As talk has turned in California and the nation towards re-opening the economy, a number of California cities and counties have adopted requirements that all Essential Businesses implement formal Social Distancing Protocols. These requirements are likely to expand across the state and remain in place long after shelter in place orders are lifted.

The Families First Coronavirus Response Act (FFCRA), which the President signed on March 18, 2020, is emergency legislation intended to help employers maintain pay for employees who cannot work due to COVID-19 reasons.

On April 10, 2020, LA County issued a new order further clarifying its shelter in place order, making it clear that all non-essential in-store retail must cease. The order explicitly states remote sales of vehicles are not restricted by the order if the vehicles are delivered to a residence or Essential Business. This means that any car dealer currently offering in-store sales, even if limited to appointment only or for essential workers, must discontinue those sales. If the dealership wants to continue retail sales, it should conduct those sales remotely, being sure to follow state and federal regulations to avoid potential liability.

The Mayor of Los Angeles issued a further emergency order on April 7, 2020, regarding the COVID-19 pandemic directed at certain essential businesses, which more likely than not effects some, if not all vehicle service operations. Retail businesses, restaurants, and delivery businesses that are deemed essential are among the effected businesses as well. Businesses subject to the order now have additional requirements for providing masks, hand washing, and social distancing and may refuse service to customers not wearing masks. The new requirements take effect this Friday, April 10, 2020.

On April 1, the City of Los Angeles issued a modified version of its Safer At Home order initially issued on March 19. This order applies only to dealers in the city of Los Angeles. The updated version contains a statement that “no auto dealership shall operate, with the exception of its auto service and parts stores.” This follows closely behind modified orders issued by local jurisdictions in Northern California that require closure of dealership sales operations. The Northern California orders, however, expressly state that they are not intended to prohibit online sales if the vehicle is delivered to an essential business or residence. The Los Angeles City order does not mention online vehicle sales at all.

Temporary regulations applicable to the Families First Coronavirus Response Act (FFCRA) were released by the DOL today. Among other things, the regulations clarify that state and local shelter in place and safer at home orders and directives do qualify as a quarantine or isolation order for the purposes of emergency paid sick leave (EPSL). However, this leave is available only when an employer is open and operational and has work for the employee to do, but it is the employee who is unable to work due to the order. Thus, if an employer is closed because it is a non-essential business and ordered to close under the state or local order, or the employer is an essential business (and remains open), but experiences a slowdown in customers such that there is no work for the employee, the affected employee would not be entitled to EPSL absent some other qualifying reason. On the other hand, if the employee is scheduled to work or can telework, but experiences some circumstance related to the stay at home order preventing her from working, she can avail herself of the leave.

In the face of local and state orders mandating individuals to “stay at home” and “shelter in place,” many employers are turning to telework and allowing employees to work from home as a way to maintain business continuity and payrolls. This means non-exempt employees who have never before worked from home face a new reality.

On March 19, 2020, Governor Newsom issued Executive Order N-33-20 (“Executive Order”) directing all residents to heed current State public health directives. The order directed all individuals to stay home except as needed to maintain continuity of operations of essential critical infrastructure sectors.

With all of California under a “shelter in place” order from the Governor, car dealers across the state are wondering if their business interruption insurance will cover any of the income lost due to mandatory showroom closures and other disruptions. At first blush, it appears that most insurers will not cover these losses, as most policies only apply where there is damage to the covered building or the immediate vicinity, and others also have exclusions for communicable disease. Nonetheless, depending on the specific wording of your policy and the facts at your dealership, there may be compelling arguments that coverage applies. 

Yesterday evening, the United States Senate passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act.” The bill is expected to be taken up for a vote in the House of Representatives tomorrow morning by voice vote at 9 AM EDT, and President Trump has indicated that he would sign the bill when passed.