Workshop Review – Crisis Employment & Construction Law
On Thursday 4/9, Brick & Wonder members joined our Workshop discussion on the employment and construction law implications of COVID-19 led by employment law specialist Thomas Wasell, and construction law specialist, David Pfeffer.
The session covered:
- Employment Law:
- Layoffs & Furloughs (not a legal term)
- Federal & State Paid Sick Leave requirements now impact businesses of all sizes. Previous FLA law applied to businesses over 500 people, but the new Emergnecy FLA applies to all employers.
- There is a new work sharing program, which employers can opt into, allowing you to cut hours by upto 60% while keeping your workforce on payroll.
- Cobra will help laid-off employees retain health coverage, and some employers are helping out towards these costs.
- It remains to be see what Force Majeure or Act of God clauses will be able to be used in relation to COVID-19 for project delays, contracts and insurance purposes.
- Some employeers, for example, at banks, are nervious about coming to work. Technically speaking, fear of getting the virus is not a reason to refuse to come to work, but most employers not taking a hard line on it. Some employers are allowing employees to take unpaid leave of absence or use accrued vacation time.
- There is a general expectation that the judges will not be very sympathetic to Landlords who are leaning on leases over rent. Having an open dialogue is key – in particular, businesses may wish to ask landlords to consider proven loss of revenue in relation to rent payments during the crisis.
- PPP has started to flow, slowly. Banks have 10 days to get this money to companies once loan is approved.
- There are differing opinions about the extent to which govt will be watching where the money is being spent, but the recommendation is obviously to spend it according to the loan terms on payroll expenses.
- Construction Law
- In NYS, construction will likely resume first because the Construction lobby is very strong with Republicans upstate. See further guidenace here.
- In Act of God/Force Majeure clauses, the owner takes the risk of loss. On a construction projec, this could mean an extension of time, or an extension of cost, or both. An extension on deadlines is normal, but on larger projects where owners have leverage, there is a no damage for delay provision – construction companies may get more time, but no extra money.
- It is advisable for design and construction professionals to start these conversations early. For equipment rentals, and for demobilizing and remobilizing, it is reasonable that there will be extra cost, but paying for senior/management staffing during the downtime – probably not.
- Owners are advised to be proctive about putting money in Escrow and telling construction teams they are keen to resume construction asap, to tempt the construction and design teams back to their projects first.
- Human capital driven professional service firms are looking at reducing salaries – it’s difficult but it can save the firm.
- Most real esate owners and developers incorporated as LLCs will not be approved for PPP loans as they are passive entities. Developers do typically have separate management compaies which would be eligible for PPP.
- There have condos and co-ops are hoping they qualify for PPP and applying with a rider saying they are applying in good faith and unsure whether they qualify for PPP.
Our thanks to David and Tom for sharing their expertise with the Brick & Wonder Community and to Drew Lang for hosting.