Will Subcontractor Default Insurance Still Have Value in the Recovering Economy?

The COVID-19 pandemic has burdened subcontractors with workforce shortages, supply chain issues, and financial difficulties. Therefore, as states lift their stay-at-home orders issued to limit the spread of COVID-19 and construction projects resume, subcontractors’ ability to complete demanding, time-sensitive projects might be impacted. Subcontractor default is already a common and costly problem for general contractors. When subcontractors fail to complete their contractual obligations, a general contractor’s profitability and reputation are greatly impacted. Effectively managing the risk of subcontractor default will be increasingly important for general contractors in the post-pandemic economy.

Subcontractor Default Insurance (“SDI”) is a non-traditional insurance product which can minimize a general contractor’s damages resulting from a subcontractor’s default. It is a two-party indemnity agreement between a general contractor and insurer. It was created as an alternative to surety bonds, with the idea that the general contractor controls the default process and remedy to help keep projects on time and within budget. Under a SDI policy, a general contractor enrolls prequalified subcontractors for either a specific project or policy term. Then, the general contractor is indemnified by the insurance company for any covered costs incurred if one of the subcontractors defaults. Typically, SDI claims stem from labor, work delay and quality issues, as well as financial-related defaults, which are not covered under general liability insurance policies.

In addition to direct costs, SDI coverage usually includes indirect expenses such as liquidated damages, acceleration of other subcontracts, increased overhead and the like. The insurer shares the risk with the general contractor through a deductible and co-pay; the general contractor absorbs some of the costs associated with a subcontractor’s default, usually up the deductible amount. SDI coverage extends to the limits of the individual policy rather than being limited to the value of the subcontract.

In order to lessen their risk, SDI carriers require general contractors to prequalify subcontractors before they can be enrolled on the policy. General contractors are in charge of this process. In order to evaluate a subcontractor both operationally and financially, subcontractors must submit the following types of information: financial statements, proof of available lines of credit, safety record, and history of claims and litigation. For subcontractors, the prequalification process is not different than that for surety bonds, except that it is executed by the general contractor instead of a professional surety underwriter.

After the COVID-19 pandemic, insurance carriers will necessarily adjust their outlook on subcontractors due to the increased risk of loss. Therefore, it will likely be more difficult for general contractors to find subcontractors able to prequalify for SDI policies and, in any event, the process will become more tedious. In addition to the aforementioned information, general contractors will probably be interested in subcontractors’ business continuity plans and specific plans to mitigate impacts like loss of employees and/or project shutdowns.

General contractors must be large and sophisticated enough to have the resources necessary to properly pre-qualify subcontractors, including assessing the financial risks of accepting subcontractors, and monitor their schedules and performance for the duration of the project. While the pre-qualification process is necessary, it is insufficient to thoroughly manage the risk. Even a subcontractor who is prequalified at the outset of a project must be managed throughout the entire course of work. A general contractor’s oversight of subcontractor performance will be even more critical in the post COVID-19 economy as subcontractors are more likely to be operationally and financially stretched thin.

In order to even qualify for SDI insurance, a general contractor typically needs minimum annual subcontractor volume in the $50-$100 million range. In fact, for SDI to be cost-effective, carriers say that annual subcontracted values must exceed $75 million. This is because SDI is expensive, usually ranging from 0.4 to 0.85 percent of total subcontract values.

Given the increased risk of subcontractor default, SDI policies will likely be even more expensive as the economy recovers from the COVID-19 pandemic. Deductibles, which are already high, are likely to increase. Currently, it is not unusual for a deductible to be in the $500,000 range. In addition to that, SDI policies have a co-pay which is paid up the retention aggregate—often three to five times the deductible. That said, SDI will still have value and provide cost savings under the right circumstances. For very large jobs, it would be worth taking on part of the financial risk of default for general contractors to accept SDI’s high deductibles because it would cost much less (now typically 50% less) than subcontractors bonding and passing along costs within their bid. Another consideration is whether the costs can be absorbed by the project. General contractors can also strategically utilize SDI to target high-risk subcontractors.

Cost will not be the only determinative factor in evaluating SDI’s value after the pandemic. It is possible insurers will write more exclusions into policies to manage their own risk associated with impacts associated with mandated shutdowns similar to what the United States recently experienced. Accordingly, subcontractor default stemming from such a shutdown (including impacts like workforce shortages and supply chain backlogs) would unlikely be covered. SDI policies also generally do not cover defaults, which result from the following: misrepresentation, fraud, defaults occurring prior to the policy period, material breach of warranty by the contractor, contracts acquired from other entities, war and losses arising from providing professional services.

