The Scope and Reach of Pennsylvania’s Construction Industry Coronavirus Shutdown: What Construction Companies Can and Cannot Do

Cohen Seglias Pallas Greenhall & Furman PC
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At 8:00 AM Monday, enforcement measures took effect for Pennsylvania Governor Tom Wolf’s executive order limiting most Commonwealth business operations, including construction. Meant to combat the coronavirus’s spread, the order mandates that “[n]o person or entity shall operate a place of business in [Pennsylvania] that is not a life-sustaining business,” but virtual or telework activities may continue. The Governor’s office also issued a list detailing which businesses do and do not fall under the concept of “life-sustaining.”
 

As with so many developments during these unprecedented circumstances, the Governor’s order raises more questions than it answers. For many construction companies, the order imposes a seemingly impossible dilemma between discontinuing all but remote operations, on the one hand, and keeping workers employed and satisfying customers, on the other. However, this situation is ever-evolving as the order has already been amended several times. Further, the order’s language leaves substantial room for interpretation. Also, under the order’s exemption process, waivers are being granted liberally to qualifying applicants.

Overview

  • Businesses, including construction companies, may maintain critical functions at their locations, but only with limited personnel who are following all government COVID-19 health guidelines. In Philadelphia, construction companies may keep working until Friday, March 27 to close out and secure active construction sites.
  • The order does permit certain construction activity as life-sustaining, such as emergency repairs and building maintenance, and may not affect out-of-state work, but the order leaves substantial room for interpretation, so contractors should consult with the Pennsylvania Department of Community and Economic Development (DCED) to ensure compliance.
  • Construction companies may apply for a waiver from the order’s enforcement, but need to style the application to show that their work qualifies as “life-sustaining” and that they will comply with government coronavirus prevention guidelines.
  • Violating the order subjects a business to severe consequences, so construction companies should err on the side of compliance.

Permitted Construction Activity: Under the revised list, the order bars all commercial and residential construction, including heavy civil and all trade work. It provides only two construction work exceptions—“emergency repairs” and “construction of health care facilities.” Additionally, certain construction-associated services may continue, including remediation and waste management and building and facilities services. This list, however, does not define any of those terms. So, for example, it appears that maintenance work on building operating systems (e.g., HVAC) can continue. Further, neither the order nor any other guideline defines what constitutes operating “in the Commonwealth,” suggesting a Pennsylvania company can work on a project in a state that has not barred construction activity.

Also, under an order from Mayor James Kenney, Philadelphia construction companies “have until 5:00 PM on March 27, 2020 to make construction sites safe and secure,” such as securing the site against trespass, ensuring structural integrity for buildings under construction, and leaving residential projects safe and habitable. But even that range of activities leaves wide room for interpretation, as do the terms in the Governor’s order. To obtain much-needed clarification, construction businesses should email the Pennsylvania DCED at ra-dcedcs@pa.gov to ensure their work is permitted. For out-of-state work, businesses should frequently check for any coronavirus-related limitations on operations in those states.

Waiver to the Order: In addition to offering case-by-case clarification, the DCED advises construction companies unsure about permissible work to seek a waiver to the order’s enforcement via an online application form that asks for:

  • Basic business information
  • An explanation about how the business or its activities qualify as life-sustaining
  • A summary of the business’s plan to “meet CDC recommended guidelines to maintain employee safety during the COVID-19 pandemic”

The DCED will evaluate applications based on “balancing public safety while ensuring the continued delivery of critical infrastructure services and functions.” A construction company’s waiver application should explain how on-site project activity is “necessary to maintain operations” of either a life-sustaining business on the DCED’s list or the supply chain for critical infrastructure businesses. The application should have a narrative that includes “the category of critical infrastructure or life-sustaining business” that the applicant business serves, how much of the applicant’s business falls in this category, and “specific examples of [contracts with] critical or life-sustaining infrastructure businesses or sectors.” Finally, construction companies may obtain a waiver to “stabilize [a job] site, temporarily prevent weather damage, and make emergency repairs,” but not to perform new construction or elective rehabilitation or remodeling.

The application must also include an employee safety plan that complies with the Center for Disease Control (CDC) guidelines for addressing coronavirus risks at work. While a waiver application remains pending, applicants must “suspend in-person, physical operations until a waiver is approved and provided,” according to DCED guidelines. Although the DCED has received over 10,000 waiver applications, it has approved some requests. Further inquiries on the waiver process can be directed to RA-dcexemption@pa.gov.

Consequences for Violations: Under the statutes the order invokes, violators could face citations, fines, and possible imprisonment. Additionally, construction companies that disobey the order could lose their licenses to operate, become disqualified from any applicable disaster relief, and have state loans or grants terminated.

Legislative Action: Legislators, trade associations, and construction industry stakeholders alike have expressed concern to Governor Wolf about the order, ranging from challenging the order’s appropriateness to asking for an industry-specific waiver. In particular, combined chapters of Associated Builders and Contractors (ABC) asked for an exemption for all construction businesses.

From assessing compliance to preparing waiver applications, the order presents issues and challenges that require an attorney’s help. Cohen Seglias lawyers are prepared to advise on all of these issues, so please contact us with any concerns.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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