FAQ: What Does Phase II Mean for North Carolina Businesses

May 22, 2020Alerts

With North Carolina's Phase I stay-at-home restrictions expiring at 5 p.m. May 22 under Executive Order 141 (EO 141), Gov. Roy Cooper announced that the state is cautiously ready to take a “modest step forward” into Phase II.

This is great news if you are excited about the prospect of getting a haircut for the first time in months or going to the pool with your kids when the weather warms up, but what does Phase II mean for your business? 

Will you be allowed to reopen all or part of your operations? What kinds of restrictions does the order place on your business during Phase II (which lasts at least until June 26)?  What are the consequences if you fail to comply with all of the applicable regulations for your business?  Below is some interpretive guidance to help your North Carolina business navigate Phase II.

Does this order apply to my business?

EO 141 affects any business that is “open to the public,” including “bars,” “personal care, grooming, and tattoo businesses,” “restaurants,” “retail business” and “entertainment and fitness facilities.” While your business may not seem to fit into any of those categories, the definitions under the order are very broad. For example, a “retail business” is “any business in which customers enter a space to purchase goods or services.”  Under that definition, the term “retail businesses” covers anything from law firms to laundromats. Furthermore, Gov. Cooper recognizes in EO 141 that many businesses are multifaceted operations that have different components. Thus, under this executive order, the regulations may apply to “components” of your business. 

If so, should I bring all of my employees back to work?

While it lifts the stay-at-home order, EO 141 still strongly encourages teleworking and advises those at high risk for coronavirus complications to stay home. Moreover, all businesses must be hyper-vigilant in requiring employees who are symptomatic to stay home and remain isolated for an appropriate period of time. Businesses should follow appropriate guidance from the CDC and EEOC in navigating these treacherous issues. Some employees may be reluctant to return to work due to fears about their health or other concerns. This alert addresses the many issues raised by such a situation.

Am I required to screen employees and others entering the workplace?

Under EO 141, all businesses open to the public are required to screen employees for symptoms on a daily basis before they "enter the workplace.” In addition, certain businesses, including child care facilities and day camps, are required to conduct daily health screenings on all individuals entering their facilities. The North Carolina Department of Health and Human Services (NCDHHS) has made a sample screening checklist questionnaire available on its website

How can I comply with the screening requirement safely and efficiently?

The CDC recommends that screening be completed “in a way that helps maintain social distancing guidelines, such as providing multiple screening entries into the building.”  Although guidance from NCDHHS suggests that this screening can be done at the entrance to the workplace, it appears to offer flexibility to require employees to self-monitor and submit daily screening results to their employer digitally — possibly through an app or via email — before entering the workplace. This approach would promote privacy and efficiency and avoid exposing screeners to unnecessary risk.

How do I calculate my maximum occupancy during Phase II?

All businesses subject to EO 141 must calculate their limited maximum occupancy and post it in a noticeable place within the establishment. However, the math can seem a little intimidating. Your maximum occupancy will always be the lowest number calculated using each of the specific tests that apply to your type of business under the order. For many businesses during Phase II, this is likely to mean limiting the number of customers in their establishment to 50% of fire capacity. Remember, if your facility has a fire capacity — and it probably does — it will be posted somewhere on the premises.

What are the potential consequences if I don’t comply with every aspect of EO 141?

There are penalties for running afoul of EO 141 and “state and local law enforcement officers” are granted enforcement powers. That is a broad phrase that suggests any enforcement officer, from a local police officer to a state OSHA official, could come knocking on your door to enforce compliance. If you are found to be in violation of the order, you can be prosecuted for a Class 2 misdemeanor — which carries a maximum penalty of 30 days in jail and a $1,000 fine. The nature of this particular misdemeanor makes it unlikely that a conviction will result in jail time; however, be prepared to pay a fine. And because the order and the relevant criminal statute are written in a way that invites the interpretation that each daily violation of the order results in a $1,000 fine, fines could be hefty. For example, if your business fails to comply with applicable signage and sanitation requirements, that could be interpreted as two separate violations ($2,000 fine) for each day that you are out of compliance. If you don't screen your employees as required, that could be interpreted as a separate violation for each employee you do not screen ($1,000 multiplied by the number of employees).

Will the new law limiting civil liability for coronavirus claims help protect my business?

North Carolina passed separate legislation that protects certain “essential businesses” from COVID-19 related claims by employees and customers (see discussion here). Because most businesses reopening under EO 141 are “nonessential” businesses, they likely would not be covered by this helpful limited immunity. The only exception is restaurants, which EO 141 explicitly deems shall be considered “essential businesses” with limited liability immunity, so long as they operate consistent with the terms of EO 141. Reopening businesses may want to consider other ways that they can proactively limit their exposure to future COVID-related lawsuits.


For questions about this alert, or how to interpret what this order requires of your business, contact Jerry Sayre at [email protected] or Ashley Honeycutt Terrazas at [email protected].