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COVID-19: Impact on PA Construction Industry

COVID-19 is causing unprecedented disruption to the economy, including the construction industry. Governor Wolf’s March 19 Order came with a matrix* listing in some detail which businesses must close. Unfortunately, as it relates to the construction industry, the listing of businesses is both ambiguous and inconsistent. The Order indicates that all construction work, including “Construction of Buildings,” “Heavy and Civil Engineering Construction” and “Specialty Trade Contractors” must cease work immediately. There may be, however, some limited exceptions to this. For example, under the category of “Professional and Business Services” the subcategories of both “Scientific Research and Development Services” and “Other Professional, Scientific and Technical Services” may continue physical operations. The Order does not address whether construction work associated with those categories may continue. For example, if your business is working on a project that supports those services, can you continue working on that project? The answer is unclear, but we suggest that you discuss the matter with the owner or general contractor (as applicable) for the project at issue to determine whether the project will proceed. If construction will continue you should obtain a letter from the owner/general contractor stating that they are directing you to continue work pursuant to the identified category in the matrix. In addition, they Order is unclear as whether construction contractor offices must shut down to the extent that they are supporting construction work being performed in other jurisdictions where stop-work orders have not been issued (e.g. – Ohio and West Virginia).

The matrix is also unclear as to how service-related work should be handled. For example, under the category of “Other Services” the subcategories of “Electronic and Precision Equipment Repair and Maintenance,” “Commercial and Industrial Machinery and Equipment Repair and Maintenance,” and “Personal and Household Goods Repair and Maintenance” may continue physical operations. Our interpretation is that all service-related work (e.g. – mechanical, electrical and plumbing) is expressly permitted to continue. If you have personnel out performing this type of work, we recommend that you provide each worker with a letter from your company explaining what type of work they are performing and why they are permitted to be performing that work. To the extent that your home office must remain open to support that type of service work we believe that would be permitted although the personnel in the office would have to be devoted only to the support of that permitted service work.

It is noteworthy that “Lumber and other construction materials merchant wholesalers” must close, but “Building material and Supplier Dealers” operating in the retail market may remain open. This distinction is not explained, but this may be based on a concern that individuals may need access to items for essential home repairs while actual construction projects that would need wholesale construction materials should not continue.

Various legislators in Pennsylvania are working to attempt to limit and/or repeal this Order, so we have no idea how long this may remain in place and/or whether it may be amended as early as today. It is also possible that a Federal Order could preempt the Order issued by Governor Wolf. We will continue to provide updates as we receive them.

Given what we know, except as noted above, we think that the best course of action for contractors currently working on active construction projects is to issue written notice to the owner or general contractor (as applicable) that you are complying with the Order and are therefore not able to perform on site effective immediately and that you will track the time and cost impacts associated with this suspension of work. We also recommend that you tell any owner or general contractor (as applicable) that if they believe their specific project is exempt from the Order and that they expect you to perform, to notify you in writing immediately and state the category in the Matrix that permits them to continue with the project. Notice should also be sent to all subcontractors and vendors on affected projects notifying them:

1. that work on the applicable project is suspended based on Governor Wolf’s Order;
2. that they should take immediate steps to protect any equipment or materials and otherwise try to mitigate the effects of this suspension; and
3. that they should be prepared to resume work immediately upon notification.

To the extent that you believe you should be entitled to an waiver from application of this Order, the Pennsylvanian Department of Community and Economic Development (“DCED”) has already begun processing waiver requests to exempt businesses from the closure rules. They have set up the following two e-mail accounts that the DCED will staff:

1. [email protected] – A resource account to send questions about whether a particular business need to close.
2. [email protected] – A resource account if businesses want to apply for a waiver and want information on the process (DCED will e-mail back with information about the process).

Questions?

If you have questions, please contact Matt Jameson, Kurt Fernsler, or Richard Saxe.

D. Matthew Jameson III, Esq.
Co-Chair, Construction Law Practice Group
[email protected]

Kurt F. Fernsler, Esq.
Member
[email protected]

Richard W. Saxe, Jr., Esq.
Member
[email protected]


* The matrix was updated on March 20 with additional exceptions to now include the construction of health care facilities and emergency repairs, as well as mining and quarrying activities. The hard deadline to shut down was also extended until March 23.

The contents of this communication is intended to convey general information only and not to provide legal advice or opinions.