In our Friday update, we summarized Governor Pritzker’s “Stay-At-Home” Executive Order (the “Order”) effective 5 p.m. March 21st until April 7th. For your reference, you can find the full order HERE and recently published FAQs HERE. Also, in response to client requests, please see below guidance for employers on commuting for essential businesses and operations, as well as specific guidance on how the Order applies to the construction industry.
Sample Letter for People Traveling to/from Workplace
If your business is one of the Essential Businesses or Operations that is continuing to operate during the period of the Governor’s Stay-At-Home Order, we recommend a letter on company letterhead that your employees can show to law enforcement authorities as they commute to and from work if they are questioned. We suggest language below that can be revised as appropriate depending your particular business and the employees receiving the communication.
[INSERT COMPANY LETTERHEAD]
To Whom It May Concern:
[Insert employee name] is an employee of [insert company name]. Under the terms of Gov. Pritzker’s March 20, 2020 COVID-19 Executive Order, [insert company name] has been deemed an Essential Business or Operation and, therefore, is authorized to continue operations during the “Stay At Home” order. Consequently, [insert employee name] is authorized to travel to and from work. Please allow [insert employee name] to proceed with his/her commute as his/her presence at our company is necessary for our continued operations. Should you have any questions, please do not hesitate to contact the undersigned.
[insert name of executive]
While the Governor’s Order has broad implications and effects on many industries, it does relatively little to shut down or limit construction. Notable to owners, contractors, trades, material suppliers, and other construction industry members, specific exceptions to the Stay-at-Home Order are found in Paragraphs 9 and 12.
First, Paragraph 9 allows the continuation of services and work necessary to offer, provide, operate, maintain, and repair Essential Infrastructure, which includes, but is not limited to the following: construction required in response to the COVID health emergency; hospital construction; construction of long-term care facilities; public works construction; and housing construction.
Additionally, an exception is made for building management and maintenance; airport operations; operation and maintenance of utilities, including water, sewer, and gas; electrical (including power generation, distribution, and production of raw materials); distribution centers; oil and biofuel refining; roads, highways, railroads and public transportation; ports; cybersecurity operations; flood control; solid waste and recycling collection and removal; and internet, video, and telecommunications systems. The Order states that this provision is to be construed broadly to avoid impact to Essential Infrastructure.
Furthermore, work covered by “critical trades” is specifically defined as an “Essential Business and Operation” under Paragraph 12. Of note, “Essential Business Operations” are not only provided an exception from the Stay-at-Home Order, they are specifically “encouraged to remain open” under Paragraph 2. Accordingly, while Paragraph 9 is broad, Paragraph 12 may be even more expansive in allowing continued construction operations. For example, Paragraph 12(h), defines “critical trades” which may remain open for business as including the following: “Building and Construction Tradesmen and Tradeswomen, and other trades including but not limited to plumbers, electricians, exterminators, cleaning and janitorial staff for commercial and government properties, security staff, operating engineers, HVAC, painting, moving and relocation services, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, Essential Activities, and Essential Businesses and Operations.”
Still further, Paragraphs 12(n), 12(o), and 12(t) also define transportation network providers and businesses that sell, manufacture, or supply other Essential Businesses and Operations with the support or materials necessary to operate as Essential Businesses and Operations. Thus, manufacturers, material suppliers, and transportation companies that create, supply, or transport materials to jobsites are also excepted from the stay-at-home mandate.
Under the Order, individuals employed by companies that are engaged in work meeting the above definitions may leave their residence to perform work “providing essential products and services at Essential Businesses or Operations … or to otherwise carry out activities specifically permitted in this Executive Order, including Minimum Basic Operations.” Moreover, the Order further allows travel into or out of the State to maintain “Essential Businesses and Operations and Minimum Basic Operations.” As a result, the construction industry generally appears to be largely unencumbered by the terms of the Order.
With that said, to the extent that projects remain ongoing, the general orders still apply. For example, workers should maintain social distancing of at least six feet from other people to the greatest extent reasonably possible and practice the other precautions described in this Order and other Executive Orders previously issued by the Governor related to COVID-19 found HERE.
