Update: Impact of Gubernatorial Closure Orders on Construction Companies

As was expected, governors of other states are also electing to shut down all but essential services in order to “flatten the curve” representing the infection rate as it relates to COVID-19. My team and I are continuing to try to monitor things and will pass along information as we are able to do so. In this regard, information continues to come out as it relates to Governor Wolf’s order limiting activity in Pennsylvania. There is also new information to report on New Jersey and New York. I have summarized it below and offered some thoughts on how to make adjustments in business operations to account for the new restrictions.

Pennsylvania

Governor Wolf has loosened the restrictions on the construction industry, but only slightly. The newest list of exempt businesses still states that no construction operations can continue. It then makes an exception from that baseline rule for “emergency repairs” and “construction of health care facilities” – but there are no definitions of what constitutes an emergency, construction (does renovation or maintenance work fall into these categories?), or what is considered health care (is a dentist or general practitioner’s office covered, or is it only hospitals?). Because of the lack of clarity on what is considered an “emergency” and what might be considered “construction” or a “health care facility”, our recommendation remains the same. Application should be made for a waiver of the Governor’s Order if you are working on a project in Pennsylvania. If you get a waiver or are denied one because the Commonwealth thinks you are already exempt and can work, then there should be no real problems. If, to the contrary, you assume you fit into emergency services or construction of a health care facility and are incorrect, the consequences could be problematic at best and severe at worst. Let me know if you want to talk or if I can be of any help.

New Jersey

Governor Phil Murphy entered 2 executive orders this afternoon. Executive Order 107 closes all businesses in the state except those which have been exempted; and Executive Order 108 declares that all county and municipal orders issued prior to Executive Order 107 dealing with COVID-19 are superseded and no longer in force. This is a slightly different approach than that taken by Governor Wolf in Pennsylvania, as all the decisions are being centralized at the state level. In Pennsylvania, the counties have been charged with enforcement and, therefore, will have significant say in how the order plays out practically. Enforcement of the process is being given to the State Police and the state Attorney General in New Jersey, including fines and other penalties. 

Governor Murphy’s Order takes a slightly different approach in another way. He has ordered all New Jersey residents to stay at home unless effectively going out to obtain goods or services from an “essential business” or going to or from work. All “social gatherings” in the state are ordered cancelled. All non-essential businesses are not only required to close, but it is mandated that reasonable accommodations be made for employees who are able to telecommute or work from home be made by the employer. This places an extra burden on New Jersey employers; and there is no guidance on how to apply the rule if an employee works in one state and lives in another. Businesses can ask for an exception to be made by applying to the Director of Emergency Management in New Jersey. This is the Superintendent of the New Jersey State Police. Importantly, New Jersey has set up a process by which residents can report those who are violating the order, thereby making the public part of the “police force” to make sure the Executive Order is enforced. There is no time limit on the Governor’s Order.

As it relates to construction companies specifically, the baseline rule is that any business requiring the gathering of people is closed. Heavy construction is specifically exempted from the Governor’s Order, but there is no definition included to explain what qualifies as “heavy construction”. It’s likely safe to assume that infrastructure work is included in this in order to keep roads open, but it’s hard to identify what else might qualify as heavy construction. There is also language in the order that allows job sites to continue if it’s required to maintain critical operations. It’s likely safe to deem work needed to make sure there are no safety risks or that is required to keep projects moving (i.e. on the critical path for purposes of scheduling) will be considered “critical”. Anything else falls into a gray area that is harder to justify. In cases that are not deemed heavy construction, you can only keep enough people on the job site to keep the project moving and maintain the required social distancing as per the CDC and WHO guidelines. Absent both, you are not permitted to work. Lastly, supply houses are not included in the order (hardware stores can stay open). If you need materials, it’s a good idea to stockpile them or order them from locations outside of New Jersey and have them delivered to your job site. 

Our advice to our clients with projects or employees in New Jersey is to apply for an exemption unless you are certain that you fit into one of the two aforementioned categories. You should also do a memo or letter that explains any project you are working on is one which is not shut down by the Governor’s Order, the reasons why, and give some basic information on your company and the project to your employees. Employees should be directed to keep a copy of this document in their car in the event they are stopped on the road going to or from work or approached while working. This is a good idea in any case and is suggested by the Governor’s office.

Please let us know if you need any clarification on this issue, any help applying for the exemption, or otherwise working through issues in New Jersey.

New York  

The pertinent order issued by New York Governor Andrew Cuomo is Executive Order 202.6. It closed all “non-essential” businesses effective March 20, 2020, at 8:00 p.m. Construction is deemed an essential business in the order and thus construction companies can continue with field operations. The Order can be read to mean that the same rule would apply to office personnel since construction is an exempt industry; but we recommend that construction companies take a slightly different approach for both legal and practical reasons. There is another portion of Executive Order 202.6, which is modified by Executive Order 202.7, that requires businesses to reduce their in-person workforce by 75% effective today at 8:00 p.m. While the exemption might apply, it’s safer to assume that office personnel for construction companies will be subject to this reduction in force. It’s also a good idea practically speaking to send people home to work in order to be safe. Where possible, we recommend that construction companies have office personnel who can work remotely do so to assist in meeting the Governor’s directives and to protect those workers from exposure to the virus. Field personnel can continue to work; but consider the directives of the CDC, WHO, and other organizations to be in place to avoid problems. We strongly suggest that you make your next tool box talk about these rules.

As with other states, waivers are possible. There is not really a need to apply for one in New York yet given the current rules though. 

Please let us know if you have any questions or need further assistance in New York.

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It’s tough going out there right now. We understand that major adjustments are required by everyone; and, for some, this situation presents a real threat to your company’s survival. We’ll keep working to get through this together though – and when we come out on the other side together, we’ll all be much stronger for the experience. Hang in there and feel free to reach out if we can help. Also, information is critical right now, so please feel free to circulate this post to anyone who you think might benefit from receiving it.  If you would like further information or to get copies of the order, email me at [email protected].