Application of Stay-at-Home Orders to Financial Institutions

As more and more restrictive orders are being issued nationwide, businesses in the financial services sector are racing to confirm whether or not they are considered an “essential business” able to remain open despite state- and county-issued orders in each of the jurisdictions in which they may have affected employees. Federally, President Trump has indicated that individuals in critical infrastructure industries “have a special responsibility to maintain [their] normal work schedule,”¹ and in guidance issued March 19, 2020 by the Cyber-Infrastructure Security Agency (CISA) within the Department of Homeland Security, the federal government has defined “critical infrastructure” industries (the Guidance) to include the financial services sector.² CISA does not define the financial services sector by categorizing particular types of licenses or registrations; rather, it defines the sector functionally to include institutions that provide the following types of services: (1) deposit, consumer credit and payment systems products; (2) credit and liquidity products; (3) investment products; and (4) risk transfer products (including insurance).

For financial services, CISA’s Guidance includes the following workers as “essential” to the functioning of the sector:

• Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing and settlement; wholesale funding; insurance services; and capital markets activities).
• Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (e.g., armored cash carriers). 
• Workers who support financial operations, such as those staffing data and security operations centers.³

Also related to financial services, within the information technology industry, “[w]orkers responding to cyber incidents involving critical infrastructure, including medical facilities, SLTT governments and federal facilities, energy and utilities, and banks and financial institutions, and other critical infrastructure categories and personnel” are also considered essential.⁴ While these are not an exclusive statement of who may be considered “necessary” to support critical financial services infrastructure, the CISA release provides a core reference point for financial institutions assessing their capacity to serve their customers and maintain a functioning, stable financial system through the COVID-19 outbreak.

CISA is careful to note, however, that the Guidance is advisory, and not a federal directive, and as such each state is permitted to utilize its own standards for determining what is a critical industry, sometimes referred to as an “essential business,” when considering business closure orders in this unprecedented time. Thus, financial institutions of all types must carefully parse each individual state and local order for clarification of the scope of coverage and exemptions.

For example, California is utilizing the CISA Guidelines for purposes of the state-wide “Stay Home” Executive Order.⁵ However, many counties in California have issued their own orders. For example, San Francisco County and adjacent counties have identified “banks and financial institutions” to be essential businesses.⁶ The county orders also exempt businesses that provide “other Essential Businesses with the support or supplies necessary to operate.”⁷

The Illinois order includes a detailed list of exemptions for, among other things, financial institutions such as “[b]anks, currency exchanges, consumer lenders, including but not limited, to payday lenders, pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products”⁸ and professional services organizations, including those that provide “legal services, accounting services, insurance services, and real estate services (including appraisal and title services).”⁹ By contrast, although the New York order also includes “banks and related financial institutions” as an “essential business,” its initial non-exclusive list of examples is more limited, including, “banks, insurance, payroll, accounting, and services related to financial markets.”¹⁰

Even if initial governmental releases regarding restrictive orders do not clearly exempt specific financial services workers on their face, formal or informal exemptions for critical support of financial services activities may be available as governments focus on the importance of support for the financial infrastructure that is critical to the lifeblood of the economy. In making arguments for such exemptions, the CISA documentation, as well as accommodative positions in other states, can provide helpful precedents for institutions attempting to press a case for exemption. Further, there may also be questions of federal preemption, such as in the application of a state or local order to a federally chartered bank and obligations of registrants under federal securities laws, if state or local limits are overbroad in their application, but most state and local governments seem to be taking a pragmatic approach to enable consumers and businesses to obtain access to financial services.

As financial services providers navigate these complex issues, they also will need to take into account additional considerations such as business continuity planning in the face of the pandemic, the ongoing health and safety of its employees, labor and employment obligations, and guidance from supervisory agencies. Our COVID-19 Resource Center contains helpful information regarding these considerations as well as broader discussions of some of the restrictive orders being implemented around the country.

² The Guidance can be found at: https://www.cisa.gov/sites/default/files/publications/CISA-Guidance-on-Essential-Critical-Infrastructure-Workers-1-20-508c.pdf.

³ Guidance, at 11.

⁴ Guidance, at 10. SLTT stands for State, Local, Tribal and Territorial governments.

⁵ The California Executive Order N-33-20 requiring individuals to stay home except for essential needs can be found at: https://covid19.ca.gov/img/Executive-Order-N-33-20.pdf.

⁶ See, e.g. City and County of San Francisco Order of the Health Officer No. C19-07, at § 10.4.vii.

⁷ Id., at § 10.f.xv.

⁸ State of Illinois Executive Order 2020-10 in Response to COVID-19, § 1, para. 12.f, found at: https://www2.illinois.gov/Documents/ExecOrders/2020/ExecutiveOrder-2020-10.pdf.

⁹ Id., at § 1, para. 12.r.

¹⁰ State of New York Executive Order 202.6, found at: https://www.governor.ny.gov/news/no-2026-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency, and Press Release dated March 20, 2020 Governor Cuomo Issues Guidance on Essential Services Under The 'New York State on PAUSE' Executive Order, found at: https://www.governor.ny.gov/news/governor-cuomo-issues-guidance-essential-services-under-new-york-state-pause-executive-order. New York has, however, released FAQs which indicate that very limited functions, such as picking up the mail, can be performed at even non-essential businesses under controlled circumstances: “A single person attending a non-essential closed business temporarily to perform a specific task is permitted so long as they will not be in contact with other people.” https://esd.ny.gov/sites/default/files/ESD_EssentialEmployerFAQ_032220.pdf.