In summary—and despite the foregoing—construction industry members may nonetheless encounter difficulties executing their work during the ongoing pandemic. For example, some owners may not want to move forward with projects, there could be disruptions to the material supply chain, or there could be labor shortages (amongst other reasons). Feel free to reach out to us if you have questions related to delay or force majeure provisions in your contracts, if you have labor or employment-related problems, if you would like to explore standstill agreements to avoid potential contract breaches, or if you would like advice on any other business or legal-related issue you have currently or in the future.
Federal Reserve Program for Main Street Businesses
Today, just before markets opened, the Federal Reserve (the “Fed”) announced a litany of new programs to help keep the market functioning and businesses stay afloat. See HERE. In particular, the Fed announced $300 billion in new financing to keep the flow of credit available to consumers, employers and businesses. It also will soon announce the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the Small Business Administration. We will keep you updated as details become available.
Banks Working with Borrowers
In addition, federal and state banking regulatory agencies are encouraging financial institutions to work constructively with customers impacted by COVID-19. See the FDIC press release HERE and additional FAQs HERE. Several banks - including Bank of America, Capital One, Chase, CIBC, Citibank, Fifth Third, and others - are voluntarily deferring payments and waiving fees for their customers. We encourage you to contact your financial institutions and other creditors to see what loan modifications and other relief they may offer you and your business during this difficult time.
Families First Coronavirus Response Act (Phase II)
Last Wednesday, the President signed the Families First Coronavirus Response Act (the “Act”), which will become effective 15 days from enactment (April 2, 2020). We summarized key provisions for employers in our updates last week. The Department of Labor (“DOL”) wage and hours division recently issued initial summaries of the Families First leave requirements HERE.
We’ve been receiving questions, in particular, about the 12-weeks paid expanded Family Medical Leave Act (“FMLA”). As the DOL website clarifies, after the first two weeks (up to 80 hours) of expanded FMLA, the Act provides additional paid leave to employees for child care as summarized by DOL:
Up to an additional 10 weeks of expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
Phase III Economic Stimulus Package
Today the Senate failed for a second time to vote on the current version of Phase III of the federal government’s response to the COVID-19 outbreak: The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Since our Friday update on the unofficial draft of the CARES Act (as released to the press), the Senate has continued to experience partisan tension over several key provisions. Both sides continue to disagree on how the financial relief should be allocated. Reports indicate that Republicans have focused on providing relief for small businesses and industries like airlines, while Democrats wish to shift more of the emphasis to helping individual Americans directly and providing additional forms of unemployment relief.
Although an official version of the Senate bill has yet to be released, it is widely reported that the cost of the legislation has risen to over $1.4 trillion. When factoring measures taken by the Federal Reserve, that number rises to around $2 trillion. The bill would create a $500 billion lending program for businesses, cities, and states and another $350 billion to help small businesses meet payroll costs. Reports indicate that Democrats have been uncomfortable with the lack of oversight and guidance for some of those programs, and continue to push to ensure that such bailouts primarily benefit workers.
Another source of tension has been on the scope of the relief provided in household payments to qualifying tax payers. Both sides have been working to negotiate a way to expand both the size of those payments and the pool of those eligible to receive them.
To further complicate matters, the Speaker of the House, Nancy Pelosi, announced on Sunday that the House Democrats were going to introduce their own version of the bill. An unofficial draft was released to the press this afternoon. The House bill differs in several ways from the Senate’s proposal initiated by GOP leaders. The House bill would strengthen unemployment insurance, provide more funding for health care providers, provide more tax credits for individuals, provide greater paid family and medical leave, provide $40 billion in direct funding to higher education, and provide billions to states to ensure elections can go on without disruption. The move has already increased the pressure on the Senate to finalize its own bill.
We continue to monitor these developments.
Feel free to contact us if you have any questions.
Gery Chico, Jon Leach, and Alpita Shah