The Associated General Contractors of America recently reported that a survey, conducted between March 23 and 26, showed thirteen percent of respondents reporting project delays or disruptions because a potentially infected person had visited a jobsite. We have been tracking the impact of Stay at Home Orders in our other blog posts, but here we address your obligations and exposures regarding an outbreak on your jobsite, and what you can do to mitigate risk.
Companies that fail to adhere to Social Distancing Measures in Public Health Orders (“PHOs”) could be subject to fines by the Colorado Department of Public Health and Environment (“CDPHE”) or regulatory action by the Occupational Safety and Health Administration (“OSHA”). The CDPHA has the authority to issue fines to contractors violating PHOs. At the same time, OSHA’s General Duty Clause, 29 USC 654(a)(1), requires employers to give workers “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.” Failure to abide by OSHA’s general duty clause can give rise to individual complaints and agency action. In a time of fear about job security and jobsite safety, whistleblowing could be the primary means of policing violations of government orders.
But beyond governmental enforcement, companies that fail to comply with Social Distancing to the greatest extent possible might also become liable to others for the cost of project delays or disruptions caused by an outbreak on a jobsite that arose from the company’s failure to take reasonable measures to mitigate that risk. Most construction contracts require all contractors and subcontractors to abide by all applicable federal, state, and local rules and regulations. Thus, failure to follow Social Distancing measures in a jurisdiction where those measures have been mandated by a Public Health Order or other governmental decrees could be a breach of contract. If that breach could reliably be tied to a jobsite outbreak that leads to delays, the offending party may face claims for the delay costs.
A contractor that allows sick workers to be on-site, fails to follow Social Distancing, or fails to comply with OSHA by not taking reasonable steps to mitigate jobsite risks of contracting COVID-19, could be liable for the costs and impact the outbreak has on the project. Even worse, could that contractor also be required to indemnify others for related losses? There is no crystal clear answer, but the risk is significant enough to warrant taking action now.
The take-away is: comply with Social Distancing regulations wherever possible and document your efforts to do so. Creating and documenting a culture of compliance will help avoid or mitigate regulatory fines and should help minimize actual jobsite risks. It could also increase your odds of finding insurance coverage for indemnity and defense costs arising out of a job site outbreak.
Here are some things you can and should do:
- Keep workers 6 feet apart whenever possible;
- Implement telework or other strategies such as staggered schedules or re-designed workplaces to create more distance between workers, and limit the number of people in a single area at one time;
- Install handwashing stations throughout the project and mandate regular handwashing for 20 seconds;
- Mandate regular wipe downs of high use surfaces;
- Prohibit sick workers from showing up or staying on-site;
- Require exposed workers to quarantine at home for at least 14-days; and
- Document your efforts!
Contractors should also seek assistance reviewing their insurance coverage and whether (and to what extent) it might cover a claim based on a COVID-19 outbreak tied to an alleged failure to follow Social Distancing regulations or OSHA requirements.
In sum, while some skeptics have expressed doubt about the government’s ability or willingness to strictly enforce Social Distancing measures, those requirements are the law. This means that under most construction contracts, those requirements, as far as they apply, are now a contract term. One who violates that term (or fails to document the ways it is complying) could be a risk of significant claims. Even if those claims may be susceptible to valid defenses, such as inability to prove causation, supervening cause, consequential damage waivers, and the Economic Loss Rule, simply dealing with the costs and hassle of defending suits like these could be a major problem for contractor’s dealing with cash flow issues and other negative consequences related to the COVID-19 outbreak.
For more information or questions regarding construction practices please contact Dan Wennogle, Co-Chair of the Construction Group or Jamie Belgum. For questions regarding employment practices, please contact Stephanie Loughner, Co-Chair of the Employment Group. This blog post was co-authored by Bobby Dishell, Law Student Intern at Moye White.