Over the past week, the governors of several U.S. states have issued “stay-at-home” orders to combat the spread of the COVID-19 coronavirus. These orders significantly limit freedom of movement within the affected states and instruct businesses to institute remote work solutions for their employees—or else to shut their doors entirely. Naturally, this creates a significant threat to life sciences companies, especially those with laboratories required to keep their businesses viable. Fortunately, many states have provided exceptions that should allow many of these businesses some much-needed flexibility.
Below is an overview of the stay-at-home orders in effect in California, New York, Connecticut, New Jersey and Pennsylvania, as of 12 pm ET on March 22, 2020, as well as analysis of the provisions most relevant to biotechnology and other life sciences companies with laboratory activities.
On March 20, 2020, Governor Newsom issued Executive Order N-33-20, which immediately implemented an Order of the State Public Health Officer directing all residents to “stay at home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors[.]” The Executive Order specifically references an “outline” of these “federal critical infrastructure sectors,” provided by the federal Cybersecurity Infrastructure Agency (“CISA”), available here. Order N-33-20 further provides that “Californians working in these 16 critical infrastructure sectors may continue their work[.]”
Since Order N-33-20 was issued, the State Public Health Officer has also issued guidance to identify the “Essential Critical Infrastructure Workers” who are excepted from the stay-at-home order, available here. This guidance largely tracks CISA’s own list of critical infrastructure sectors.
Relevant to life sciences companies, this guidance includes multiple categories that might apply to life sciences companies in the critical Health Care and Public Health Sector:
Manufacturers, technicians, logistics and warehouse operators, and distributors of medical equipment, personal protective equipment (PPE), medical gases, pharmaceuticals, blood and blood products, vaccines, testing materials, laboratory supplies, cleaning, sanitizing, disinfecting or sterilization supplies, and tissue and paper towel products.
This category covers many life sciences companies, including many that operate laboratories. Businesses that fall into such defined categories of “Essential Critical Infrastructure Workers” are excluded from the stay-at-home restriction. However, Order N-33-20 still states that anyone leaving their home under this or any other exclusion “should at all times practice social distancing.”
On March 20, 2020, Governor Cuomo issued Executive Order 202.8, effective as of March 22, 2020 at 8 pm ET. Order 202.8 mandates that all businesses and non-profits shall require their employees to work from home, excepting any business that is either an “essential business” or an “entity providing essential services or functions,” provided that the latter may only “operate at the level necessary to provide such service.”
Since Order 202.8 issued, The New York State Department of Economic Development (d/b/a Empire State Development) has published guidance outlining what constitutes an essential business or provider of essential services. That guidance can be found here.
Relevant to life sciences companies, essential businesses include “research and laboratory services,” “medical wholesale and distribution,” and manufacturers of “food processing, manufacturing agents, including all foods and beverages,” “chemicals,” “medical equipment/instruments,” and “pharmaceuticals.”
Accordingly, businesses that fall into one of these categories likely are excluded from the stay-at-home restriction. However, Order 202.8 still states that anyone leaving their home under this or any other exclusion “should at all times practice social distancing.” Businesses that do not fall within the specified categories can request an exemption by filling out the form available here.
On March 20, Governor Lamont issued Executive Order Number 7H, effective as of March 23, 2020, at 8 pm ET. Order 7H mirrors the instructions of New York’s Order 202.8, mandating that all businesses and non-profits require their employees to work from home, except for any “essential business” or “entity providing essential services or functions”. Connecticut has not yet issued any guidance to clarify the scope of these terms, but Order 7H references the same 16 federal “critical infrastructure sectors” as California’s Order N-33-20, and provides for the Department of Economic and Community Development to provide lawfully binding guidance about which businesses are essential by 8 pm ET on March 23. When it issues, that guidance should be available here.
We would expect that the guidance would follow some combination of New York and California with respect to excluded “essential businesses.”
On March 21, 2020, Governor Murphy issued Executive Order Number 107, effective the same day as of 9 pm ET. Order 107 provides that “[a]ll New Jersey residents shall remain home or at their place of residence,” with certain specified exceptions. The only industry-based exception provided is for critical retail services .
Relevant to life sciences companies, Order 107 does, however, provide an exception for any business with “employees that cannot perform their functions via telework or work-from-home arrangements” provided that the business makes “best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue.” It further provides examples of such employees who cannot work remotely, including “lab technicians.”
Accordingly, life sciences companies likely can continue to have employees who reside in New Jersey report to their place of business, but only to the extent necessary to provide for the continuation of their essential operations.
Such companies should also follow guidance published by the State of New Jersey, which provides among other things that “[b]usinesses are encouraged to give each employee a letter indicating that the employee works in an industry permitted to continue operations.”
On March 19, 2020, Governor Wolf issued an unnumbered Executive Order. The Pennsylvania Order requires that “[n]o person or entity shall operate a place of business in the Commonwealth that is not a life sustaining business[.]” The Pennsylvania Order excludes “virtual and telework operations,” but requires those operations and life sustaining businesses to follow “social distancing and other mitigation measures.” The Pennsylvania Order was supposed to take effect on March 21, 2020, at 12:01 AM, but has since been delayed to March 23, at 8:00 AM.
Governor Wolf has since issued successive versions of a list of life-sustaining and non-life-sustaining businesses.
Relevant to life sciences companies, “Pharmaceutical and Medicine Manufacturing” and “Scientific Research and Development Services” are both classified as life-sustaining businesses, and thus “May Continue Physical Operations.”
Accordingly, life sciences companies likely can continue to operate within Pennsylvania, provided they abide by social distancing and other mitigation protocols.
Massachusetts and Washington
To date, neither Massachusetts nor Washington has issued a stay-at-home order like the other states discussed above. However, if such an order issues in these (or any other) states, the form is likely to follow the models above. Life sciences companies in any state without a stay-at-home order should closely watch the developing situation in states that have issued such orders, and consider the guidance that follows so that they can prepare for any future order.
COVID-19 will continue to significantly impact how life sciences companies can and should operate their businesses. Fortunately, the states that have issued stay-at-home orders so far have carved out exceptions that should allow affected companies to protect their viability for the long term, even if they cannot immediately proceed with business-as-usual. Life sciences companies in any state without a stay-at-home order should closely watch the developing situation in states that have issued such orders, and consider the guidance that follows so that they can prepare for any future order, including by taking steps to mitigate the effect if at all possible.
That being said, all companies should consider the safety and well-being of their employees and follow social-distancing protocols, which are themselves mandated in many states. In addition, best practices for companies subject to a stay-at-home order, even if they fall within an exception, include (i) limiting on-site requirements to employees necessary for the essential operations of the company, (ii) notifying any such employees in writing of that status (with details on the exception claimed) and to provide a copy of the applicable order, and (iii) instructing such employees to retain a copy of any designation letter while traveling to and from work. Companies should also consider whether the local municipalities in which they have facilities have imposed any more stringent gathering or stay-at-home restrictions that might affect their operations.
Please note that that these and many other states, cities and counties continue to issue new orders and guidance related to those orders, which could render some of the information above out of date at any time, as could any federal actions.
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