To determine whether or not SDI is a worthy investment, a general contractor must separately evaluate each project, and carefully weigh the cost, potential savings and risk involved.

For more information on the efficacy of subcontractor default insurance in a recovering economy or other construction law topics, please contact Nicole Lentini and Becky Juhl.

Updated Guidance for Construction Projects in Los Angeles County

In the two months since Governor Gavin Newsom’s Stay at Home Order was enacted across the state, construction has largely continued in Los Angeles County despite guidelines and protocols enacted by local officials seeking to make job sites safe during the ongoing pandemic. We previously covered impacts and developments from the Coronavirus in Los Angeles County on April 8, 2020.

The City of Los Angeles has been led by Mayor Eric Garcetti in focusing efforts to enable essential business, including many construction projects, to continue with safety precautions. Mayor Garcetti established a Stage 2 process to begin on May 8, 2020, to allow additional businesses to operate on a careful and phased basis. The Los Angeles Department of Building and Safety has produced Guidelines for Inspections by City Personnel, as well as Safety Guidelines that all construction projects must comply with.

To obtain the City of Los Angeles’s COVID-19 Safety Guidelines for Construction Sites, please click here. To obtain the City of Los Angeles’s City Inspections COVID-19 Guidelines, please click here. The City of Los Angeles also requires the completion of a Social Distancing Protocol, which must be posted near worksite entrances and distributed to all employees. A copy of the blank protocol form can be obtained here.

In addition to the City, the County of Los Angeles Department of Public Works developed its own Guidelines for Construction Sites during the COVID-19 Pandemic. The County of Los Angeles’s recommendations are based on the recent guidelines published by the CDC and Cal/OSHA. To obtain the County of Los Angeles’s COVID-19 Construction Guidelines, please click here. The County has also developed modified procedures for submittal and pick-up of Construction Plans that can be viewed here.

While construction has largely continued in and around Los Angeles, recent media reports have raised issues with worksite contamination, non-compliance issues, and delays resulting from social distancing and other mandated policies. If these or other issues are affecting your construction project or worksite in and around Los Angeles, please contact a construction attorney who can assist you with your specific issues.

Visit our COVID-19 Hub for ongoing updates.

Identifying “High-Risk” Workers During the Pandemic is Crucial to Continue Essential Construction Business in Washington State

On April 13, 2020, Governor Inslee issued Proclamation 20-46, specifically addressing protections for high-risk employees and worker’s rights1. This Order applies to ongoing construction work deemed essential under the Stay Home, Stay Healthy Proclamation, and includes yet another requirement for employers managing construction companies to be aware of in this ever-changing environment.

High-risk employees are not just found in office jobs, but also in the construction business, as many conditions that are considered “high-risk” in terms of COVID-19, would not preclude individuals from working on construction sites. “High-risk” conditions protected by this Order can be broken down into three main categories affecting employees, they are: (1) employees 65 and older; (2) employees with chronic medical conditions and (3) employees that are immuno-compromised.2 Individuals of any age may have chronic medical conditions, which are allotted special protection during this pandemic. Chronic medical conditions include asthma, chronic lung disease, heart disease, diabetes, severe obesity, high blood pressure (even if controlled by medication), liver disease, kidney disease, COPD and or other conditions identified by the Center for Disease Control as putting someone at higher risk of severe illness from COVID-19. Immuno-compromised individuals may include conditions that are short-term or long-term in nature and may affect people of any age. They include pneumonia, cancer, HIV, auto-immune diseases such as lupus, multiple sclerosis and rheumatoid arthritis, as well as individuals that smoke or are on medication which weakens their immune system, such as corticosteroids.

The Order requires employers to seek out alternative work arrangements, including telework, remote work locations, reassignment and social distancing measures to provide high-risk employees a safer option to their customary in-person jobs. Alternative work arrangements can be difficult, if not impossible on the construction site, therefore, if it is not feasible, the employer must give employees the decision to use accrued leave or unemployment insurance while they remain out of work, while continuing to maintain employees’ health insurance benefits. To ensure that essential construction continues, employers may hire temporary workers to fill jobs of employees that cannot work due to high-risk conditions. However, employers must ensure employees their roles are available when it is safe for them to return to work, without retaliation.

