Several Midwest States Close Non-Essential Businesses – Potential Construction Impacts 

Updated April 10, 2020

Over the past few days, several Midwestern states have issued stay-at-home orders and closed non-essential businesses in response to the growing novel coronavirus (COVID-19) pandemic. Governors in Illinois, Ohio, Indiana, Wisconsin, Michigan, and Minnesota issued full stay-at-home orders similar to those issued on the West Coast. Similarly, the governor of Wisconsin closed non-essential businesses. In these states, most construction operations have been categorized as “essential” and are permitted to remain open. However, numerous projects and construction-related businesses have been or will be required to close. As detailed below, Michigan’s stay-at-home order is more limiting and should be read to close new construction and renovations on commercial properties and other non-essential renovations.

Whether a particular jobsite or project remains open should be determined on a case-by-case basis in accordance with applicable governmental action and guidance, including municipal restrictions that could be stricter than state or federal orders. Given the likelihood that suppliers or subcontractors may be governed by the laws of a neighboring state it is important to carefully monitor other states’ orders in the coming days and weeks.

Governmental responses to COVID-19 are constantly changing, so it is imperative to stay up to date on new restrictions and guidance as they are released.

ILLINOIS

On March 20, 2020, Illinois Governor JB Pritzker issued Executive Order 2020-10 ordering all residents to stay at their homes except as necessary for “Essential Activities, Essential Government Functions, or to operate Essential Businesses and Operations.” The order went into effect at 5 p.m. on March 21, 2020, and is effective through the duration of the Gubernatorial Disaster Proclamation, which currently extends through April 7, 2020. Executive Order 2020-10 does not include penalties or punishments for noncompliance with the order; however, Governor Pritzker stated that individuals who refuse to comply after repeated direction from law enforcement may be subject to a reckless conduct misdemeanor. On April 1, 2020, Governor Pritzker issued Executive Order 2020-18, which extends the stay-at-home order issued in Executive Order 2020-10 in its entirety, until April 30, 2020. Executive Order 2020-18 also extends several other COVID-19 related orders.

At this time, most construction projects and related businesses qualify as either “essential infrastructure” or “essential businesses or operations” under the Illinois order and may remain open. The order defines essential infrastructure to broadly include, among other activities and businesses:

  • “construction (including but not limited to, construction required in response to this public health emergency, hospital construction, construction of long-term care facilities, public works construction, and housing construction);
  • “building management and maintenance;
  • “operation and maintenance of utilities, including water, sewer, and gas; and
  • “electrical (including power generation, distribution, and production of raw materials).”

The order also defines essential businesses or operations to include, among others:

Hardware and supply stores

Hardware stores and businesses that sell electrical, plumbing, and heating material;

Critical trades

Building and construction tradesmen and tradeswomen, and other trades including but not limited to plumbers, electricians, exterminators, cleaning and janitorial staff for commercial and governmental properties, security staff, operating engineers, HVAC, painting, moving and relocation services, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, essential activities, and essential businesses and operations.

Manufacture, distribution, and supply chain for critical products and industries

Manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as pharmaceutical, technology, biotechnology, health care, chemicals and sanitization, waste pickup and disposal, agriculture, food and beverage, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, national defense, communications, as well as products used by other essential businesses and operations.

Under these definitions of essential business in Illinois, most construction operations will be able to continue at this time. However, it is possible that municipalities have already, or will in the future, impose stricter restrictions on the definition of essential that will shut down additional construction projects and related companies that would otherwise be allowed to continue operations under Governor Pritzker’s order. Illinois may also order more closures that may directly or indirectly affect the construction industry as the pandemic continues.

