New York on Pause: What Landlords Need to Know

As part of the “New York State on PAUSE” response to the COVID-19 outbreak, on March 20, 2020 Governor Cuomo issued Executive Order No. 202.8 requiring a 100% reduction of the in-person workforce of all non-essential businesses in New York State.  This order came on the heels of previous orders which had encouraged telecommuting; banned large gatherings; limited restaurants to take-out and delivery; and closed indoor retail shopping malls, gyms and fitness centers, and personal care services.  While the reduction of in-person workforce is broad reaching, the essential services exception serves to allow landlords to continue providing basic security, janitorial service, and other services truly needed for maintaining and operating their buildings.  Furthermore, landlords and tenants should be able to maintain the IT infrastructure needed for remote work, provided they are doing so in a manner that otherwise comports with the NY State on Pause requirements. 

Reduction in In-Person Workforce and the Essential Businesses and Services Exception.  

Governor Cuomo had previously signed Executive Order 202.6 on March 18, 2020, which mandated each employer "reduce the in-person workforce at any work locations by 50% no later than March 20 at 8 p.m.," with the exception of essential businesses. On March 19, 2020, Executive Order 202.7 increased that reduction to 75%.  Each of the orders has exempted "essential" businesses and services.  Order 202.8 expanded that exemption, providing that "an entity providing essential services or functions whether to an essential business or a non-essential business shall not be subjected to the in-person work restriction, but may operate at the level necessary to provide such service or function."  That means if a firm is a vendor, supplier, or provides other support to an essential business that is required for the essential business' operation, then that business is exempt from the employment reduction provisions.  A violation of the workplace reduction provisions will be treated as a violation of Section 12 of the Public Health Law, which carries potential civil and criminal penalties.  Note that for non-essential businesses, if necessary, a person may pick up the mail or perform a similar routine function each day, so long as that specific task does not require that individual to be in contact with other people.^[1]

Defining “Essential”.

The State has published Guidance on what constitutes essential businesses or entities (the "Guidance").  

Specifically, the Guidance defines "Essential Business," to include, among other things:

Essential Infrastructure, including telecommunications and data centers;

Essential Services, including trash and recycling collection, processing and disposal; mail and shipping services; building cleaning and maintenance; storage for essential businesses; and

​Essential Services Necessary to Maintain the Safety, Sanitation and Essential Operations of Residences or Other Essential Businesses, including security and building cleaners or janitors. 

Our conclusion is that landlords should be able to continue providing basic security, janitorial service, and other services truly needed for maintaining and operating their buildings.  Furthermore, landlords and tenants should be able to maintain the IT infrastructure needed for remote work, provided they are doing so in a manner that otherwise comports with the New York State on Pause requirements. 

Application of the Essential Business Exception.  

The determination of "essential" applies to each business individually.  With respect to businesses that operate or provide both essential and non-essential services, supplies, or support, only those lines and/or business operations that are necessary to support the essential service, supplies, or support are exempt from the restrictions.  Essential businesses are still required to utilize telecommuting or work from home procedures to the maximum extent possible.^[2]  Employees reporting to work at essential businesses are also required to adhere to the requirements set forth in the Department of Health Guidelines, which include maintaining a safe social distance, restricting use of public transportation to when absolutely necessary, and staying home when sick.  

As an illustration of what is deemed an essential service, New York State gives the example of a manufacturing firm with three production lines.^[3]  If two lines manufacture toys and one medical equipment, the business is exempt from the employment reduction requirements to the extent that employees are needed to maintain the production capacity of the line manufacturing medical equipment.  All other employees are subject to the workforce reduction requirements.  Additionally, employees needed to support the medical equipment line that are capable, such as human resources, accounting, and legal, are still required to utilize telecommuting or work from home procedures to the maximum extent possible.

Requesting Designation as Essential Business.  

Any business not listed in the Guidance may apply to be designated an essential business here.

Mintz will continue to monitor and analyze the rapidly changing legal landscape. 

Subscribe To Viewpoints