If a business in Grand Rapids wants to designate a grain supplier in Ohio as essential, it can only do so in compliance with both Michigan and Ohio’s orders. Photo by iStock
Businesses in critical industries such as food and manufacturing that want to avoid sanctions related to Gov. Gretchen Whitmer’s “Stay Home, Stay Safe” order should take immediate action to ensure they are compliant by the March 31 deadline, a pair of Michigan attorneys say.
Joe Infante, an attorney with Miller Canfield in Grand Rapids who focuses on commercial litigation and alcoholic beverage manufacturing regulations, and Jeff LaBine, a corporate deputy group leader who works out of Miller Canfield’s Ann Arbor office, spoke to the Business Journal March 24 about how employers that are defined as part of the crucial fabric of the economy can identify and designate essential workers — including in their downstream supply chain — during COVID-19.
Whitmer on Monday, March 23, signed the “Stay Home, Stay Safe” Executive Order (EO 2020-21), directing all Michigan businesses and operations to temporarily suspend in-person operations that are not necessary to sustain or protect life.
Section 4 of the order declared: “No person or entity shall operate a business or conduct operations that require workers to leave their homes or places of residence except to the extent that those workers are necessary to sustain or protect life or to conduct minimum basic operations.”
Those workers are referred to in Section 4, part a. as “critical infrastructure workers.”
But what exactly does that mean? Business owners began flooding their attorneys’ phone lines with that exact question as soon as the order came down, Infante and LaBine said.
Both attorneys have spent time in virtual meetings with their firm’s Coronavirus Response Team, formed in early March, to ensure they are prepared to answer such legal questions.
Although employers during the first week of the order were permitted to verbally designate essential critical infrastructure employees, Infante pointed out there’s a Tuesday, March 31 deadline to inform workers of their essential designation in writing, “whether by electronic message, public website or other appropriate means.”
LaBine said the final arbiter for whether businesses are complying and appropriately making their designations is the attorney general for the state of Michigan, “but you hope it doesn’t get there.”
“There is specific language in the order that provides for penalties for abusing this designation. I’m fielding lots of calls because everyone seems to have skipped that piece of language,” LaBine said.
The warning is in Section 9, part b., sub-section 6: “Businesses, operations, suppliers, distribution centers and service providers that abuse their designation authority shall be subject to sanctions to the fullest extent of the law.”
LaBine and Infante agree the order has “very broad” definitions of critical infrastructure industries and workers, and therefore it requires interpretation and analysis.
Sections 8 and 9 of the EO provide a list of sectors in that are considered critical infrastructure industries:
- Health care and public health
- Law enforcement, public safety and first responders
- Food and agriculture
- Water and wastewater
- Transportation and logistics
- Public works
- Communications and information technology, including news media
- Other community-based government operations and essential functions
- Critical manufacturing
- Hazardous materials
- Financial services
- Chemical supply chains and safety
- Defense industrial base
- Workers at disaster relief child care centers
- Workers at designated suppliers and distribution centers
Except for the latter two items, the EO drew all of its critical infrastructure categories from a document that was published March 19 by the director of the U.S. Cybersecurity and Infrastructure Security Agency, at bit.ly/CISAguidanceonworkers.
Under the CISA guidance, the food and agriculture industry ranks among the top three with the most bullet points — the other two being health care/public health and the energy sector — with three-quarters of a page being devoted to examples of activities within the food/ag sector that are considered essential.
Infante said he has been advising his brewery clients that their establishments are deemed part of the critical infrastructure if they provide takeout and delivery food. According to bullet point three, beverage production is also considered essential, so this would include brewing, winemaking and distilling operations.
The question of how those production operations can continue to function is where it gets a little hazy, Infante said.
“Your industry or your business may fall into one of these bullet points, but it doesn’t mean that you’re supposed to keep 100% operational. The owner of the business has to make the determination of just which employees are essential and which employees need to be there. … Only the bare minimum to operate need to be working still,” he said.
In order to keep brewing, distilling, winemaking, producing food in restaurants or manufacturing critical goods, businesses need to maintain their supply chains — which is provided for in the order but still requires interpretation, Infante and LaBine said.
Section 9, part b., subsections 1-4 of the EO address the question of how makers can maintain access to suppliers:
1. A business or operation that employs critical infrastructure workers may designate suppliers, distribution centers or service providers whose continued operation is necessary to enable, support or facilitate the work of its critical infrastructure workers.
2. Such suppliers, distribution centers or service providers may designate workers as critical infrastructure workers only to the extent those workers are necessary to enable, support or facilitate the work of the original operation’s or business’s critical infrastructure workers.
3. Designated suppliers, distribution centers and service providers may in turn designate additional suppliers, distribution centers and service providers whose continued operation is necessary to enable, support or facilitate the work of their critical infrastructure workers.
4. Such additional suppliers, distribution centers and service providers may designate workers as critical infrastructure workers only to the extent that those workers are necessary to enable, support or facilitate the work of the critical infrastructure workers at the supplier, distribution center or service provider that has designated them.
How to achieve this will require a lot of communication between companies, and when the rubber meets the road, it’s probably smart to consult legal counsel, LaBine said.
A primary reason for this, he said, is that many local companies’ suppliers are located out of state, where the governors and legislative bodies may have issued different orders on how to proceed during this time.
“The most important thing that they keep in mind is that for Michigan employers, if they’re looking to designate downstream suppliers, that only works under this order if that supplier is in Michigan,” he said.
“It’s catching a lot of our clients (off guard) where we’re having to analyze this in six, seven states. Given our proximity to Ohio, if somebody in Grand Rapids wants to designate a grain supplier in Ohio, the Michigan entity can only do so in compliance with both Michigan and Ohio’s orders.”
LaBine added that although it’s pretty hard to be a company in the food industry right now and not be considered essential, suppliers in the packaging industry, for example, would mainly be considered essential if they make takeout packaging or packaging for foods that end up in grocery stores or are used in some part of the food industry value stream.
He said the point under the CISA guidance that describes critical manufacturing is not currently as well defined as the food industry, with only a tiny paragraph specifying which types of manufacturers are essential, so attorneys such as himself are hoping to eventually obtain more clarification from the Whitmer administration in coming days so as to better advise their clients.
Information surrounding the coronavirus and its impacts in Michigan is rapidly changing. More information and executive orders applying to Michigan businesses can be found under the “News and Announcements” landing page at michigan.gov/whitmer.