Most importantly, Governor Inslee’s Order supersedes all employee and labor union contracts that would obstruct the protections set forth in Proclamation 20-46. This proclamation is in effect until June 12, 2020 and may extend beyond that date by order of the Governor. Any person found in willful violation of the Order, may be guilty of a gross misdemeanor, punishable by one year in jail and/or $5,000 fine3. Given the serious nature of this Order and since these conditions affect people of any age and may not be obvious to employers, it is imperative that construction companies ensure that their workers understand their rights under this Proclamation and follow the guidelines as set forth in the Order.

Visit our COVID-19 Hub for ongoing updates.
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1 Proclamation by the Governor Amending Proclamation 20-05: 20-46 High-Risk Employees – Workers’ Rights
2 Center for Disease Control and Prevention: Coronavirus Disease 2019 “People Who Are at Higher Risk for Severe Illness”
3 RCW 43.06.220(5)

Idaho’s Stay Home Order Extended: What this Means for Construction

On March 25, Governor Little issued an Order to Self-Isolate for the State of Idaho.1 On Wednesday, April 15, Governor Little extended Idaho’s stay-at-home order through April 30. The Order directs all individuals living within the State of Idaho to self-isolate at their place of residence. Individuals may only leave their place of residence for “Essential Activities”, “Essential Government Functions”, or to operate “Essential Businesses”.2 Relevant, particularly, to contractors is the following:

  • Idaho’s Order permits individuals to leave their residence to provide any services or perform any work necessary to the operation and maintenance of “Essential Infrastructure”, including, but not limited to, public works construction, commercial construction, construction of housing (particularly [but not limited to] affordable housing or housing for individuals experiencing homelessness), water, sewer, gas, electrical, oil, refining, mining, roads and highways, provided that Social Distancing Requirements3 as further defined by the Order are followed to the extent possible.
  • The Order goes on to expressly provide that “Essential Businesses” is defined to include “Essential Infrastructure,” i.e. construction activities.4
  • Further, incorporated into Idaho’s Order is the Cybersecurity and Infrastructure Security Agency of the United States Homeland Security’s March 19 Memorandum on Identification of Essential Critical Infrastructure Workers relative to the Country’s COVID-19 response. The memorandum provides that workers, such as plumbers, electricians, exterminators, builders, contractors, HVAC technicians, landscapers, and other service providers necessary to maintain the safety, sanitation and essential operation of residences, businesses, and buildings such as hospitals, senior living facilities, and any temporary construction required to support the COVID-19 response are defined as “Essential” Workers.5

The federal guidance comes with the caveat that construction-related activities may continue to the extent they are related to our Nation’s fight against the COVID-19 pandemic. Idaho’s Order is much broader. In Idaho, it is clear that construction services and work is deemed “Essential” and may continue, including public works and both commercial and residential construction. The Order expressly provides that “[a]ll Essential Businesses are strongly encouraged to remain open.”6

Failure to comply with Governor Little’s Order through the end of April exposes you to a misdemeanor, punishable by fine, imprisonment or both.7

Note that, under the extended directive, out-of-state people visiting Idaho for non-essential travel will need to self-quarantine for 14 days. “We don’t need people coming here from a place with a high community spread,” Governor Little said.

In summary, the following guidance is offered:

  • In-state and out-of-state contractors should clearly identify their essential activity-related purpose to any law enforcement officer when not self-isolating in their residence. For example, if you are driving to a job site for work, make sure to identify this purpose to law enforcement if questioned.
  • Social Distancing should be practiced to the extent possible. Again, this may be easier to do for, say, a landscape sub on a small residential project. This may be more difficult for other trades that normally work in closer proximity. General contractors should manage their schedule and subs to practice Social Distancing to the fullest extent possible.
  • Minimize on-site project staffing to the extent possible.
  • Enable employees to practice additional sanitation efforts, including self-care and the project environment (i.e. provide hand-washing stations, hand sanitizer, wipe down project surfaces, including small handheld tools and equipment).
  • Provide masks and gloves to employees (i.e. Personal Protection Equipment or “PPE”).
  • Do not share water or other PPE.

The construction attorneys at Gordon & Rees are here to help you navigate this unprecedented time. Let us assist you take the necessary steps to protect yourself now, including a review of your contracts and applicable law. COVID-19 is effecting the supply chain, workforce, and other project delays and impacts across the construction industry. Contact our office to understand your rights and potential remedies for the impacts you are encountering on the job site.

