The Building Tradesman Newspaper

Friday, March 20, 2020

News Briefs

By The Building Tradesman



Normal? Now, nothing is normal.

The presence of the coronavirus in the U.S. has lead to stern medical warnings to wash our hands, avoid touching our face, and isolate from each other. The pandemic has led to the emptying out of schools, cancellation of public events, and a halt to major sporting events.

The economic impact of the coronavirus (COVID -19) has significantly upped the chance of tipping the nation into an economic recession. For workers in the building trades, who don’t get paid if they don’t work - and for whom working at home is not an option - the future is concerning. 

As we went to press, owners and contractors were looking at their options and lining up contingency plans to keep construction projects going - or shutting them down to prevent transmission of the virus. The initial reaction has been to advise individual tradespeople who are feeling flu-like symptoms, to stay at home, even if their symptoms are borderline. 

At least two owners, including DTE Energy and General Motors,  have prepared visitor questionnaires that screens visitors, including tradespeople, seeking to gain access to their properties. The form asks whether they have returned from a list of countries including China, Iran, Italy and Japan, within the past 14 days, if they have been in close contact with people potentially exposed to the virus, or if they have experienced cold- or flu-like symptoms. A single "yes" answer denies them access to the property. Workers, of course, are asked to be honest.

Some contractors last week were also discussing using touchless thermometers to determine a workers' temperature. If it's elevated, they will be declined entry. One contractor reported that the search is on around the world for available portable hand-washing stations to place on jobsites.

"This is a whole new situation for everyone, and in the building trades, a lot of what happens on work sites is going to be owner-driven," said Patrick Devlin, secretary-treasurer of the Michigan Building and Construction Trades Council. "The situation is changing day by day, and we're relying on guidance from the medical experts in an attempt to keep everyone safe."

With the virus rapidly spreading, work stoppages at construction projects around Michigan, on some scale, are likely inevitable. The virus is affecting elements of the entire economy. Aside from insisting on safe work practices for workers exposed to the general public - especially in the medical and public service fields - labor unions, like employers and public officials, are in uncharted territory.

"Unions are working nonstop to coordinate, develop and disseminate educational, training and logistical resources and recommendations from the foremost experts," said AFL-CIO President Rich Trumka. "We are also pressuring federal agencies to provide the resources and protective guidelines to ensure workers are safe now and in the future."

In the construction industry over the past three decades, worker safety has become ingrained in the culture of most responsible contractors. But no one knows what the tipping point will be for shutting jobs down because of the threat of the virus. In the background, behind worker safety, there are some projects whose shutdown would prove incredibly costly for owners, contractors and workers. Consider the legal implications for contractors.

“The construction industry is even more unique with respect to the coronavirus because construction contracts also typically contain force majeure or excusable delay provisions,” writes attorney Michael C. Decker in a paper prepared for the Detroit-based law firm Butzel Long. “Specifically, provisions stating that time is ‘of the essence’ in the performance of the contract and providing for liquidated damages for failing to perform on time.”

He wrote that typically, an “excusable delay” might take the form of a labor dispute, a fire, an unusual delay in deliveries, unavoidable casualties, or adverse weather conditions. 

“Obviously,” Decker continued, “the question becomes – would the coronavirus fall within the category of a force majeure or excusable delay event?  It is not entirely clear given the novel nature of the coronavirus.  Therefore, it is not recommended that construction companies count on relying upon such force majeure or excusable delay provisions to shield them from liability for delays and disruption in their work or their failure to complete their work within the time specified in their contracts.”

Will a major contractor somewhere in the U.S. find the coronavirus threat to workers so great that its jobsites will be closed? Or perhaps an owner will lock its property’s gates and suspend construction. Will those actions prompt a snowball effect on construction projects across the nation?

Obviously, with the virus now deemed a pandemic by the World Health Organization, the effect on human health is likely to be the dominant consideration – in an ideal world. But the legal implications of a workforce told to go home, or simply not showing up for work, is bubbling very close to the surface.

“The construction industry is even more unique with respect to the coronavirus because construction contracts also typically contain force majeure or excusable delay provisions,” writes attorney Michael C. Decker in a paper prepared for the Detroit-based law firm Butzel Long. “Specifically, provisions stating that time is ‘of the essence’ in the performance of the contract and providing for liquidated damages for failing to perform on time.”

He wrote that typically, an “excusable delay” might take the form of a labor dispute, a fire, an unusual delay in deliveries, unavoidable casualties, or adverse weather conditions. 

“Obviously,” Decker continued, “the question becomes – would the coronavirus fall within the category of a force majeure or excusable delay event?  It is not entirely clear given the novel nature of the coronavirus.  Therefore, it is not recommended that construction companies count on relying upon such force majeure or excusable delay provisions to shield them from liability for delays and disruption in their work or their failure to complete their work within the time specified in their contracts.”

Another attorney Diana Parks with the international law firm Dorsey & Whitney, suggested  some "excusable delay" contract language could include broader language like "acts of God,"  thus providing more legal support for delayed contractors.

Being on the wrong side of legal liability for a project’s delay could bankrupt a contractor. Decker suggests construction contractors protect themselves by being proactive, including identifying the company’s most important business activities and processes that need to be protected and the people responsible for them. As well as identifying the company’s most important subcontractors and suppliers, and most important materials and equipment.

