Business Closures – What Does This Mean For Affected Employers?

On March 11, 2020, Arizona Governor Doug Ducey declared a public health emergency due to the coronavirus outbreak.

On Tuesday, March 17, the mayors of Tucson and Phoenix declared public health emergencies and ordered or requested the temporary closing of certain businesses or suspension of certain services to prevent the spread of the virus.

On Thursday, March 20, Governor Ducey issued a series of executive orders, one of which closed bars, restaurant dining rooms, gyms, movie theaters, and limited restaurants to delivery, carry-out, and drive-through service only.

What Does This Mean for Affected Employers?

These new measures raise a host of interrelated questions for employers including:

• How does this impact employee paid sick time (and unpaid time off) under Arizona’s mandatory paid sick leave and the new Families First Coronavirus Response Act?
• How does a declaration of a “public health emergency” and closure of the business by a public official affect legal duties to employees?
• How does this affect employee benefits?
• Are employees laid off or furloughed due to mandatory closure entitled to COBRA or mini-COBRA protection and Unemployment Insurance Benefits?
• What if my business was not ordered closed, but due to the coronavirus emergency, we close anyway?
• If I must lay off employees, will my unemployment tax rate increase?

These are all incredibly difficult decisions to make in an atmosphere that is sometimes not conducive to decision making. At a high level, if an Arizona company has been ordered closed due to the coronavirus emergency, its employees are still entitled to accrued paid sick time during the closure, and employees may be entitled to benefits extension and compensation protection, but the nuances of these issues are novel and complex. Over the past two weeks, RL&L’s employment lawyers have been working hard to stay abreast of  changes to the law and the ever-shifting medical and public advice about how to manage COVID-19 in the workplace, and will remain ready and prepared to help advise clients during these difficult times. If have any questions please contact the head of our employment law practice, Kate Frenzinger, [email protected], 520-792-4800 or 480-663-9800.

How Can My Business Get in Front of The Coronavirus Situation?

Over the past two weeks RL&L has also been fielding calls from a host of clients seeking advice regarding how to best position their businesses to weather whatever may be coming over the coming months if extreme measures become the new normal.  In response to those concerns RL&L has responded and provided advice to several businesses regarding a host of complicated questions including:

• How do these new measures impact my businesses if I am not officially ordered to close?
• What steps should I take to prepare in case I am ordered to close?
• What impact would closing – either as ordered or voluntarily – have on my existing contractual obligations, including landlord-tenant obligations, supply contracts, or services contracts?
• To what extent can business interruption insurance protect me throughout this time period?
• Can force majeure clauses be leveraged to avoid obligations and/or preserve capital?

Again, these can all be extremely difficult and tricky decisions to make – but mapping out a plan for how to best position your business’s path through the next three months or beyond is likely vital.  Over the past two weeks, RL&L’s transactional team have been reviewing clients existing contracts and relationships and advising clients as to how to best minimize the potential risks associated with what will undoubtedly be difficult decisions both in the near and long term. If you have any questions about your particular situation please immediately reach out to the head of our business transaction practice, Oscar Lizardi, [email protected] at 520-792-4800 or 480-663-9800.

Local Help for Small Businesses May Be Coming

Some Arizona-based economic development entities are discussing how they can assist small businesses with counseling and micro-loans. We are monitoring their efforts and will provide details when they are available. If you have any questions please contact Pat Lopez, [email protected], 520-792-4800 or 480-663-9800.