OHIO

On March 22, 2020, under the direction of Governor Mike DeWine, Ohio Department of Health Director Amy Acton, M.D., MPH issued a stay-at-home order titled “Director’s Order that All Persons Stay at Home Unless Engaged in Essential Work or Activity.” The order requires all persons living within the state of Ohio to stay at their homes or residences unless they need to leave for “Essential Activities, Essential Governmental Functions, or to participate in Essential Businesses and Operations.” Non-essential businesses are required to close unless they can “continue operations consisting exclusively of employees or contractors performing activities at their own homes or residences (i.e., working from home).” Like Illinois, Ohio’s order does not specify penalties or punishments for noncompliance, but empowers state and local law enforcement to enforce the terms of the order. Penalties may range from warnings or fines to possible jail time for repeated or flagrant noncompliance. These restrictions went into effect at 11:59 p.m. on March 23, 2020, and will last until 11:59 p.m. on April 6, 2020, unless the order is rescinded or modified by the director of the Ohio Department of Health. On April 2, 2020, under the direction of Governor Mike DeWine, Ohio Department of Health Director Amy Acton, M.D., MPH issued an extended stay-at-home order titled “Amended Director’s Order that All Persons Stay at Home Unless Engaged in Essential Work or Activity.” Effective at 11:59 p.m. on April 6, 2020, this amended order extends the current stay-at-home order in its entirety until 11:59 p.m. on May 1, 2020.

Ohio adopted similar, though slightly different, definitions of what is essential from Illinois. The differences as they relate to construction indicate an even broader category of construction projects are definitely considered essential. Specifically, Ohio defines essential infrastructure to include, among other things:

  • “construction (including but not limited to, construction required in response to this public health emergency, hospital construction, construction of long-term care facilities, public works construction, school construction, essential business construction, and housing construction);
  • “building management and maintenance;
  • “operation and maintenance of utilities, including, for example, water, sewer, and gas; and
  • “electrical (including power generation, distribution, and production of raw materials).”

The Ohio order also defines essential businesses and operations to include, among others:

CISA List

This includes all workers identified in the U.S. Department of Homeland Security, Cybersecurity & Infrastructure Security Agency (CISA) Memorandum dated March 19, 2020.

Hardware and supply stores

Hardware stores and businesses that sell electrical, plumbing, and heating material.

Critical trades

Building and construction tradesmen and tradeswomen, and other trades including but not limited to plumbers, electricians, exterminators, cleaning and janitorial staff for commercial and governmental properties, security staff, operating engineers, HVAC, painting, moving and relocation services, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, essential activities, and essential businesses and operations.

Manufacture, distribution, and supply chain for critical products and industries

Manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as pharmaceutical, technology, biotechnology, health care, chemicals and sanitization, waste pickup and disposal, agriculture, food and beverage, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, national defense, communications, as well as products used by other essential businesses and operations.

Because these definitions are slightly broader than the definitions of essential infrastructure and essential business in Illinois, the vast majority of construction operations should be able to continue in Ohio. However, it is possible that municipalities have already, or will in the future, impose stricter restrictions on the definition of essential that will shut down additional construction projects and related companies that would otherwise be allowed to continue operations under Director Acton’s order. Ohio may also order more closures that may directly or indirectly affect the construction industry as the pandemic continues.

INDIANA

On March 23, 2020, Indiana Governor Eric Holcomb issued Executive Order 20-08 titled “Directive for Hoosiers to Stay at Home.” The order requires individuals in Indiana to stay at their homes or residences unless they need to leave for “Essential Activities, Essential Governmental Functions, or to participate in Essential Businesses and Operations.” Non-essential businesses are required to close unless they can “continue operations consisting exclusively of employees or contractors performing activities at their own homes or residences (i.e., working from home).” Like Illinois and Ohio, Indiana’s order does not specify penalties or punishments for noncompliance, but empowers state and local law enforcement to enforce the terms of the order. Most likely, individuals and businesses that do not comply with this order may be subject to jail time and/or fines for repeated or flagrant noncompliance. These restrictions went into effect at 11:59 p.m. on March 24, 2020 and will last until 11:59 p.m. on April 6, 2020, unless the order is rescinded, modified, or extended by the governor. On April 6, 2020, Governor Holcomb issued Executive Order 20-18, titled the Continued Directive for Hoosiers to Stay home, which extends the Stay at Home order issued in Executive Order 20-08 in its entirety and adds several modifications from 11:59 p.m. on April 6, 2020, until 11:59 p.m. on April 20, 2020. One of the modifications to the Executive Order 20-08 is an added enforcement mechanism, which empowers local authorities to enforce the order and specifies violations of the order as a Class B misdemeanor, which is punishable up to 180 days incarceration and a fine up to $1,000. The extension of the order with modifications should not affect how construction operated under Executive Order 20-08.

