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March 27, 2020

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

Pursuant to Governor Cuomo’s Executive Order 202.6, as of March 22, non-essential businesses were required to reduce their onsite workforce by 100 percent in an effort to slow the spread of COVID-19. The executive order exempted “essential” organizations and entities, including “construction.” Amid numerous inquiries as to what sort of construction was deemed essential, Empire State Development (ESD)––the agency charged with enforcing the executive order––initially issued guidance noting that “all construction” was deemed essential.

As of this afternoon, however, that guidance was modified to restrict the types of construction deemed essential and thereby exempt from the 100-percent workforce reduction. Specifically, the latest directive is that “all non-essential construction must be shut down, except emergency construction.” Although not specifically stated in the new guidance, it appears these new restrictions go into effect immediately.

There remains significant confusion regarding what will and will not constitute essential construction and emergency construction. Other than the very limited specific categories identified in the guidance of “roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters,” whether or not a construction project will still fall within the scope of the guidance as either essential or emergency construction is an issue that will need to be addressed on a case-by-case, circumstance-specific basis.

As noted below, we believe there are still certain projects that could fall within the scope of essential construction based on the industries and businesses for which the construction project is being performed. Additionally, we believe there is certain work that logically should fall within the scope of emergency construction necessary to protect safety and to make the site “safe to shut down.” However, this is just one interpretation of the newly issued guidance about which there remain numerous questions. The circumstances of each specific project must be considered in order to assess whether or not construction can continue, and, as noted below, ESD will ultimately determine whether or not a project can continue.

The guidance states:

Construction

  • All non-essential construction must shut down except emergency construction (e.g. a project necessary to protect health and safety of the occupants or to continue a project if it would be unsafe to allow to remain undone until it is safe to shut the site).
  • Essential construction may continue and includes roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters. At every site, if essential or emergency non-essential construction, this includes maintaining social distance, including for purposes of elevators, meals, entry, and exit. Sites that cannot maintain distance and safety best practices must close, and enforcement will be provided by the state in coordination with the city and local governments. This will include fines of up to $10,000 per violation.
  • For purposes of this section, construction work does not include a single worker who is the sole employee or worker on a job site.

Based on the guidance, it appears that, if a project is at a stage where ceasing work could lead to harm to the building or its occupants—now or potentially in the future—the work could fall within the scope of the guidance as “necessary to protect health and safety of the occupants” or it “would be unsafe to allow [the work] to remain undone.” As a potential example, completing a project to a stage where the building is fully enclosed to prevent water infiltration that could lead to destruction of the building or cause mold to develop may meet these requirements.

Likewise, it could reasonably be argued that if the construction is necessary to support another essential business, it could be exempted from the otherwise required 100-percent workforce reduction, particularly if the construction is required for the continued operation of an essential business. In addition to the examples specifically listed in the guidance, such construction could include projects involving the other essential businesses set forth in the guidance, including, for example:

  • Health care operations, including research and laboratory services, walk-in-care health clinics and facilities, nursing homes, or medical supplies and equipment manufacturers
  • Infrastructure-related entities, including public water and wastewater, telecommunications and data centers; airports and airlines; commercial shipping vessels, ports and seaports; transportation infrastructure (such as buses, rails, for-hire vehicles, and garages); and hotels or other places of accommodation
  • Essential manufacturing businesses, including manufacturers providing food processing, chemicals, medical equipment and instruments, pharmaceuticals, sanitary products, microelectronics and semi-conductors, food-producing agriculture and farms, and household paper products
  • Essential retail businesses, including grocery stores; pharmacies; convenience stores; gas stations; and hardware, appliance, and building-material stores

The situation continues to evolve and, in particular, what construction may continue in light of the 100-percent work reduction order is very much still in flux. Our construction and surety attorneys remain available to address questions on specific projects to help evaluate whether or not a particular project would fall within the essential or emergency exemptions to the shutdown.

That being said, there are two additional caveats that all construction businesses must also keep in mind:

  1. 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.
  2. As stated in the guidance, proceeding with construction that is deemed to be non-essential or non-emergency construction will lead to penalties of $10,000 per occurrence.

As noted above, ESD will make the final determination on whether work on a specific project is essential and businesses can apply to ESD for essential status. Our attorneys are available to assist with applications and inquiries to 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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