Trade Contractors, Worker Safety, Indemnity, and COVID-19

In Corporate Resources by Porzio

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Authored by: Carol A. Sigmond

Generally, project owners, construction managers and some general contractors have been investigating ways to maintain progress on their project in face of ‘social distancing’  and ‘stay at home’ orders from governmental authorities.   Many workers and subcontractors have joined in the clamor to continue working.  However, financially stable trade contractors may see this issue differently.  Many trade contractors perceive significant risk in working during the pandemic. 

COVID-19 is a highly contagious respiratory disease for which, to date, there is no effective treatment.  People who are asymptomatic can spread the disease.   The virus survives on surfaces for up to 5 days (wood, glass, metal, paper and ceramics).  It is also spread by close personal contact remaining suspended and alive in the air for up to 4 hours.   To limit the spread of the virus, Americans and others around the world have been asked to practice “social distancing”,  that is staying at least 6 feet away from other people.  Recently, the CDC added the recommendation that people wear masks or scarfs over their noses and mouths in public.  Approximately 2% of the confirmed victims of COVID-19 will die.  

In face of a growing pandemic, weeks ago, many cities including Seattle, San Francisco, Detroit, New York City, Chicago and  New Orleans,  and in 42 states, mayors and governors  have issued ‘stay at home’ or ‘shelter in place’ orders to enforce ‘social distancing.’  At this point, there is a patch work of orders with varying provisions as to what is essential work and a further patch work of exceptions.   Moreover, there is yet another patch work of travel restrictions in place. 

This patch work of state ‘stay at home’ and travel orders creates risk for trade contractors based in states adjacent to the project site.  Consider, a job could be deemed ‘essential’ in one state but it is illegal to order someone to work in the adjacent state where the job is not deemed ‘essential.’  This creates a significant risk for the trade contractor for: 1)  charges of violating the government orders, and 2) law suits from employees for putting them at risk for or actually contracting  corona virus.  

Trade contractors have other risks.  Many sophisticated construction managers and contractors have comprehensive contracts that impose requirements and risks on trade contractors.  These include a prohibition on introducing hazards or hazardous substances to the job site; imposing indemnity obligations; and creating third party liability to other trades for safety violations.    Moreover, the Trade Contractors are employers with obligations under the OSHA General Duty Clause and for contractors working in New York, the Industrial Code.  

A fair interpretation of the typical contract clauses imposes liability, including an indemnity obligation, on the trade contractor running in favor of  the construction manager or general contractor if a worker employed by the trade contractor has the virus and introduces it to the project site creating delays or disruptions.  The trade contractor may also be liable to other trades on site, or their employees or others for damages arising out of exposure of the latter’s work force to the virus.   Since ordering the workers to work is a voluntary action that may be unlawful, there is the further a risk that insurance policies will not respond to claims. 

OSHA has not issued regulations respecting COVID-19.   OSHA has issued a guide that may be found here.   The guide contains general guidance on disease prevention, social distancing, hand washing, cleaning, and engineering for offices, personal protective equipment (“PPE”) and other general information.  It does not contain any specific guidance for construction sites, such as cleaning tools, equipment or the project.   The OSHA guidance does contain a reminder that the General Duty Clause is applicable.  Without specific regulations, Trade Contractors do not have any safe harbor, no specific guidance on safe work practices, which only serves to increase the risk of working. 

For trade contractors dealing with persistent demands to return to sites, particularly sites that have had workers with COVID-19 on the site, the doctrine of  “inevitable accident”  may provide a defense to allegations of breach of contract.  Under this doctrine, where there is a contingency in contract performance that was not planned under the contract that will cause death or injury to a worker, the employee of others or a member of the general public, performance is excused.  

In conclusion, well financed trade contractors risk much by continuing to work, unless the general contractor, construction manager or owner are prepared to assume these dangers.  

Reference Section

 1The OSHA General Duty Clause provides: 

“Each employer (1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees; (2)  shall comply with occupational safety and health standards promulgated under this Act.”

Section 5(a)(1) of the Occupational Safety and Health (OSH) Act of 1970, 29 USC 654(a)(1)

The New York Industrial Code General Duty Clause provides:

“All places where employees are suffered or permitted to perform work of any kind in construction, demolition or excavation operations shall be so constructed, equipped, arranged, operated and conducted as to provide reasonable and adequate protection for the lives, health and safety of such persons as well as of persons lawfully frequenting the area of such activity. To this end, all employers, owners, contractors and their agents and other persons obligated by law to provide safe working conditions, personal protective equipment and safe places to work for persons employed in construction.”

12 NYCRR § 23-1.5.

2 On April 14, OSHA issued interim guidance for workplace inspections at hospitals and health care facilities.