For all practical purposes for the construction industry, Indiana’s order is almost identical to Ohio’s order, including its adoption of the CISA List. Indiana businesses should carefully review the order and continue monitoring and tracking changes that are happening in Indiana and neighboring states. For now, most construction operations should be able to continue.

WISCONSIN            

On March 24, 2020, Wisconsin Department of Health Services Secretary-designee Andrea Palm issued the Safer At Home Order, Emergency Order #12. The order is modeled after the orders issued in Illinois, Indiana, and Ohio and requires all persons living within the state of Wisconsin to stay at their homes or residences unless they need to leave for “Essential Activities,” “Essential Governmental Functions,” or to “operate Essential Businesses and Operations.” Non-essential businesses are required to close unless they can continue “operations consisting exclusively of employees or contractors performing activities at their own home or residences (i.e., working from home).” The Wisconsin order is enforceable by local law enforcement and violations or obstructions with compliance of the order are punishable by up to 30 days imprisonment and/or up to $250 fines. These restrictions went into effect at 8:00 a.m. on March 25, 2020, and will last for one month until 8:00 a.m. on April 24, 2020, or until a superseding order is issued.

Wisconsin adopted similar but broader definitions of essential infrastructure and essential businesses and operations as Indiana, Illinois, and Ohio. Specifically, Wisconsin defines essential infrastructure to include, among other things:

  • “construction (including, but not limited to, construction required in response to this public health emergency, hospital construction, construction of long-term care and assisted living facilities, public works construction, school construction, Essential Business and Operations construction, construction necessary for Essential Governmental Functions, and housing construction, except that optional or aesthetic construction should be avoided);
  • “building management and maintenance;
  • “operation and maintenance of utilities, including, for example, water, sewer, gas, and electric (including power generation, distribution, and production of raw materials, and Wisconsin Department of Natural Resources-certified and registered drinking water and wastewater testing laboratories).”

The Wisconsin order also defines essential businesses and operations to include, among others:

CISA List

This includes all workers identified in the U.S. Department of Homeland Security, Cybersecurity & Infrastructure Security Agency (CISA) Memorandum dated March 19, 2020, as updated on March 23, 2020, and any subsequent versions of this memorandum.

Hardware and supplies stores

Hardware stores and businesses that sell electrical, plumbing, heating, and construction material.

Critical trades

Building and construction tradesmen and tradeswomen, and other trades including but not limited to plumbers, electricians, carpenters, laborers, sheet metal, iron workers, masonry, pipe trades, fabricators, finishers, exterminators, pesticide application, cleaning and janitorial staff for commercial and governmental properties, security staff, operating engineers, HVAC, painting, moving and relocation services, forestry and arborists, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, essential activities, essential governmental functions, and essential businesses and operations.

Manufacture, distribution, and supply chain for critical products and industries

Manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as pharmaceutical, technology, biotechnology, health care, chemicals and sanitation, waste pickup and disposal, agriculture, food and beverage, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, national defense, communications, and products used by other essential governmental functions and essential businesses and operations.

