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Ask the Expert: COVID Conundrum

How Is COVID-19 Impacting the Construction Industry?

May 21, 2020 Photo

The Experts:

Dennis J. Cotter, Partner, SmithAmundsen LLC


Jack Sanker, Associate, SmithAmundsen LLC

Q: What are some of the significant impacts COVID-19 has had on the construction industry?

A: From a financial, contractual, and project-management standpoint, contractors are dealing with delay, suspension, and termination issues, as well as the very real and rarely used option of assessing and seeking to enforce “force majeure” clauses to escape pandemic-driven economic hardships. For work that is continuing—construction in many states is considered “essential” business—OSHA, the CDC, as well as state and local regulations have required contractors to stay on top of developments and remain safe and in compliance by adopting site-specific safety plans and programs.

To date, OSHA has not required PPE or masks for construction workers, who have been classified as “low risk” for COVID-19 transmission. However, OSHA is requiring employers to record and report employee infections in certain circumstances: if an employee tests positive for COVID-19; if the case is work-related (i.e., infected on the job); or if the case involves one or more of the general recording or reporting criteria that OSHA normally imposes on workplace injuries, such as medical treatment beyond first aid, hospitalization, or death.

Trade unions, building commissions, local municipalities, and state agencies are encouraging contractors to develop and enforce their own protocols for how best to prevent infection in the workplace. At the time of publication, OSHA has not yet required employers to develop and adopt COVID-19 infection-prevention plans, though draft legislation in the U.S. House of Representatives may soon address this.

Regardless, proactive contractors are utilizing national resources—such as the AGC, ASA, and ABC—and local trade and construction safety associations as resources to develop and adopt company-wide and job site COVID-19 safety plans.  

Workers compensation laws differ from state to state, but, generally speaking, construction, as an “essential” industry operating while others are sheltering-in-place, is uniquely exposed to workers compensation and other liability claims because construction workers can claim, as a preliminary evidentiary matter, that they are both statistically and epidemiologically more likely to be exposed by being in contact with others at work when many in the country are sheltering. Notwithstanding, proving that the virus was contracted in the workplace, when most workers spend twice as much time away from the job site, may prove difficult, so many state legislatures are considering adopting legislation similar to a rule that the Illinois Workers’ Compensation Commission recently unilaterally adopted—that if a worker in an essential industry (including construction) contracts COVID-19, the rebuttable presumption will be that the worker contracted it in the workplace. This would shift the burden to the employer to disprove the workplace-causation conclusion. A swift legal challenge caused the Illinois Commission to retract that rule change, but the Illinois legislature is now considering it.    

It is simply a matter of time before we start seeing third-party liability claims and lawsuits filed on behalf of construction workers against contractors on the site other than their employ-ers, claiming that they contracted COVID-19 on the job site due to either the failure of the defendant-contractor to adopt a credible COVID-19 prevention and safety plan, or, if one has been adopted, failing to vigorously and consistently enforce it. Contractors must remain current regarding industry recommendations and continue to enforce plans after societal and governmental restrictions begin to ease.

The focus in insurance-coverage discussions will be on whether the contraction of the virus constitutes an “occurrence” and, if so, whether any exclusions apply. With “occurrence” frequently defined as “an accident, including continuous and repeated exposure to substantially the same harmful condition,” one can envision a dispute over whether contracting the virus constituted an accident, and whether there was continuous and repeated exposure. Potential exclusions to coverage that could be raised include communicable disease exclusions (if the policy is so endorsed), mold exclusions, and exclusion for expected or intended injury.

About The Authors
Multiple Contributors
Dennis J. Cotter

Dennis J. Cotter is a partner at SmithAmundsen. DCotter@salawus.com

Jack Sanker

Jack Sanker is an associate at SmithAmundsen.  Jsanker@salawus.com

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