Visit our COVID-19 Hub for ongoing updates.
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1 Idaho Department of Health and Welfare Order of the Director, Order to Self-Isolate, dated March 25, 2020 (the “Order”).
2 As defined by Section 8 of the Order.
3 See Order, at Paragraph 8(j) (defining “Social Distancing Requirements” as “maintaining at least six-foot social distancing from other individuals, washing hands with soap and water for at least twenty (20) seconds as frequently as possible or using hand sanitizer, covering coughs and sneezes (into the sleeve or elbow, not hands), regularly cleaning high-touch surfaces, and not shaking hands.”).
4 See Order, at Paragraph 8(f)(i).
5 Memorandum on Identification of Essential Critical Infrastructure Workers During Covid-19 Response issued by the Cybersecurity and Infrastructure Agency of the United States Homeland Security, dated March 19, 2020.
6 See Order, at Paragraph 5.
7 See Order (citing Idaho Code § 56-1003(7)(c) (“[A]ny person who violates an order of isolation or quarantine shall be guilty of a misdemeanor.”).

Essential Construction Projects In California: Can You Keep Working And How?

Despite the COVID-19 pandemic and its severe impact on the construction industry, work on Essential Projects is permitted in certain instances, depending on the location and the type of the project. The question of what work is “essential” is key. Not surprisingly, the designation of Essential Construction is evolving and different requirements now exist at the state and local level which has led to confusion.

The following provides an overview of the current orders and local regulations affecting major metropolitan areas of California as well as the trends as a result of these orders. Those with additional questions beyond the information presented in this article are recommended to consult with a licensed attorney with construction law experience to achieve your compliance and workplace safety goals.

The Federal Guideline

The Department of Homeland Security for the Federal Government produced Guidelines identifying 16 sectors deemed “Essential” Businesses. These Guidelines are only recommendations – it is up to the individual local jurisdictions to draft their own ordinances.

Under the Guidelines, several areas are clearly covered as “essential” including infrastructure construction and restoration (fiber optic cables, wireless facilities, and other communications-related areas); work supporting the manufacture, distribution and provision and construction of computing-related services); business infrastructure; financial transactions/services; web-based services; and critical manufacturing.

For more information on the federal guidelines, please visit our prior article on this issue.

California State Guideline

On March 19, 2020, Governor Newsom’s Office issued Executive Order N-33-20 ordering all residents to “Stay at Home,” except as needed to maintain continuity of essential critical infrastructure sectors, including those designed by the State Public Health Officer. On March 22, 2020, the State Public Health Officer designated a list of “Essential Critical Infrastructure Workers” to help state, local, tribal, and industry partners as they work to protect communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security. The State Public Health Officer’s list of designated “essential” workers includes but is not limited to:

  • Construction workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)
  • Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, construction material sources, and essential operation of construction sites and construction projects (including those that support such projects to ensure the availability of needed facilities, transportation, energy and communications; and support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste)

San Francisco County and Bay Area (Marin, Alameda, Santa Clara, Contra Costa)

The San Francisco County and City ordinance is instructive as the counties in the Bay Area have worked together and been on the forefront of developing the definitions of Essential Projects. The same standards apply to Marin, Alameda, Contra Costa, and Santa Clara Counties.

The Order provides that only certain, limited types of construction are permitted to continue, including the following:

  • healthcare projects directly related to addressing the COVID-19 pandemic
  • housing and mixed use projects that includes at least 10% affordable housing
  • projects that provide services to vulnerable populations projects required to maintain safety, sanitation, and habitability of residences and commercial buildings
  • construction necessary to secure an existing construction site that must shut down

The Health Officer may issue guidance requiring construction site-specific health and safety plans. The Order also provides for San Francisco to limit public works construction to essential public works projects as determined by the City Administrator in consultation with the Health Officer.

All other construction is prohibited. Essential projects are further defined as:

  • Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure;
  • Projects associated with Healthcare Operations, including creating or expanding Healthcare Operations, provided that such construction is directly related to the COVID-19 response;
  • Affordable housing that is or will be income-restricted, including multi-unit or mixed-use developments containing at least 10% income-restricted units;
  • Public works projects if specifically designated as an Essential Governmental Function by the City Administrator in consultation with the Health Officer;
  • Shelters and temporary housing, but not including hotels or motels;
  • Projects immediately necessary to provide critical noncommercial services to individuals experiencing homelessness, elderly persons, persons who are economically disadvantaged, and persons with special needs;
  • Construction necessary to ensure that existing construction sites that must be shut down under this Order are left in a safe and secure manner, but only to the extent necessary to do so;
  • and Construction or repair necessary to ensure that residences and building containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot reasonably be delayed.

