March 19, 2020
COVID-19 Shutters Boston Construction Industry for (At Least) Two Weeks. What's Next?By James B. Peloquin and Christopher K. Sweeney
In response to the public-health crisis caused by the spread of COVID-19, Mayor Walsh has ordered all construction activity halted in Boston, effective March 17, 2020. The order carves out exceptions for emergency utility hookups and road repairs, and it permits the use of skeleton crews to secure and monitor job sites. But other than that, all work has been halted for a minimum of 14 days.
So, what does all of this mean for construction-industry professionals?
Five things to consider:
, Mayor Walsh’s order applies only to Boston projects. It has no impact on work performed outside of the City. That said, while Boston is the first major jurisdiction to stop construction, it is unlikely to be the last. As the virus inevitably spreads, expect other municipal, state, and federal officials to follow Mayor Walsh’s lead.
, project participants should look to their contracts to understand their rights and responsibilities in these unique and uncertain times. In construction, time is money. As a result, nearly all construction contracts will include strict progress and substantial completion deadlines, and many will impose significant financial penalties for failing to meet those benchmarks. To mitigate the risk of those sanctions, many contracts include “force majeure” provisions, which typically excuse future performance rendered difficult or impossible by acts-of-god or other circumstances outside of the contractor’s control. Does COVID-19 constitute an act-of-god? One would think so, but this probably depends on how broadly the relevant provision is written and how closely the present circumstances resemble well-recognized force-majeure triggering events.
, construction-industry employers should consider suspending or curtailing work even if there is no order to do so. Risk managers need to evaluate the activities and behaviors of their companies. State and federal authorities including OSHA prohibit employers from exposing their employees to unreasonably hazardous working conditions. Given what we know about how contagious and debilitating COVID-19 is, requiring employees to congregate at work – especially without a concrete plan for mitigating the risk of transmission – will create exposure for employers. Secondarily, with skilled labor in notoriously short supply, losing workers to illness also will exacerbate an already fraught situation.
, construction professionals should consider whether their insurance programs cover any losses attributable to COVID-19. Some commercial insurance policies include business-interruption coverage, which often applies to the fall-out from a natural disaster. Depending on the terms of the policy, this coverage may be available to construction professionals whose work has been halted because of COVID-19. For further analysis, contact your insurance agent.
, with China still reeling from the effects of the virus, contractors who rely on Chinese suppliers may need to look elsewhere for their material needs. For now, this may mean looking at domestic options, which are likely to be more expensive than their Chinese counterparts. The terms of your contract should determine who will bear these additional costs.
COVID-19 presents unique challenges never before seen. Novel problems breed uncertainty, as the legal system works to assess unprecedented issues. Please stay safe, and please feel free to contact us if we can help you during these trying times.