One month ago, when this column last appeared, not much was known about the progress of the COVID-19 virus. The “curve” was peaking (although we did not know it at the time), and it was not known how long New York’s “pause” would last. Since then, although schools have been closed for the remainder of the year, we are at a point where the pause will be lifting, and construction will be in the vanguard. However, with most job sites idled for the last several weeks, we now have to think about how to proceed again once those sites open, and how to begin to recover from the effects of the shutdown. This column will address two concerns relating to the resumption of work (and the continuation of work on “essential” job sites that never shut down).
TEMPERATURE TESTING OF EMPLOYEES
While much is still unknown about the COVID-19 virus, “social distancing” has demonstrated effectiveness in slowing the transmission of the disease. Accordingly, when job sites reopen, social distancing protocols must be maintained. The purpose of this social distancing is to reduce the chance of catching the virus from potentially infected individuals. Another way of reducing this chance is to prevent potentially infected people from entering the job site. As one of the early symptoms of COVID-19 is a fever, one way to weed out potentially infected people is to conduct temperature tests as a condition of admission. However, is this permissible for an employer? Clearly, in attempting to prevent one problem, one does not need to create another.
The U.S. Equal Employment Opportunity Commission, the agency charged with the principal enforcement of the Americans with Disabilities Act, has recently provided guidance on the issue of whether employers may administer temperature tests to their employees. As a medical test, temperature testing may be administered to employees if it is “job related and consistent with business necessity”. Since employees with the COVID-19 virus pose a direct threat to non-infected employees, the EEOC guidance provides that employers may test their employees for fever as a condition of returning to work. However, the tests must be administered in a uniform manner (which, for purposes of avoiding any allegations of discriminatory testing, should be interpreted as testing of all employees). Further, the tests must be carried out in a way that insures accuracy and reliability. This can be done through backup testing of any feverish employees with a second thermometer, and a “positive” test be deemed to have taken place only when both tests indicate fever. Finally, because of the Health Insurance Portability and Accountability Act (“HIPAA”), which provides for confidentiality of health information, employers should be careful not to share the results of any of this testing with anyone other than the affected employee. Of course, employers must keep in mind that fever is only one indicia of the COVID-19 virus, and that a non-feverish employee may nevertheless be infected with COVID-19.
DOCUMENTING YOUR COVID-19 RELATED IMPACTS
Even though New York is officially reopening its economy, starting with the construction industry, the economy will not simply resume as if nothing has happened. While some projects which were deemed essential continued, and while others will resume as soon as they can, others, due to lack of funding or other reasons, will either be put into mothballs for the time being, or simply cancelled altogether. However, even for those that have been working on those essential projects, there is not a contractor out there that has not suffered some sort of impact as a result of COVID-19. Accordingly, it is important that contractors be prepared to recognize, and document, their COVID-19 related impacts—and be able to differentiate these impacts from other, non-COVID related impacts.
The first thing that a contractor must keep in mind in assessing one’s impacts is that the law imposes a duty to mitigate one’s damages. While certain impacts related to COVID-19 are unavoidable, particularly where your job was shut down, where a contractor can minimize the impacts they must do so or they will not be permitted recovery. These impacts may, aside from the obvious one of having the “non-essential” job site shut down, include delays of deliveries of materials, supplies and goods necessary for the job, additional time required to unload those items, the lack of workers due to illness or being home with dependents, delays in obtaining permits and in scheduling municipal inspections, the inability to hold proper meetings, the challenges imposed by social distancing requirements (particularly on vertical conveyances such as lifts and hoists), site workflow constraints and work area limitations, more regular cleaning requirements, the need for additional tools to minimize sharing, longer and additional workdays to accommodate staggered shiftwork and minimize labor on the site, and the need for additional supervision for that increased time, amongst others.
In assessing the damages suffered, the contractor must, of course, look to the terms of the contract to see what damages can be recovered (if any, for the contract may only provide for an extension of time for certain types of delays, including those for force majeure type of events such as epidemics/pandemics). Additionally, as we mentioned in last month’s column, contractors must provide notice of the delay and the impacts they are suffering in accordance with the contract. Provided that has been done, the contractor should, first and foremost, determine the project’s actual progress and costs at the time of the disruption. Once that baseline is established, useful strategies would include considering the disruptions to suppliers and subcontractors to determine possible escalation costs, dedicating resources to document and manage the impacts, and creating separate COVID-19 related cost codes so that they can be easily distinguished from general job costs. Contractors can base their analyses on project specific comparison studies, which can be performed based on comparable work by the contractor or, where that is not possible, comparing work between different contractors, comparable or work between different projects. Contractors can also rely on the total/modified cost method, where the loss is determined by simply subtracting the bid cost from the actual cost. However, contractors should be cautious in using this method because it assumes a cause-and-effect relationship between the damages and the claimed impacts, as well as that the work was reasonably estimated, that the actual costs are similarly reasonable, and that the contractor is not responsible for the additional costs.
Clearly, the job of classifying and documenting the impacts that contractors face as a result of COVID-19 is not an easy one. Once the contractor determines its direct costs (such as increased labor, materials, equipment, and subcontractor costs) and its indirect costs (such as increased project management staff, field office, site maintenance, cleaning and home office overhead costs), the retention of appropriate legal counsel and scheduling experts would be helpful in assisting it in best presenting its claim for the maximum chance of recovery.
Undoubtedly, the COVID-19 pandemic will add time and cost to virtually every construction project. Who bears the burden of that additional time and cost, as between owners, general contractors, suppliers and others, may be debated and litigated for some time to come. It is important to reiterate from last month’s column that a contractor who is faced with an impact resulting from COVID-19 would be well advised to, first and foremost, give notice of the delay and the condition which led to the delay, as well as any other information required by the particular contract—particularly now that New York’s economy will be opening up shortly and those additional impacts will be incurred. The requirements for how New York will open up its economy seems to be changing on a daily basis, and contractors would be well advised to be prepared by doing your paperwork now.