San Francisco also recently developed guidance for construction “Best Practices” and “Field Safety Guidelines” for COVID-19 job site safety, including submission of Site-Specific Health and Safety Plans that conform to the guidelines. These guidelines are likely to be adopted by the Bay Area counties and beyond. Contractors and construction professionals should consult with an attorney on how to comply and submit the necessary plans to safely resume operations.

Los Angeles County

While the County of Los Angeles has not provided specific construction-related guidance, the City of Los Angeles has developed protocols for COVID-19 Safety for Construction Sites. The City’s plan requires a comprehensive COVID-19 exposure control plan, which includes control measures such as social distancing; symptom checking; hygiene; decontamination procedures, and training. Failure to comply with this guidance shall be deemed as creating unsafe conditions and may result in withheld inspections or shutting down the construction site until corrected.

Unlike the San Francisco ordinance, the City of Los Angeles’s guidance does not distinguish between different types of essential construction and instead relies upon the state and federal guidance principles. However, the protocols for construction sites includes directives to maintain a minimum 6-foot distance from other workers at all times, provide personal protective equipment (PPE) such as gloves, goggles, face shields and face masks, and stagger the trades as necessary to reduce density and maintain minimum 6-foot separation. These types of workplace conditions will continue to affect job sites throughout Los Angeles. Notably, some cities in Los Angeles County are looking at their own, more stringent regulations on construction projects.

San Diego, Orange, Riverside County

San Diego, Riverside, and Orange Counties presently do not have independent guidance or reporting requirements beyond those provided by the State and Federal Guidelines. We continue to monitor for additional updates, but expect these Counties to adopt some standard protocols, reporting requirements, and construction site and job guidance like those from San Francisco or Los Angeles.

Sacramento County

San Diego, Riverside, and Orange Counties presently do not have independent guidance or reporting requirements beyond those provided by the State and Federal Guidelines. We continue to monitor for additional updates, but expect these Counties to adopt some standard protocols, reporting requirements, and construction site and job guidance like those from San Francisco or Los Angeles.

Key Take Away: Keep Up To Date And Monitor Your Projects

Clearly, a high premium has been placed on housing. Originally San Francisco was in line with the Federal Guidelines and was allowing all housing construction to go forward. However, as it has begun tightening up on permissible activities, San Francisco now requires an affordable component to allow the construction to go forward. It will be interesting to watch as other areas make decisions on this issue whether the trend will be towards being more restrictive in allowing residential construction and how “affordable” is defined.

The Federal Guidelines are more developed with respect to Public Works and Infrastructure work. However, the document is meant to give guidance to the local agencies who may choose to follow San Francisco’s lead and specifically designate what projects can go forward rather than leave it open for interpretation.

It is important for the Construction Industry to pay close attention to what work is permissible during this crisis and what work must be delayed. Unfortunately, we anticipate that the trend will continue to be more restrictive until a better comfort level is achieved with the future of the virus. This means close attention should be paid to each project and to carefully evaluate if notices of potential delays should be issued and to evaluate if the contractor can obtain any relief for affirmative extended general conditions, efficiency claims, or other additional compensation or remedies.

Los Angeles Construction Site Safety Guidance, (March 31, 2020)
Orange County Amended Health Order and Guidance, (March 18, 2020)
Sacramento County Stay At Home and Essential Services Order, (March 19, 2020)
Santa Clara County Order of the Health Officer, (March 31, 2020)
Alameda County Order of the Health Officer, (March 31, 2020)
Contra Costa County Order of the Health Officer, (March 31, 2020)
Marin County Order of the Health Officer, (March 31, 2020)
Riverside Essential and Criticial Services Guidance, (March 22, 2020)
San Diego Social Distancing and Sanitation Protocol, (April 2, 2020)
San Francisco Guidance for Construction Related Essential Business, (March 31, 2020)

Six Northern California Counties Have Issued New Shelter-in-Place Orders Impacting Construction Industry

