The design and construction industry is no exception to the concerns over safety and the efforts to control the spread of COVID-19 (aka coronavirus). Design firms, their clients, and contractors working on projects should evaluate the physical and economic risks that the coronavirus outbreak could pose for their projects and take proactive measures. The virus presents significant risks to critical aspects of construction projects. In addition to the health of project personnel, significant financial concerns exist because of potential supply chain disruptions, the increased potential of cost impacts and schedule delays, and the legal responsibility for safe working sites.
Two earlier posts looked at the impacts of a pandemic on the safety of a firm’s employees and its contractual commitments for projects in progress. In this post, we are going to address two issues: (1) contractual requirements and delays, and (2) employee safety and employment liability.
Contractual Requirements and Delays
The immediate project impact is that between governmental interventions and the actual spread of the virus, projects will be delayed, materials and systems may be unavailable, and financing may be compromised.
Most construction contracts have provisions – force majeure clauses – that contractually treat delays because of problems such as the spread of infectious diseases and the delays the spread can cause. For instance, standard federal contracts since 1984 have included a provision that keeps construction contractors from being held in default for many causes beyond the control of the contractor, including “epidemics” and “quarantine restrictions.” Most private construction contracts are not as specific. And design contracts rarely spell out the causes clearly. With the governmental restrictions and other influences outside the control of design firms, the delay may be qualified as excusable and delay impacts on the design firm minimized.
AIA document B101, Standard Form of Agreement Between Owner and Architect, for example, is not specific as to what is an excused delay and does not get very prescriptive about what constitutes “reasonable cause.” The following language from B101 would seem to give architects an argument for delayed performance of their services due to coronavirus issues:
§ 3.1.3 As soon as practicable after the date of this Agreement, the Architect shall submit for the Owner’s approval a schedule for the performance of the Architect’s services. The schedule initially shall include anticipated dates for the commencement of construction and for Substantial Completion of the Work as set forth in the Initial Information. The schedule shall include allowances for periods of time required for the Owner’s review, for the performance of the Owner’s consultants, and for approval of submissions by authorities having jurisdiction over the Project. Once approved by the Owner, time limits established by the schedule shall not, except for reasonable cause, be exceeded by the Architect or Owner.
EJCDC’s E-500 agreement, Standard Form Agreement Between Owner & Engineer for Professional Services, also is not specific but does include this language:
3.02 Time for Completion
B. If, through no fault of Engineer, such periods of time or dates are changed, or the orderly and continuous progress of Engineer’s services is impaired, or Engineer’s services are delayed or suspended, then the time for completion of Engineer’s services, and the rates and amounts of Engineer’s compensation, shall be adjusted equitably.
So it seems that given the scale of the disruptions caused by governmental reactions to control the contagion, specific references to “epidemics” and “quarantine restrictions” may not be necessary to establish an excusable delay in the performance of professional services.
Employee Safety and Employment Liability
Design firms need to develop plans that address specific exposure risks at workplaces, sources of exposures, and routes of transmission. As employers, firms are obligated to provide their workers with the personal protection equipment needed to keep them safe while performing their jobs. The types of personal protective equipment (PPE) required during a COVID-19 outbreak will be based on the risk of being infected with the virus while working and job tasks that may lead to exposure. Guidance is available.
- On March 9, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) published “Guidance on Preparing Workplaces for COVID-19” to help companies respond to possible coronavirus occurrences in the workplace. The document provides practical guidance for preventing the spread of the disease and contains information on safe work practices and appropriate PPE based on the risk level of exposure. OSHA did not issue the publication as a standard or regulation; it is guidance and creates no new legal obligations for employers. It does contain recommendations and descriptions of mandatory health and safety standards. The guidance also outlines the numerous ways COVID-19 could impact workplaces, including increasing worker absences and changing patterns of supply and delivery.
- In addition to the guidance book, OSHA recently launched a COVID-19 webpage that provides infection prevention information specifically for workers and employers. The site is also actively reviewing and responding to any complaints regarding workplace protection from coronavirus, as well as conducting outreach activities.
- The Department of Labor’s Wage and Hour Division is providing information on common issues employers and employees face when responding to COVID-19, including effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act.
Prepare your clients for an excusable delay extension of design time, and prepare your firm and employees for the personal and professional impacts of COVID-19 by taking advantage of the OSHA and other federal sources of information.