Other key considerations are communication with staff and suppliers - and taking care to continue to protect its staff and key materials and equipment.

Another attorney Diana Parks with the international law firm Dorsey & Whitney, suggested  some "excusable delay" contract language could include broader language like "acts of God,"  thus providing more legal support for delayed contractors.

force majeure clause and determine if an epidemic or pandemic is expressly included in its definition. Even if those precise words are not included, common boilerplate language in such clauses, like “an act, event, or occurrence caused by acts of God, explosion, public enemy, civil disturbance, unusual and adverse weather, or other similar act, event or occurrence that is beyond the reasonable expectation or control of the parties” arguably encompass large-scale outbreak of a novel disease.

"The coronavirus could have a significant impact on those provisions.  For example, a company could easily find itself in breach of or on the brink of breaching those provisions if its labor forces are reduced or its material or equipment cannot be obtained or delivered on time because of the coronavirus."

Subcontractors, he said, have many of the same impacts. neglect of the Owner or the Architect,” “authorized by the Owner,” or for “labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather conditions documented in accordance with Section 15.1.6.2, or other causes beyond the Contractor’s control.”


FEBRUARY JOBLESS RATE AT  3.5%

WASHINGTON (PAI)—The U.S. jobless rate in February was 3.5%, the Bureau of Labor Statistics reported. Businesses claimed to create 228,000 new jobs, a separate survey showed, and governments said they added 45,000, with almost half in state and local schools.

BLS said there were 5.787 million jobless people in February, 135,000 fewer than in January. But the jobless, those too discouraged to seek work, and those who toil part-time when they really want full-time jobs account for one of every 14 workers.

“This is the calm before the storm” of the coronavirus hitting the economy, said Economic Policy Institute senior economist Elise Gould. “Workers are continuing to get pulled off the sidelines, but employers aren’t feeling much pressure to raise wages to attract and retain the workers they want.”

“Manufacturing -- the first sector expected to feel the effects of any supply chain disruptions — rose by 15,000 jobs in February. The reference period for this month’s data collection was too early in February to see the expected impacts of” the virus, she added. The same could hold true for bars, restaurants and motels, Gould said.

After February’s gains, factories employed 12.86 million workers, and 44% of the gains were in cars and parts. That left 613,000 factory workers (3.9%) jobless. That’s 1% higher than in February 2019.

Construction added even more jobs, 42,000, to 7.646 million. And 60% of those were at specialty trade contractors. There were still 531,000 jobless construction workers (5.5%). 

The bars and restaurants were the biggest job gainers in February, reportedly adding 52,600 jobs. So were health care (+31,600 jobs) and social assistance (+24,900).


Economy Gains 273,000 Jobs in February; Unemployment Unchanged at 3.5%
AFL-CIO Staff
March 6, 2020

The U.S. economy gained 273,000 jobs in February, and the unemployment rate was essentially unchanged at 3.5%, according to figures released Friday morning by the U.S. Bureau of Labor Statistics. Wages showed some improvement, rising 3.0% over last year.

In response to the February job numbers, AFL-CIO Chief Economist William Spriggs tweeted:


    Higher wage industries (moving up the chart) were part of job gains (moving right on the chart) but lower wage leisure & hospitality and education & health showed the biggest gains. Retail continued its weakness as the biggest job loser @AFLCIO pic.twitter.com/QB3AzfQuRF
    — William E. Spriggs (@WSpriggs) March 6, 2020


    While the unemployment rate hovers near low rates, the share of Americans holding jobs shows a long road to return to 2008 level or record 2000 levels @AFLCIO pic.twitter.com/H3W2KnDMri
    — William E. Spriggs (@WSpriggs) March 6, 2020


   Though showing a little improvement, the share of the unemployed still looking 26 weeks or more remains stubbornly above what was "normal" in 2000 @AFLCIO pic.twitter.com/xe8UZRwnxr
    — William E. Spriggs (@WSpriggs) March 6, 2020


Employment in motor vehicle & parts manufacturing rebounded in February, up 6,800 but not back to December's level and still 15,700 below last February @UAW @AFLCIO
    — William E. Spriggs (@WSpriggs) March 6, 2020


 The labor force participation rates for Blacks and whites continue to show convergence. @APRI_National @CBTU72 @AFLCIO pic.twitter.com/youB1s6g3e
    — William E. Spriggs (@WSpriggs) March 6, 2020


Last month's biggest job gains were in health care (57,000), leisure and hospitality (53,000), government (45,000), construction (42,000), professional and business services (32,000) and financial activities (26,000). Employment in other major industries—including mining, manufacturing, information, transportation and warehousing, wholesale trade, and retail trade—showed little change over the month.

Among the major worker groups, the unemployment rate for Asians declined a half of a percentage point in February to 2.5%. Unemployment rates for teenagers (11.0%), blacks (5.8%), Hispanics (4.4%), adult men (3.3%), whites (3.1%) and adult women (3.1%) showed little or no change.

The number of long-term unemployed (those jobless for 27 weeks or more) showed little change in February and accounted for 19.2% of the unemployed.