Effective 11:59 p.m. on March 30, 2020, Alameda, Contra Costa, Marin, Santa Clara, San Francisco and San Mateo Counties shelter-in-place rules will be more detailed and restrictive. The construction industry will be significantly impacted. The order only allows the following kinds of construction projects to go forward:

  • Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure
  • Projects associated with Healthcare Operations, including creating or expanding Healthcare Operations, provided that such construction is directly related to the COVID-19 response
  • Affordable housing that is or will be income-restricted, including multi-unit or mixed-use developments containing at least 10% income-restricted units
  • Public works projects if specifically designated as an Essential Governmental Function by the lead governmental agency
  • Shelters and temporary housing, but not including hotels or motels
  • Projects immediately necessary to provide critical non-commercial services to individuals experiencing homelessness, elderly persons, persons who are economically disadvantaged, and persons with special needs
  • Construction strictly necessary to ensure that existing construction sites that must be shut down under this Order are left in a safe and secure manner, but only to the extent necessary to do so
  • Construction or repair necessary to ensure that residences and buildings containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot reasonably be delayed

A significant amount of construction that is currently ongoing will now have to stop. It will be much more difficult to argue that certain projects should go forward due to ambiguity in the order.

Construction companies should be sure to carefully review the orders and work with counsel to evaluate their options and potential needs to issue notices of delays in order to protect claims for additional time and damages.

Visit our COVID-19 Hub for ongoing updates.

COVID-19 Construction Jobsite Considerations & Safety Suggestions

In light of the CISA update that includes Construction as part of the country’s essential infrastructure activities, contractors must be wary and ensure that they are implementing all necessary safety measures on their construction jobsites.

Given that construction projects around the United States are continuing and most contractors and construction workers are exempted from “shelter-in-place” and “stay-at-home” orders, all parties involved in the construction process should continue to be vigilant and do their best to prevent the spread of the COVID-19. The following are some recommendations and tips that should be employed to assist in the effort to ensuring safety on the construction jobsite.

Overall Project Planning and Management

  • Implement and communicate your safety and jobsite management plan.
  • Minimize project staffing to the extent possible.
  • Require all personnel displaying flu-like or who have come in contact with someone who has COVID-19 to stay home.
  • Ensure that proper social distancing measures are implemented and post appropriate signage with instructions. For example, it may be appropriate to limit elevator occupancy to two (or fewer) individuals depending on the square footage.
  • Require all personnel to wear appropriate PPE (protective personnel equipment), such as gloves and masks.
  • Set-up additional hand washing stations on project sites.
  • Encourage all personnel to wash hands with soap and hot water frequently for a minimum of 20 seconds each time.
  • Perform daily environmental cleaning, such as sanitizing common surfaces, including workstations, countertops and doorknobs, provide disposable wipes.
  • Perform daily sanitization of small, handheld tools.
  • Avoid having any outside lunch vendors on the jobsite.
  • When required to travel in vehicles, if more than one person is required, try to keep to only one passenger and sit in the back seat on passenger side.
  • Implement a Daily Crew Assessment that includes checking on health to ensure ill workers are not reporting to work.
  • Use shoe sanitation (non-bleach sanitizer solution) prior to entering the jobsite if possible.
  • Do not use a common water cooler.
  • Encourage workers to bring their own water.
  • Identify specific locations and practices for daily trash including for paper, towels, food, boxes, containers, etc.
  • If possible, utilize disposable gloves; wash hands after removing.

Personal Responsibility

  • Stay Home When You Are Sick
    • It is important that if you are experiencing any of the symptoms of COVID-19 – fever, cough, shortness of breath or difficulty breathing, as well as tiredness, aches, runny nose, sore throat — that you notify your supervisor immediately.
  • If any employee or worker appears to be sick, he or she should be reported to management immediately. That individual should be asked to remain home until they are symptom-free and/or released by a doctor.
  • Workers should also stay at home of they have been exposed to someone with COVID-19. If you notice that a fellow worker is experience these symptoms – report it!
  • Wash Your Hands
    • Be sure to wash your hands frequently, especially after using the restroom, before and after eating, and after blowing your nose, coughing, or sneezing.
    • Be sure to use soap and water for at least 20 seconds and use disposable towels to dry your hands.
    • If hand washing with soap and water is not feasible, use an alcohol-based hand sanitizer that contains at least 60-95% alcohol.