Because these definitions are broader than the definitions of essential infrastructure and essential businesses in Illinois, Indiana, and Ohio the vast majority of construction operations should be able to continue in Wisconsin. However, it is possible that municipalities have already, or will in the future, impose stricter restrictions on the definition of essential that will shut down additional construction projects and related companies that would otherwise be allowed to continue operations under the Safer At Home Order. Wisconsin may also order more closures that may directly or indirectly affect the construction industry as the pandemic continues. Again, Wisconsinites may be impacted by shut downs in neighboring states, particularly in Michigan right now, so it is important to carefully monitor other states’ orders in the coming days and weeks.

MINNESOTA                      

On March 25, 2020, Minnesota became one of the most recent states to issue a stay-at-home order when Governor Tim Waltz issued the Emergency Executive Order 20-20, “Directing Minnesotans to Stay at Home.” The Minnesota order mostly relies on the guidance in the CISA List for what operations may continue during the order, but also largely allows construction operations to continue. Any person who willfully violates this order is guilty of a misdemeanor in Minnesota and subject to punishment by a fine not to exceed $1,000 or imprisonment for not more than 90 days. These restrictions will go into effect at 11:59 p.m. on March 27, 2020, and will last until 11:59 p.m. on April 10, 2020. On April 8, 2020, Governor Tim Waltz issued Executive Order 20-33, which extends the previous stay-at-home order issued in Executive Order 20-20 and includes some modifications and a mechanism for more businesses and activities to be deemed “essential,” allowing businesses to reopen over the coming weeks. The extended stay-at-home order is effective April 8, 2020, at 11:59 p.m. and ends on Sunday May 3, 2020, at 11:59 p.m.. 

Some of the notable new exemptions in Order 20-33 include: 
  • Workers supporting “minimum basic operations” to maintain the value of businesses’ inventory, facilities, equipment, security, etc. (e.g. mowing golf courses)
  • Lawncare and landscaping workers
  • Automobile, motorcycle, RV, and ATV sales necessary for essential travel or supporting critical sectors
In addition to those workers identified in the CISA List, the Minnesota order specifically exempts from closure:

Construction and Critical Trades

This category includes workers in the skilled trades such as electricians, plumbers, HVAC and elevator technicians, and other related construction of all kind. This category also includes exterminators, cleaning and janitorial staff for commercial and governmental properties, moving and relocation services, security staff, operating engineers, and all other service providers who provide services that are necessary to maintain the safety, sanitation, and essential operation of homes and residences and the critical sectors listed in this executive order.

Essential Supply Stores

This category is limited to workers at businesses that sell products, tools, materials, or supplies necessary for: (1) the critical sectors to continue their essential operations, (2) for workers to work from home, or (3) for the maintenance of the safety, sanitation, and essential operation of homes or residences.

Minnesota has also provided an industry-by-industry list where businesses can compare their NAICS industry code with a simple yes/no indication as to whether they can continue operating under the order. The vast majority of the construction industry is identified as critical on this list and can continue operating. Every business in Minnesota should consult this list along with the executive order and CISA List to confirm whether they are critical. Given the different requirements in neighboring states, Minnesotans should also carefully monitor developments nearby to determine potential impacts.

MICHIGAN

On March 23, 2020, Michigan Governor Gretchen Whitmer issued the “Stay Home, Stay Safe” Executive Order No. 2020-21, titled “Temporary requirement to suspend activities that are not necessary to sustain or protect life.” The Michigan order is the strictest in the Midwest states and requires Michiganders to stay at their homes or residences unless they are “workers necessary to sustain or protect life or to conduct minimum basic operations.” Violations of the Michigan order are considered misdemeanors and carry possible fines or imprisonment. These restrictions went into effect at 12:01 a.m. on March 24, 2020, and will last until 11:59 p.m. on April 13, 2020. On April 9, 2020, Governor Whitmer issued Executive Order No. 2020-42, which extended and expanded Executive Order No. 2020-21. The new order took effect on April 9, 2020, at 11:59 p.m. and will last until April 30, 2020.

