How to Deal with the Effects of COVID-19 on Project Sites

As the construction industry faces many challenges due to the wide-ranging effects of the COVID-19 epidemic, we continue to provide real-time answers to assist our clients in effectively responding to a quickly changing situation. Here you will find questions that we have answered for our construction industry clients over the past several days.
 
Please keep in mind how quickly information is changing. For instance, yesterday (March 17), the City of Boston shut down all construction projects within the city, other than emergency projects, for at least two weeks. The Associated General Contractors of America issued a statement strongly opposing the decision, but it is likely that more cities and states will follow suit. If you are reading this more than a day after it was sent, there is a good chance that something else has changed. For updated information, please contact one of the attorneys in our Construction Practice Group or our cross-discipline Coronavirus Response Team.
 
Can work on a project continue when more than 50 people are working on site?
 
Yes, for projects in Ohio. There is an Ohio Department of Health Director’s Order, which is binding law, prohibiting “mass gatherings.” A mass gathering was originally defined as “any event or convening that brings together one hundred (100) or more persons in a single room or single space at the same time.” That Order was amended on March 17 to bring the number down from 100 to 50. However, both Orders clarify that the definition does not include offices, factories, or other places “where large numbers of people are present, but it is unusual for them to be within arm’s length of one another.” Based on the Order’s definition, a project site typically does not fall within the definition of “mass gatherings” because laborers and on-site personnel are typically not all within the same room or space. In addition, even if a project site could arguably fall under the definition, the exceptions make clear that it is not intended to affect normal business operations for employees and laborers even when working in the same space.
 
What do I do about labor and material shortages?
 
The first thing you should do is review your written contract to determine if there is a force majeure or other provision that would entitle the contractor to additional time or cost as a result of any delays due to acts of God, government orders, labor shortages or other conditions beyond the contractor’s control. Typically, these types of delays are excusable (additional time will be allowed) but not compensable (no additional cost will be allowed). For example, the AIA A201 allows for extra time at §8.3.1 and the ConsensusDocs 200 allows for extra time and may allow for additional costs at Article 6.3.1.  Each contract varies, so it is important to review each contract for every pending project carefully.
 
Second, you need to review the notice provision of your contract as it relates to delays, as well as claims for additional cost or additional time. Notice to all project participants should be made promptly with frequent updates. The AIA documents require that claims for extra time and/or money must be made within 21 days.  Article 15.1.2.  Notice must be made to any contracting party against whom you may assert a claim in order to ensure that your claim is preserved. Keep in mind that everyone, whether owner, lender, contractor or supplier, is dealing with the effects of the virus, and its effect on their businesses. Frequent and transparent communication is critical to maintaining a true team approach and the best way to address these ongoing issues.
 
What can I do to protect on-site personnel and help stop or slow the spread of the virus on the site?
 
On March 9, the Occupational Health and Safety Administration (OSHA) published updated guidance for protecting employees from exposure to the virus. Many of the guidelines can and should be practiced on job sites as well as in offices:

• Encourage any on-site personnel to stay home when sick or exhibiting any symptoms of the virus (fever, cough, headache, shortness of breath);
• Provide tissues, handwashing and sanitizing stations at entries, gates, and lavatories;
• Encourage all on-site personnel to take personal measures to prevent exposure, such as frequent hand washing (and gloves when possible);
• Minimizing contact between on-site personnel (such as holding weekly or daily project meetings by phone); and
• Consider staggered shifts to reduce the number of on-site personnel physically present in the workplace.

 What do I do if someone on the project site is positive for COVID-19?
 
OSHA mandates that covered employers record certain work-related injuries and illnesses on their OSHA 300 log. COVID-19 can be a recordable illness if a worker is infected as a result of performing his or her work-related duties. However, employers are only responsible for recording cases of COVID-19 if all of the following conditions are met:

1. The case is a confirmed case of COVID-19;
2. The case is work-related, as defined by 29 CFR 1904.5; and
3. The case involves one or more of the general recording criteria set forth in 29 CFR1904.7 (e.g. medical treatment beyond first-aid, days away from work).

 
You should also take precautions to quarantine the individual and prohibit him or her from the project site. The CDC recommends a 14-day quarantine period after a positive diagnosis, or longer if the individual is exhibiting any symptoms.
 
Will insurance cover any business losses?
 
Under a standard commercial policy, most likely not, absent a specific endorsement covering business interruption.  We recommend all clients speak with their insurance broker to determine whether any coverage might be available so that, if so, they can comply with any notice or claim requirements under their policy. Please also reference a prior client alert by Frantz Ward’s Coronavirus Response Team addressing the insurance coverage issue, which can be found here.
 
If you need assistance navigating any of the issues addressed here, or other construction-related issues, please contact Nora Loftus.  For other issues as the epidemic evolves, please contact Brian Kelly or Christopher Koehler, and they will engage the appropriate members of our Coronavirus Response Team.