Governor Newsom Issues Executive Order in Response to COVID-19 Pandemic

COVID-19 Update

In reaction to the coronavirus pandemic, on March 12, 2020, California Governor Gavin Newsom issued Executive Order N-25-20, which includes several directives to protect public health and the economy throughout the state. At its most basic level, the Executive Order permits the governor to “suspend any regulatory statute, or statute prescribing the procedure for conduct of state business” that hinders the state’s ability to address COVID-19. More specifically, the Executive Order will have important impacts on companies doing business in California:

  • Property. The state can now commandeer hotels, motels, medical facilities and other private property for quarantine, isolation and treatment—a tool that is greatly needed to prevent the spread of COVID-19 among the homeless and chronically underhoused but that could have an impact on property owners and healthcare providers.
  • Taxes. The state’s tax filing deadline was delayed 60 days for individuals and businesses unable to file on time based on compliance with public health requirements, with the potential for additional individualized extensions as necessary.
  • Government. The Executive Order modifies state and local open meeting laws (i.e., the Brown and Bagley-Keene Acts) to permit local and state legislative bodies to hold public meetings via teleconference while social distancing or similar measures are in place. However, teleconferences will remain subject to notice requirements in accordance with the time frames prescribed by the acts and with the requirement to provide at least one publicly accessible location for public participation.
  • Labor. The governor also announced workforce protections. For instance, if a worker or family member is sick or if the worker needs to be quarantined on the recommendation of civil authorities, the worker may use accrued paid sick leave in accordance with the law. If workers are unable to do their usual job because they were exposed to and contracted COVID-19 during the regular course of their work, they may be eligible for workers’ compensation benefits.

Notably, Executive Order N-25-20 adds to the governor’s March 4, 2020, proclamation of a state of emergency, which also includes several important directives impacting businesses:

  • Contracting. For state contracts, “applicable portions of the Government Code and the Public Contract Code, including but not limited to travel, advertising, and competitive bidding requirements,” were suspended “to the extent necessary to address the effects of COVID-19.” It is not immediately clear what specific provisions of the Government Code and Public Contract Code are suspended or what procurements these suspensions will apply to.
  • Consumer Protections. The governor’s proclamation triggered a state law that limits price gouging. Prices for affected goods or services can be no more than 10% above the price prior to when the proclamation went into effect. The limits will apply to several items or services, including but not limited to food; medical supplies; building materials; housing; gasoline; and transportation, freight and storage services. However, price increases are permitted if directly attributable to a rise in underlying costs due to the emergency and no greater than the increased cost plus the customary markup. Price-gouging protections will be in effect at least through September 4, 2020.

With the unprecedented public health risks of coronavirus mounting, Governor Newsom is also taking assertive executive action. Late Sunday afternoon, the governor called for home isolation of individuals over age 65 and persons with chronic disease. The state is also asking bars, wineries and nightclubs to close, in addition to having restaurants reduce occupancy by half. These measures—intended to encourage social distancing—are emblematic of the dynamic changes and restrictions that will continue to develop in California.

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