On the Jobsite

  • Practice Staged Working
  • For tailgate meetings:
    • Meet outdoors/in large, open areas
    • Avoid clipboards or pens for check-in; each worker to use his or her own pen.
    • Implement an app/web-based system if possible.
  • Perform meetings in shifts when possible, keeping the same group of workers together to limit exposures.
  • If on site, maintain a minimum of 6 feet distance between other people.
  • Do not eat lunch or take breaks indoors with other people – try to remain outdoors and maintain a 6 foot distance from others.
  • Cover your cough and sneeze with a Kleenex or on the inside of your elbow.
  • No hand-shaking, fist bumping, or other physical social greetings.
  • Use walkie-talkies or other communication tools to facilitate remote engagement.
  • Keep the Jobsite Clean
    • Ensure you are properly using PPE. Do not share PPE if possible. Sanitize any reusable PPE.
    • Wipe down common areas including office desks, tools, and doorknobs.
    • Sanitize all tools and equipment.
  • DO NOT SHARE
    • Tools
    • Water coolers or water bottles
    • Hand towels at hand washing stations
    • Food/Lunches
    • Personal Protection Equipment (PPE)

After the Jobsite

  • When you leave the jobsite, be mindful of tracking pathogens into the home.
    • Remove shoes and handle clothing carefully.
    • Do not shake out work clothes.
    • Wash work clothes separately in warm water with a sanitizing detergent.

Of course, decisions involving the jobsite are not always black and white, if you have further questions about how to handle a particular situation involving COVID-19, please contact Gordon & Rees’ COVID-19 Task Force. We are closely monitoring daily developments involving the construction industry and stand ready to assist clients with their questions and concerns.

Visit our COVID-19 Hub for ongoing updates.

Construction is an Essential Service in Massachusetts

As in other parts of the country, the state and local response to COVID-19 has been universal but not uniform. On March 23, 2020 Massachusetts Governor Baker issued Order No. 13 directing “brick and mortar” businesses to close their physical doors until April 7, 2020, encouraging them to continue operations online. The list of “essential services” that can continue to operate as usual includes construction projects, utilizing social distancing practices, of course.

Following up on this Order, in a March 25, 2020 Guidance to municipalities, the Governor confirmed that Order No. 13 was issued under the Massachusetts Civil Defense Act. As such, any inconsistent municipal rule, regulation, ordinance, or by-law is inoperative. In particular, the most recent Guidance makes clear that construction projects are continuous essential projects requiring uniform, statewide management during this pandemic and should adhere to the state’s health and safety guidelines, rather than be subject to individual municipal requirements. The March 25, 2020 Guidance directs municipalities to follow the state’s guidelines for safety at construction sites allowing work to continue across the state.

The lack of uniformity comes with the fact that Boston Mayor Marty Walsh had earlier directed that construction in the City of Boston must cease, except for essential construction related to transportation and gas hookups. Mayor Walsh’s March 16, 2020 directive would seem to be superseded by the Governor’s Order No. 13 and March 25 Guidance.

In response to the Governor, Mayor Walsh affirmatively extended the City of Boston’s order pausing “non-essential” construction in the City. Such construction sites should have already been locked down by the time the Governor issued Order No. 13 on March 23, 2020, but may have been hoping to reopen.

Home Rule in Massachusetts was granted to cities and towns by constitutional amendment, and while viewed as very strong, the Commonwealth retained unlimited power to overturn local decision-making, which the Governor has exercised in this case. As such, the Governor’s Order is controlling, even in the City of Boston. The Mayor’s press release indicates that he is working with various partners including construction firms and the building trades to determine protocols that would allow these sites to safely re-open in Boston. The Governor’s office recommends that cities and towns implement guidance consistent with the state’s guidance to ensure safe and consistent practices.

Before restarting a construction project in the City of Boston, check the City’s Inspectional Services website for updates.

Please contact our Construction COVID-19 Task Force for assistance in developing your safety protocols or in any regard to assist in responding to the COVID-19 challenges on your existing projects or preparing your upcoming contracts and projects.

Visit our COVID-19 Hub for ongoing updates.

