From Lockdown to a Showdown: What questions should companies consider to “reopen” the economy?

Excerpted from Lexology by Paul Hastings LLP

As the discussion about “reopening” the economy intensifies, an important legal question has arisen: What authority, if any, does the federal government have to allow employees to return to work in the face of state and county stay-at-home orders? To date, President Trump has declared his intent of permitting employees to return to work, even if on a gradual basis. And many governors (including of California and New York) are taking a cautious approach to “reopening” businesses to avoid a resurgence of COVID-19 in their respective regions.

The net result is that employers—including companies with operations in multiple jurisdictions—may soon face issues relating to whether and to what extent federal directives could impact state or local mandates. Employers likewise may address matters relating to the well-being of their workforce, although those issues have received considerably more attention and are not addressed here.1 This article instead identifies certain issues that companies might consider in the face of (potentially conflicting) guidance from federal and state or local governments.

1.Who has responsibility for public health/welfare issues?
Generally, states have responsibility for protecting the public health/welfare of their citizens unless preempted by a valid act of Congress.

The federal government is one of limited, enumerated powers. That is, the federal government may act only where the Constitution authorizes it do so. Case law makes clear that the Constitution has reserved to states the power to make (and enforce) rules pertaining to the public health and welfare of citizens, which includes the right to quarantine and the right to close businesses and schools.2

So what would happen if the President were to relax the federal guidelines while governors determine stay-at-home orders remain indispensable to manage the health crisis in their states? Under the preemption doctrine and the Supremacy Clause of the U.S. Constitution, federal law is the supreme law of the land, but the President does not have the independent power to compel states and municipalities to relax restrictions designed to mitigate the spread of COVID-19—the President would need the help of Congress.

Congress does have this power and could, theoretically, choose to effectively displace states’ quarantine power. As a rule, Congress can displace states’ traditional police powers when Congress acts pursuant to one of its enumerated powers, even when the exercise of such authority would preempt contrary state law.
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