in-person operations, there are a number of loan and grant programs that may be available. For additional guidance on these resources, see Financial Difficulties.
A business’s intentional violation of a shutdown order carries with it a number of risks, some of which are described below. We focus our analysis here on Philadelphia businesses.
Specifically, the business faces (A) potential fines and sanctions from the city and the state, based on a number of laws. Continued noncompliance could raise the possibility of criminal charges. Additionally, (B) businesses that reopen in violation of a shutdown order will likely not be able to use their insurance policy to cover any losses that arise as a result of their noncompliant operation. Next, (C) it is unlikely that the business would be able to compel its employees to return to work, since the business is not operating legally. Lastly, (D) it is likely that the business’s operation in violation of a shutdown order would be a factor in any lawsuit brought by a customer, employee, or other individual or entity alleging that the business caused them harm (including that they contracted COVID-19).
Because the COVID-19 pandemic is unprecedented in modern times, there is little past experience to draw upon to shape our analysis. As some businesses continue to operate in violation of shutdown orders, this section will be revised.
A. Legal Fines and Sanctions
- The City of Philadelphia
On April 29, 2020, Philadelphia issued new guidelines to increase the penalties associated with defying shutdown orders associated with preventing the spread of COVID-19. For businesses who violate the orders or other regulations relating to these orders the penalty is now $2,000 per day, per violation.
Individual officers have the option to issue code violation notices which would waive the opportunity to contest the violation in Municipal Court but would bring the violation price down to $700. The code violation notice would require the particular business to admit the violation.
Per the Philadelphia Voice, as of April 30, 2020, “[T]he health department has received 758 complaints about businesses that were operating in violation of the orders. Among them, 583 businesses received warnings. No fines have been issued, but there have been some cease operations orders.”
While the city has not issued any fines to date, it is noted that Mayor Jim Kenney has suggested that the city may start issuing fines instead of warnings if violations increase.
These fines are imposed in addition to any other applicable remedy provided by law such as orders to cease operations, stop-work orders, the revocation of permits or licenses, “stop work” or “cease operations” orders, or injunctive relief (where a court can order a business to stop working). Criminal Penalties may be imposed, where applicable, for continued noncompliance.
Philadelphia’s regulations are similar to those found in other cities, and are lower than those in place in Washington, D.C. and Baltimore.
- The Commonwealth of Pennsylvania:
On March 25, 2020, the State Police released Non-Life-Sustaining Business Enforcement Guidance that details potential penalties under several legal codes. The guidance urges police officers to give warnings first before citation.
a. Administrative Code of 1929
Fines of not less than $10 to not more than $50 may be imposed for any person who violates the orders or regulations of the Department of Health or who resists or interferes with any officer or agent in performance of their duties after a conviction through a summary proceeding before a justice, alderman, or magistrate. In addition, the violation of this statute may impose criminal penalties.
b. The Pennsylvania Disease Prevention and Control Law of 1995
Furthermore, under the Disease Prevention and Control Law, the Pennsylvania Secretary of Health has the authority to issue orders for isolation, quarantine and other control measures. Any person violating those orders may be guilty of a summary offense and shall be fined $25 - $300.
c. The Pennsylvania Crimes Code
For more serious violators, there are provisions under the Pennsylvania Crimes Code which may be applicable for someone who refuses to abide by the restrictions ordered by the Governor or Department of Health. These include obstructing administration of law or function which is categories as a misdemeanor of the second degree.
d. Title 35 Health and Safety
Further, in what would be a most extreme case, there is a Pennsylvania law that allows for fines and imprisonment for any “person” who violates any plans and programs of the Pennsylvania Emergency Management Council. After a conviction through a summary proceeding, a first offense will result in a fine not exceeding $200 and up to 30 days imprisonment time. Each subsequent offense will result in a $500 fine with up to 90 days jail time. To date, we are not aware of any enforcement of this law.
B. Insurance Considerations
If a business operates in violation of a shutdown order, it is likely that its insurers would deny any claim made for losses during that time period, if those losses were caused by the operation of the business. For example, if a customer slipped and fell in the business, the insurer would likely not cover a claim based on that incident because the business was not operating legally. Businesses should check their insurance policies or with their insurance agents to confirm coverage (or lack thereof).
C. Employee Considerations
Businesses have a certain ability to require their employees to return to work, as described in our FAQ, “Managing Employees During COVID-19 Shutdowns.” It is likely that a business cannot require its employees to return to work if the business is operating in violation of a shutdown order.
D. Lawsuit Risk
To date, we do not know of any lawsuits against small businesses with respect to a customer or employee contracting COVID-19, through their interaction with that business, or suffering some sort of other injury or damages related to the COVID-19 pandemic. However we speculate that a business operating in violation of a shutdown order will have a more difficult time defending itself against such lawsuits, if they occur, because the plaintiff will be able to argue more strongly that the business was not operating safely.
From a technical standpoint, as far as city and state regulations are concerned, a business that is required to be shut down under a shutdown order cannot possibly operate safely. However, a business operating in violation of a shutdown order can possibly mitigate its risk by (A) operating with the restrictions that it will face when it is allowed to reopen and (B) looking to other jurisdictions (cities, counties, or states) where that business would be able to operate if it were located there.
A. Operating with future restrictions
It is possible that a city or state has outlined in its reopening plan the restrictions that businesses will face when it is considered safe for them to reopen. As a baseline, any business operating in violation of shutdown order should follow those restrictions as closely as possible, to mitigate the risk and damage of any potential enforcement or other legal action.
B. Operating with restrictions in place elsewhere
Additionally, a business should check other cities, counties, and states to determine what restrictions are in place for similar businesses there. It would be most prudent for a business to adopt the most restrictive processes that it finds in another jurisdiction.
It should be noted that operating with restrictions will likely not ultimately insulate a business from any potential fine for noncompliance or liability from operation.
Not right now, but maybe later.
The exemption from a non-life sustaining business was created by the Wolf Administration to identify those businesses who were necessary to assist with the pandemic. If an exemption is granted, those businesses will be allowed to operate - often in a reduced capacity - during their COVID-19 closure. The state website gives an example of a manufacturing company that was required to close will be able to re-open to make products required by the healthcare industry.
Nearly 43,000 businesses requested exemptions and just over 6,000 of those businesses received exemptions. You can view a list of approved exemptions here, and a list of denied exemptions here.
The current application process to get a business waiver is now closed, though note businesses that are performing “life-sustaining” activities are allowed to operate without a waiver. We will update this page if the application process reopens.