CISA Clarifies – Construction is Part of Critical Infrastructure Activities

After ongoing confusion by many over whether construction should be considered part of the “essential business,” during the COVID-19 pandemic, the Cybersecurity and Infrastructure Security Agency (CISA) issued an updated Coronavirus Guidance for America on March 28, 2020 to clarify construction’s critical role in supporting essential infrastructure. CISA’s initial advisory list referenced construction in regard to some areas such as energy and wastewater treatment, but it was unclear as to the whole of the construction industry. CISA’s update clarified that construction activities are included in its list of essential critical infrastructure workers. This new federal guidance should remove the ambiguity that led to varying responses by state and local officials halting some construction. The guidance clarifies that construction and related activities – including the manufacture and supply/delivery of supplies and equipment, permitting, safety, and inspections of projects – are covered as part of the critical infrastructure and economic activities.

The ongoing challenge will be for construction activities to proceed in a way that protects workers and the general public from the spread of coronavirus. However, contractors are always resourceful and have been implementing safety measures effectively on projects with an unwavering commitment to safety and are ready to meet this challenge. In addition to following the guidance from the CDC, we recommend that contractors implement a comprehensive safety program for their employees as well as for all parties that come onto the jobsite. It is critical that contractors have clear a clear plan for communications with their teams to ensure compliance with the CDC recommendations. This should include what has recently become standard protocol or social distancing, not hosting large group meetings and conducting meetings online or via conference call, maintaining a six-foot distance between people, discouraging hand-shaking or other contact, not sharing tools, and sanitizing reusable PPE. Contractors also should also be sure to place safety posters about “How to Protect Yourself” where they can be readily seen and encourage staying home when sick, cough and sneeze etiquette, and hand hygiene at the entrance of a jobsite. We also recommend heightened site security including interviewing anyone coming to the jobsite.

Contractors will also need to adjust on-site scheduling to avoid stacking trades, to manage their sites in a way that limits the number of people on a jobsite, and to allow non-essential personnel to work remotely.

Please contact our Construction COVID-19 Task Force for assistance in developing your safety protocols or in any regard to assist in responding to the COVID-19 challenges on your existing projects or preparing your upcoming contracts and projects.

Visit our COVID-19 Hub for ongoing updates.

COVID-19: Where is Construction an “Essential Business”?

With states and municipalities taking additional measures to limit the spread of COVID-19, including “shelter in place” and “stay-at-home” orders, which require non-essential businesses to close physical locations and limit operations to telecommuting the question for construction is, Are you an “essential business”? The answer will differ based on location and may change as states and cities continue to work in this fluid situation. It is important to verify before you proceed.

Essential Business

Some guidelines are available to assist businesses making this determination. First, the Cybersecurity and Infrastructure Security Agency (CISA) released a guidance document to assist state and local governments as well as businesses to determine which sectors’ workers should be considered essential, critical infrastructure workers. CISA has identified 16 sectors:

  • Healthcare / Public Health
  • Transportation and Logistics
  • Information Technology
  • Water and Wastewater
  • Food and Agriculture
  • Nuclear Reactor, Materials & Waste
  • Energy
  • Government Facilities
  • Defense Industrial Base
  • Emergency Services (Law Enforcement, Public Safety, First Responders)
  • Financial Services
  • Communications
  • Critical Manufacturing
  • Dams
  • Chemical
  • Commercial Facilities

The CISA Guide is a recommendation and ultimately is optional for states and location governments to use when adopting their own stay-at-home or workforce reduction orders. It is notable that, currently, there are six states that are following CISA guidance on the “essential business” definitions, nine CISA-modified, and eight with their own state-issued guides; the remaining states have not (yet) issued a stay-at-home order.

One of the most comprehensive assessments of the application of the CISA guidelines for an “essential” business has been compiled by MultiState Associates in its COVID-19 Policy Tracker. MultiState Associates’ Summary is a quick, ready-reference guide that also drills down in many instances to the local level.

However, there is still confusion as to whether and what types of construction projects fall under the “Essential Business” categorization.

A few states have made it very clear, but each local county and city may have their own regulations and restrictions. For example, in California, Governor Newsom’s Executive Order has clarified that construction (including residential construction) is an essential business, but the State has confirmed that the local governments may impose more restrictive measures. Each county and local jurisdiction is handling construction in its own way and therefore it is imperative to check before you proceed with your projects. On the other hand, New York has been more specific and limited the approved construction to include: skilled trades such as electricians, plumbers; and other related construction firms and professionals for essential infrastructure or for-emergency repair and safety purposes.

Gordon & Rees’ COVID-19 Task Force has been closely following each of the states’ and many key local jurisdictions’ guidance and stands ready to assist clients with compliance with the orders and determining where and what type of construction projects can continue.

Visit our COVID-19 Hub for ongoing updates.