What Does A Shelter-In-Place Order Mean for Your Construction Project?
On Friday, March 20, Illinois became the latest state to issue a stay at home order (the "Order"). The Order halts all non-essential businesses, but the number of businesses deemed essential is quite broad, and—critically for those in the construction industry—generally exempts construction projects from the Order.
Of particular importance to owners, developers and contractors are three provisions of the Order which: define many types of construction as essential infrastructure activities (§I.9); define many construction trades as critical trades (§I.12.h); and, exempt those activities essential to the manufacture, distribution, and supply chain supporting critical industries, including the construction industry (§I.12.t).
In their relevant parts, these provisions are:
- I.9: Essential Infrastructure. For purposes of this Executive Order, individuals may leave their residence to provide any services or perform any work necessary to offer, provision, operate, maintain and repair Essential Infrastructure.
Essential Infrastructure includes, but is not limited to: … construction (including, but not limited to, construction required in response to this public health emergency, hospital construction, construction of long-term care facilities, public works construction, and housing construction)….
Essential Infrastructure shall be construed broadly to avoid any impacts to essential infrastructure, broadly defined.
- I.12: Essential Businesses and Operations. For the purposes of this Executive Order, Essential Businesses and Operations [includes] … the following:
(h): Critical trades. Building and Construction Tradesmen and Tradeswomen … who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, Essential Activities, and Essential Businesses and Operations;
(t): Manufacture, distribution, and supply chain for critical products and industries. Manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as … construction …as well as products used by other Essential Businesses and Operations.
Generally, these exemptions suggest that work should continue. These carveouts, however, put owners, developers and contractors engaged in less essential projects in a difficult position. Although the definition of Essential Infrastructure is explicitly intended to be "construed broadly," the stated "intent of this Executive Order is to ensure that the maximum number of people self-isolate in their places of residence to the maximum extent feasible." (Order §16.) These two demands of the Order are in tension and determining on which side a particular project or trade lies may have lasting and significant legal consequences.
First and foremost, in deciding whether to continue or halt a particular project, decision-makers should consider the risk to their workers, and as we've seen from the spread of COVID-19 already, ultimately the risk to the greater population. Decision-makers should also consider the increased likelihood of jobsite injury and construction defect that may occur from working in an environment in which maintaining social distance may be an overriding concern for many workers.
But counterbalanced against the risks inherent in continuing a project, are the risks inherent in halting it. The majority of construction contracts contain provisions that some may argue require that progress continue under the current Order, including "time is of the essence" clauses. These clauses may yield to others typical in construction contracts, including "force majeure" and "Act of God" clauses, but given the breadth of the exemptions for the construction industry in the current Order, there will all but certainly be litigation in the future to determine which clause is supreme. Therefore, prudent decision-makers will seek up front buy-in on their decision to continue or halt construction from all parties to the project.
For those who do ultimately decide to halt projects, they should be sure to do so in an orderly fashion, by following these steps:
- Secure the worksite. In some instances, this may include continuing to have some presence onsite even while work is halted. Failure to properly secure worksites could lead to civil liability in the event of personal injury or property damage resulting from unsecured worksites. Further, failure to secure worksites may also affect insurance coverage for damages arising from personal injury or property damage.
- Stay on top of federal, state and local laws applicable to construction employees. Not only are these laws meant to protect employees from exposure and spread of COVID-19, owners, developers and contractors need to understand them so they can also use such laws to maintain cash flow during these uncertain Discussion of these varied topics continues at Burke, Warren’s COVID-19 Resource Center, which is updated near-daily as federal, state and local governments pass laws to stem the economic effect of the pandemic.
If you have questions about the impact of COVID-19 on your ongoing construction projects, please reach out to us to discuss your concerns, and to receive updates on this evolving legal landscape.