Construction Not Deemed ‘Critical’ Service in Michigan Stay-at-Home Order

Michigan Governor Gretchen Whitmer issued Executive Order No. 2020-21 on March 23, 2020.  Effective 12:01 a.m., March 24, 2020 and continuing through, at least, April 13, 2020, individuals may only leave their place of residence under very limited circumstances.  This Order follows what many other states have already enacted. Many contractors, owners, subcontractors, suppliers, and sureties now want to know how the Order impacts construction projects in Michigan.

The Order states it must be, “construed broadly to prohibit in-person work that is not necessary to sustain or protect life,” and unlike other executive orders, Section 8 of the Michigan Order does not list construction workers as a critical infrastructure sector. The Order has organizations working to determine the guidelines for the construction industry.

An update to the FAQ page for the Order states, “Some limited forms of construction are permissible, including construction to maintain and improve essential public works like roads, bridges, the telecommunications infrastructure, and public health infrastructure. Construction workers may also undertake such projects as necessary to maintain and improve the safety, sanitation, and essential operations of residences. In addition, businesses may designate construction firms to provide necessary support to the work of the businesses' critical infrastructure workers. All construction work that is carried out while the order is in effect must be done in accordance with the mitigation measures required under section 5(c) of the order.”

While Section 5(c) of the Order sets forth social distancing practices, the clarification indicates non-essential construction must halt until April 13. Various construction industry groups are seeking clarification of the Order and the FAQ, and they are working to determine the projects and workers deemed essential to Michigan’s infrastructure without endangering lives.

The impact on construction and workers continues to unfold, but it is clear halting construction will undermine economic vitality in Michigan and beyond. The Associated General Contractors of America have urged project owners to continue scheduled payments to contractors in efforts to mitigate economic impacts.

It is imperative owners, contractors, and other parties are aware of contract and insurance provisions protecting them from the impact of COVID-19 on pending and/or future projects. Parties should know the proper mechanisms to timely protect lien rights (e.g., electronic filings within the applicable statutory time frames) due to agency closures. Discussion regarding application of force majeure clauses to delays and interruptions triggered by COVID-19 will continue.

If you have any questions, please contact the authors or your Dinsmore attorneys.