New York State recently issued Executive Order No. 202.8 (the “Order,” also known as “New York State on PAUSE”). As described in a recent LEGALcurrents®, this Order requires 100% reduction of in-person workforce for non-essential businesses, and reduction of in-person work to the extent possible for essential businesses.
Empire State Development (“ESD”) released Guidance interpreting the Order which summarizes categories of businesses deemed “essential,” including healthcare, critical infrastructure (e.g., utilities, telecommunications, transportation, water and wastewater), certain manufacturing and retail (e.g., food and medical supplies), municipal services (e.g., trash collection, package delivery, building cleaning and maintenance), news media, law enforcement, financial institutions, and “construction.”
“Construction” is defined in the ESD Guidance as “skilled trades such as electricians, plumbers,” and “other related construction firms and professionals for essential infrastructure or for emergency repair and safety purposes.” However, construction projects span across many industries and business sectors, and not all pending construction projects will relate to “essential” sectors for purposes of being exempt from the Executive Order.
The Order provides that “[a]ny essential business or entity providing essential services or functions shall not be subject to the in-person restrictions. Any entity providing essential services or functions whether to an essential business or a non-essential business shall not be subjected to the in-person work restriction, but may operate at the level necessary to provide such service or function.” However, per the ESD Guidance, all essential businesses or entities “must continue to comply with the guidance and directives for maintaining a clean and safe work environment issued by the Department of Health.”
What Does This Mean for Construction and Design Professionals?
Unfortunately, there is no one-size-fits all answer to this question. Individual departments and agencies within New York State have published guidance or other resources relative to the NYS Order and the COVID-19 situation, including the New York State Thruway Authority and Education Department. For example, the Thruway Authority has said that its projects, which relate to transportation — an “essential” service pursuant to the Order — will continue for the foreseeable future, but contracting parties are urged to give notice if they anticipate impacts due to the COVID-19 pandemic. Further guidance may be issued from other agencies in the coming days and weeks. Contractors and design professionals should look to the specific directives of the awarding agency or department to determine whether a particular project is “essential” and will proceed forward despite the current Order. However, the situation is in flux. Therefore, frequent updates of existing directives should be expected.
Certain construction work or projects may be deemed “essential” while others are not, particularly in relation to private sector work. HSE is aware that certain trade groups have sought further guidance from New York State as to what construction functions are considered essential. While there has been informal guidance communicated verbally that “all construction” may be considered essential for purposes of the Order, there is not yet definitive guidance at the state level as to how this issue should be determined in private sector construction in New York State. At the federal level, the Department of Homeland Security (“DHS”) published guidance on what is considered “critical infrastructure.” This is a valuable reference for projects within and without New York State and includes such sectors as healthcare, communications, energy services, transportation, government facilities, and defense.
The Order allows for entities in New York State to apply to the ESD for a finding that their particular services or sectors be deemed “essential” and therefore exempt from in-person working restrictions. However, given the volume of requests, the ESD is discouraging businesses from seeking construction project-specific exemptions. This may explain the informal guidance that “all construction” be deemed essential. However, some project owners or developers may determine that their pending projects are not essential (e.g., constructing a new retail building). In such cases, they may direct that project work be suspended or terminated altogether. The existing terms of your contract may already provide a mechanism for terminating or suspending work, whether for cause or for convenience. The particular language used and how it is sought to be invoked may have significant legal consequences to the contracting parties. For example, if a project is suspended, it will almost certainly impact the completion date and cost to complete.
We strongly recommend reviewing individual contracts to determine your rights and obligations thereunder. In particular, the giving of notices for any potential claim (e.g., for additional compensation or extensions of time when the Project resumes) is often time-sensitive and must be done within days of the event giving rise to the claim. If the future of a given project is uncertain, we recommend reaching out to all stakeholders to ensure all parties have cohesive strategy on whether and how to move forward and address any contingencies that may come into play by virtue of the current state of emergency.
Projects deemed “essential” are exempt from the in-person restrictions of the Order. Thus, contractors, subcontractors, and their employees will be required to work in-person to advance those projects. Design professionals may be able to perform some services remotely (e.g., responding to RFI’s, issuing supplementary drawings, etc.). However, depending on the scope of services they will perform, architects and engineers may be called upon to visit active work sites periodically, such as to observe work-in-progress. Those entities who have employees or consultants working on site should consider any necessary adjustment to working conditions and use of personal protective equipment (“PPE”) that is appropriate for the circumstances.
The Occupational Safety and Health Administration (“OSHA”) has published guidelines for preparing workplaces for the threat of COVID-19 transmission. OSHA guidelines classify certain work environments, such as healthcare facilities, as “high risk” or “very high risk” relative to the potential for infectious disease transfer. OSHA does not classify the risk for construction work, which likely falls under a lower risk category as it is typically a separate work environment. OSHA provides general recommendations for how to modify various working environments to protect against infectious disease transfer. This includes spacing workers further apart, alternating work shifts to limit the degree of personal interactions, ensuring that workers have access to proper PPE, and not allowing anyone exhibiting symptoms of illness to remain in the working environment. There is also frequently-updated CDC guidance directed to employers to slow the spread of COVID-19 infection rates.
The spirit of the NYS Order is to minimize the spread of COVID-19, which means maximizing “social distancing” and using every available opportunity to work remotely. Whether your particular work relates to essential or non-essential business enterprises, there are likely aspects of your work that need not be done in person.
HSE recommends consulting with professional and trade organizations who have compiled industry-specific information on how to move forward with business operations while implementing safe and effective practices for your employees and consultants. This includes, without limitation, resources published by the NYS Associated General Contractors (“AGC”), American Institute of Architects (“AIA”), and the American Council of Engineering Companies (“ACEC”). In addition, HSE maintains a website of resources to address COVID-19 concerns for our clients across many diverse business sectors, which is updated frequently.
For questions regarding this memorandum or otherwise as you navigate an uncertain business landscape, please contact any member of our Construction and Design Team at 585.232.6500 or 716-853-1616.