Social Distancing: How States are Handling Business Closures

March 25, 2020|4:32 p.m.| ASTHO Staff

In response to the COVID-19 pandemic, states are using their emergency powers to authorize a variety of social distancing measures designed to reduce social interactions and slow the spread of infectious diseases. A common type of social distancing measure being implemented by governments at all levels is the closure of businesses. During an infectious disease outbreak, governments may order specific establishments, such as bars, restaurants, shops, and other businesses to temporarily close in order to prevent individuals from congregating in an enclosed space for long periods of time. While these measures are effective in “flattening the curve,” they can have a major impact on the financial stability of the business and its employees.

Below is a summary of executive orders that have led to the closure of many businesses and nonprofit organizations. We’ve also included an overview of proposed state legislation to provide economic assistance to businesses impacted by COVID-19.

Non-Essential Business Closures
In addition to restaurant and bar closures, executive orders and declarations allowing only essential businesses to continue operating have led to many small business and nonprofit closures. As of March 23, almost two dozen states have issued stay-at-home orders, which instruct individuals to stay at home except as needed to perform essential activities. Stay-at-home orders also designate certain businesses and establishments as “essential businesses” and “non-essential businesses” and order non-essential businesses to cease operation or to operate with limited functions or activities.

Connecticut’s order prohibits all non-essential and not-for-profit entities from conducting in-person functions if possible and encourages these businesses to use any telecommuting or work-from-home procedures that can be safely implemented. The order excludes businesses providing essential services of functions, such as healthcare, food service, and law enforcement. Kentucky issued an order closing all in-person retail businesses that are not life-sustaining but didn’t go as far as other states in telling individuals to stay home.

In Illinois, the stay-at-home order requires all non-essential businesses and operations to cease activities except for minimum basic operations (defined in the order) and encourages essential businesses to remain open while maintaining adequate social distancing among employees and the public. Similarly, Pennsylvania has ordered all businesses not deemed as life-sustaining to cease operations, while life- sustaining businesses may remain open but must maintain adequate social distancing measures to protect employees and patrons.

Legislative Responses
States are seeking to provide financial support to promote economic recovery and stability in response to restaurant and business closures, especially for nonprofits and small businesses. California enacted a bill stating the legislature intends that the administration will work with stakeholders to develop strategies to assist individuals, nonprofits, and small businesses experiencing economic hardships due to the impacts of COVID-19. These strategies will be included in the Budget Act of 2020. The District of Columbia enacted a bill providing emergency grants to eligible small businesses meeting certain conditions, including demonstration of financial distress caused by a reduction in business revenue to the public health emergency.

Massachusetts is considering legislation that would establish the COVID-19 Economic Stabilization Emergency Fund, which would provide grants to small businesses, nonprofits, and municipalities in high impact areas. Grants would be provided for loss of revenue, unexpected expenses, or loss of contributions, grants, or financial assistance. Similarly, Arizona proposed a bill to establish the Crisis Contingency and Safety Net Fund. Money from the fund would be spent following a state of emergency declaration by the governor and may be used to provide economic assistance to small businesses with fewer than 50 employees and nonprofit organizations among other entities.

New York introduced a bill to provide grants up to $10,000 to small businesses within the COVID-19 designated containment area to help offset lost revenue due to the impact of being located within the zone. The funds could be used to help pay for rent and other operating expenses including payroll.

As the pandemic continues, this information will continue to evolve over the coming days and weeks. ASTHO will continue to track executive and legislative action addressing restaurant and business closures resulting from COVID-19 response efforts and will regularly update resources ASTHO’s COVID-19 webpage.