As Cities and States Announce Closures, What is the Difference Between an Essential and Nonessential Business?

March 20, 2020

The response to the coronavirus pandemic in the United States has largely been driven by individual state governments, with several states announcing widespread closures of “nonessential” businesses. California, New York, Ohio and Pennsylvania have all ordered similar statewide closures, with more states expected to make similar decisions in the coming days.

But this decision begs the question: what constitutes an “essential” or a “nonessential” business?

While there is no federal guideline dictating which businesses fall under each category, leaving it up to local governments to decide, most parties agree: businesses that offer a life-sustaining service are considered essential.

Most governments define “life-sustaining” as a business that is crucial to everyday life or necessary to ensure that people don’t suffer from any additional hardships related to the effects of the pandemic, such as food insecurity, economic disadvantages or health needs.

By comparison, nonessential businesses tend to be recreational and draw large, lingering crowds. These are businesses that, if closed, may cause an inconvenience but won’t affect people’s health or wellbeing. Generally, the benefit of closing nonessential businesses is to encourage more people to practice social distancing and to stay home as much as possible.

Here’s a general comparison of the typical businesses that fall under each category:

Essential Businesses

  • Healthcare providers
  • Pharmacies
  • Grocery stores
  • Gas stations and convenience stores
  • Moving companies
  • Banks
  • Post offices
  • Veterinarians and pet supply stores
  • Manufacturing that supports critical infrastructure or another essential business
  • Agricultural operations
  • Warehousing, storage, and distribution

Nonessential Businesses

  • Sporting arenas
  • Concert venues
  • Gyms
  • Recreation centers
  • Theaters
  • Museums
  • Shopping malls
  • Arcades and bowling alleys
  • Casinos
  • Salons and spas

Even with these generally accepted guidelines, there are still many businesses whose level of necessity are determined by location. For instance, highly rural parts of the country have very different needs and expectations than highly urban locations. For this reason, many cities are allowing restaurants to stay open as long as they operate exclusively through delivery and take-out. Other debatable business closures include:

  • Liquor stores and bars
  • Laundromats and dry cleaners
  • Hotels
  • Construction

Whether you’re a business owner concerned about a mandated closure or an employee worried about a possible job loss, it’s crucial to determine which category you fall under and to prepare accordingly. State and federal governments are assembling new options for relief daily to provide as many options for aid as possible. Stay up-to-date with all the options available to you by subscribing to Aprio’s new COVID-19 Advisor content hub. Our advisors are informed and ready to help, or you can contact us here.

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