Editor's note: This article was updated with financial assistance deadlines on Thursday, April 23, 2020.
Due to the coronavirus pandemic, businesses in Maryland and across the country are facing significant losses as state and local governments order businesses to scale back and shut down operations to contain the spread of the virus. Although the extent to which this pandemic will impact businesses remains uncertain, Maryland business owners should understand the implications of the current containment measures in place for the coronavirus, also known as COVID-19.
On March 23, 2020, Governor Larry Hogan ordered the closure of all non-essential businesses to the public and certain specific businesses, organizations and facilities. At the time of issuance, this order was not interpreted as constituting a shelter-in-place order. However, the Governor’s Office of Legal Counsel (OLC) has rescinded this interpretation in light of the Governor’s Amended and Restated Executive Order (Order) issued on March 30, 2020, which amends and restates the March 23 order to now include a stay-at-home directive. The implications of the Order will depend largely on whether a business is considered non-essential. In any event, any person who knowingly and willfully violates the Order will be guilty of a misdemeanor and, on conviction, could face up to one year in person or a fine not exceeding $5,000, or both.
The Governor's Order prohibits and mandates the cancelation of all social, community, spiritual, religious, recreational, leisure and sporting gatherings and events of more than 10 people, including parades, festivals, conventions and fundraisers.
Further, the Order specifically requires the closure of certain types of businesses, such as:
All businesses the Governor has required to close pursuant to prior executive orders, such as casinos, racetracks and simulcast betting facilities, are to remain closed.
The Order also refers to "non-essential businesses," which are defined as businesses and establishments that are not included in the federal guidelines for critical infrastructure sectors that may remain open. The OLC has issued interpretive guidance — Interpretive Guidance COVID19-04, Interpretive Guidance COVID19-05 and Interpretive Guidance COVID19-06 — setting forth a nonexhaustive list of businesses, organizations and facilities that are not required to close pursuant to the Order. Therefore, business owners should consult the federal guidelines and the OLC’s guidance. Although non-essential businesses are required to remain closed to the public, the Order permits staff and owners to continue to be onsite at non-essential businesses to engage in “minimal operations,” such as facilitating remote working, maintaining essential property and performing essential administrative functions, including picking up mail and processing payroll.
If a business is unsure about whether it is non-essential, the OLC has recommended that businesses take the following steps:
Maryland Secretary of Commerce, Kelly M. Schulz, has strongly recommended that business owners not subject to closure under the Governor's Order assess the potential health consequences to employees and customers if they are to remain open and to continue to prevent groups of ten or more from congregating in one area while following the Maryland Department of Health’s (MDH's) social distancing guidelines. The Governor has advised that businesses that do remain open should make efforts to scale down operations in order to reduce the number of staff onsite, limit interactions with customers and institute telework for as much of the workforce as is practical.
New Jersey, New York, Pennsylvania, Colorado, Connecticut, California, Delaware, Louisiana, Ohio, West Virginia, Indiana, Illinois and other states have already implemented measures to shut down all non-essential businesses.
As of March 30, 2020, the Order requires all Maryland residents to stay at home, except to conduct or participate in “essential activities,” such as shopping for groceries, seeking medication or emergency medical care, and exercising outdoors (but only if such exercise is in compliance with the Centers for Disease Control and Prevention’s [CDC's] and the Maryland Department of Health’s social distancing guidelines, and only with less than 10 people).
Under this stay-at-home order, staff and owners of businesses not subject to closure may travel to and from their homes and such businesses and to and from customers for purposes of delivering goods or performing services.
By contrast, staff and owners of non-essential businesses may travel (i) to and from their homes and such businesses to engage in minimal operations and (ii) to and from customers only for purposes of delivering goods. According to OLC Interpretive Guidance COVID19-07 dated March 30, this means that non-essential businesses may no longer participate in curbside pickup. Significantly, this interpretation rescinds and supersedes the references to “curbside pickup” in Paragraph 1.f. of Interpretive Guidance COVID19-06 and Paragraph 3 of Interpretive Guidance COVID19-05. Non-essential businesses may continue to sell products on a delivery basis, provided that such delivery is still in compliance with applicable social distancing and environmental cleaning and disinfection guidelines. The prohibition on curbside pickup does not apply to restaurants and bars, which are not classified as non-essential businesses under the Order.
In light of the stay-at-home directive, businesses should strongly consider providing letters to employees who must commute to and from work for purposes of establishing the necessity of the employee’s travel. The OLC suggests the letters include the following:
In any event, all businesses, whether or not considered non-essential, should understand persons traveling into Maryland from out-of-state must self-quarantine for 14 days, except for:
This is important to keep in mind for those staff and owners who continue to be on-site essential businesses or non-essential businesses to conduct minimal operations.
As of April 5, 2020, Governor Hogan has authorized local health officials to order “unsafe facilities” to modify operations to comply with federal and state social distancing guidelines or to prohibit or limit the movement of individuals and/or vehicles into all or part of the unsafe facility, including, without limitation, by closing such facility. An "unsafe facility” is defined as a business, organization, establishment, facility or construction site in the health official’s political subdivision that the official determines is unable or unwilling to operate in a manner that does not pose an unreasonable risk of exacerbating the spread of COVID-19.
These orders are binding upon and enforceable against all businesses deemed to be an unsafe facility, even if such business is otherwise permitted to remain open under the Order issued on March 30, 2020. Similar to the March 30 Order, any person who knowingly and willfully violates this April 5 order or any order issued by a local health official will be guilty of a misdemeanor and, on conviction, could face up to one year in person or a fine not exceeding $5,000, or both.
As of April 6, 2020, the Maryland Department of Commerce is no longer accepting new applications for its Small Business COVID-19 Relief Grant and Loan Programs. All applications that have been submitted are currently being reviewed in the order received. If you have already started an application, it must be completed and submitted by 5 p.m. on April 7, 2020, in order to be considered. As of April 21, 2020, the Maryland Department of Commerce is no longer accepting new applications for its Maryland COVID-19 Emergency Relief Manufacturing Fund.
For the latest information on the financial assistance available for businesses, please visit COVID-19 Financial Assistance for Businesses.
We recognize that other considerations and requirements may be affected by the Governor’s Stay-at-Home order and shutdown of all non-essential businesses in Maryland. For example, Maryland law requires that a stockholders meeting be held or postponed. Maryland corporation law allows Maryland corporations to hold a meeting by conference call or other means as long as all participants can hear each other at the same time. According to recent SEC guidance on this issue, public companies that decide to hold a virtual stockholder meeting or postpone the meeting must make some simple filings with the SEC and provide certain notifications to stockholders.
Businesses owners can receive the latest information and guidance at Business Express, a state hub on how the coronavirus is affecting Maryland businesses.
Should your business encounter dilemmas due to the COVID-19 crisis, please contact us and we will be happy to assist you.
For additional information on the impact of the coronavirus, visit our COVID-19 information hub for a list of up-to-date content.
Abba David Poliakoff
410-576-4067 • firstname.lastname@example.org
Michele Bresnick Walsh
410-576-4216 • email@example.com