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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

March 30, 2020

COVID-19: Further Guidance Issued on NYS Construction Industry Workforce Reduction Requirements

As noted in our Friday alert, after initially stating that “all construction” was allowed to continue, Empire State Development (ESD) issued updated guidance clarifying that “all non-essential construction must be shut down, except emergency construction.” What constitutes “essential” or “emergency” construction that may continue despite Governor Cuomo’s 100-percent workforce reduction order remains uncertain. 

On Sunday, the ESD released further guidance through industry sources stating that:

“Local governments, including municipalities and school districts, are allowed to continue construction projects at this time, as government entities are exempt from the essential business restrictions. However, to the greatest extent possible, local governments should postpone any non-essential projects and only proceed with essential projects when they can implement appropriate social distancing and cleaning and disinfecting protocols. Essential projects are those that have a nexus to health and safety of the building occupants or to support the broader essential services that are required to fulfill the critical operations of government or the emergency response to the COVID-19 public health crisis.”

While this update is helpful with respect to a particular class of projects (in addition to the other specific project classes identified in the updated guidance: “roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters”), our opinion remains that other projects could constitute “essential construction” and “emergency construction” on a case-by-case, circumstance-specific basis.

As noted in our Friday alert, construction projects that are necessary to support the operation of other essential businesses could be exempt from the shutdown. In this regard, the ESD noted in its FAQs

“QUESTION: What if my business is NOT an “essential business” listed on the ESD’s guidance but provides services, materials, supplies, or other support to an essential business

ANSWER: If your firm is a vendor, supplier or provides other support to an essential business that is required for the essential business’s operation, then your business is exempt from the employment reduction provisions contained in Executive Orders 202.8. However, only those employees necessary to support the essential business are exempt from the employment reduction requirements of Executive Orders 202.8, and your business is still required to utilize telecommuting or work from home procedures to the maximum extent possible.”

The ESD confirmed in a new update issued this morning that this exemption applies to the construction industry, noting that: “Construction in support of essential businesses is permissible, but only with appropriate social distancing and cleaning and disinfecting precautions. If those cannot be met, the project should be postponed.”

As indicated in the ESD response to FAQs and the further comment issued today, even if deemed essential or emergency construction, all work is to be performed in accordance with best practices to maintain social distance and sanitation to the extent possible and with only those employees required to perform the work safely.

Furthermore, as stated in the guidance, proceeding with construction that is deemed to be non-essential or non-emergency will lead to penalties of $10,000 per violation. There is no particular guidance on the enforcement of these restrictions, but local and state government agencies are certainly monitoring business operations, including construction projects, for compliance and are encouraging individuals to report any perceived violations of the shutdown order. 

While government agencies have shown some leniency with “first-time violators” in relation to other aspects of the COVID-19 response, there is no official “warning” policy or guidance. As such, continuing any construction project that does not fall within one of the specific categories identified by the ESD carries some risk if it is ultimately determined not to be essential or emergency construction, and it may be advisable to either apply to the ESD for essential status or at least attempt to unofficially inquire with the ESD about specific projects.

Our attorneys remain available to discuss whether a project may fall within an exemption to the order and to assist with applications and inquiries to the ESD. 

If you have any questions regarding the content of this alert, please contact Jim Domagalski, Construction & Surety Practice Area chair, at jdomagalski@barclaydamon.com; Nick DiCesare, partner, at ndicesare@barclaydamon.com; or another member of the firm’s Construction & Surety Practice Area.

We have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. Please contact Yvonne Hennessey, COVID-19 Response Team leader, at yhennessey@barclaydamon.com or any member of the COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.
 

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