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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.

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About this Author

Michael J. Weber Litigation Attorney Dinsmore Chicago, IL
Partner

Michael focuses his practice on fidelity and surety bond claims/litigation, complex litigation, commercial law, transactional matters, general business matters/litigation and construction law.

His extensive experience with mediations, arbitrations and trials includes the six-week Enron-related trial in JPMorgan Chase Bank v. Liberty Mutual Insurance Co., et al., in the Southern District of New York. The case involved $1 billion in losses claimed from eleven surety companies on bonds issued on behalf of Enron affiliated companies. He has also represented clients at trial in Florida...

(312) 775-1742
Grace Winkler Cranley Litigation Attorney Dinsmore

Grace focuses her practice on general and commercial litigation, surety and fidelity bonds and construction litigation. Included in her transactional experience is preparation of construction contracts and financing of principals. She represents clients in matters dealing with all types of surety bonds, including payment and performance bonds, appeal bonds, probate bonds, subdivision bonds, wage and welfare and other fringe benefit bonds. In addition, she represents clients in fidelity matters dealing with commercial crime policies and other financial institution bonds.

(312) 775-1744