Michigan’s orders are by far the most restrictive and shut down almost all construction operations in the state. The orders start with a statement that it “must be construed broadly to prohibit in-person work that is not necessary to sustain or protect life.” The only exceptions to the stay-at-home restrictions are “critical infrastructure workers” and “workers who are necessary to conduct minimum basic operations.”

In its definition of “critical infrastructure workers,” Michigan’s order incorporates the CISA List and specifically notes that critical infrastructure workers include some workers in each of the following sectors:

  • Health care and public health
  • Law enforcement, public safety, and first responders
  • Food and agriculture
  • Energy
  • Water and wastewater
  • Transportation and logistics
  • Public works
  • Communications and information technology, including news media
  • Other community-based government operations and essential functions
  • Critical manufacturing
  • Hazardous materials
  • Financial services
  • Chemical supply chains and safety
  • Defense industrial base

The order also includes workers at “designated suppliers and distribution centers” as critical infrastructure workers. Such suppliers and distribution centers are limited to those necessary to support the work of critical infrastructure workers. Under the CISA List, construction operations are only considered a part of critical infrastructure if they are for “critical or strategic infrastructure” (e.g., bridges, sewer and water mains, fiber optic cables, etc.) or they provide services that are “necessary to maintaining the safety, sanitation, and essential operations of residences.” Other maintenance and repair work is also considered critical infrastructure. For the most part, new construction is excluded.

Under these orders, almost all new construction and commercial renovations will need to remain shut down. Workers necessary to conduct minimum basic operations for construction projects may continue. This includes those workers “whose in-person presence is strictly necessary to allow the business or operation to maintain the value of inventory and equipment, care for animals, ensure security, process transactions (including payroll and employee benefits), or facilitate the ability of other workers to work remotely.”

Executive Order No. 2020-42 also adds requirements for businesses that are allowed to remain operating. Such business must take certain steps to “adhere to sound social distancing practices and measures,” including but not limited to:
  • Developing a COVID-19 preparedness and response plan, consistent with recommendations in Guidance on Preparing Workplaces for COVID-19, developed by the Occupational Health and Safety Administration and available here. Such plan must be available at company headquarters or the worksite.
  • Restricting the number of workers present on premises to no more than is strictly necessary to perform the business’s, operation’s, or government agency’s critical infrastructure functions or its minimum basic operations.
  • Promoting remote work to the fullest extent possible.
  • Keeping workers and patrons who are on premises at least six feet from one another to the maximum extent possible.
  • Increasing standards of facility cleaning and disinfection to limit worker and patron exposure to COVID-19, as well as adopting protocols to clean and disinfect in the event of a positive COVID-19 case in the workplace.
  • Adopting policies to prevent workers from entering the premises if they display respiratory symptoms or have had contact with a person with a confirmed diagnosis of COVID-19.
  • Any other social distancing practices and mitigation measures recommended by the CDC. 
Any construction or construction-related businesses that previously were allowed to continue operations must now adhere to these requirements in order to continue operating. Because the Michigan order broadly shuts down construction operations, contractors and suppliers must clearly communicate both upstream and downstream to discuss the potential impacts. Additionally, all parties should consult their contracts for what remedies may be available in these circumstances.

BEST PRACTICES

The federal and local governmental response to the COVID-19 outbreak will likely change from the date of this publication. The best practices for construction companies that are still permitted to operate are to implement and maintain social distancing to the extent possible without sacrificing safety or quality. Sanitation and deep-cleaning procedures should be implemented and maintained as well. Teleworking should be utilized to the extent possible, and in-person meetings should be eliminated and/or reduced while maintaining necessary safety and supervision. To the extent any contractors or suppliers are impacted by executive orders and related business closures, it is critical that they promptly notify both upstream and downstream contracting partners and carefully document the cost and time associated with the additional precautions or orders. In particular, contractors should reach out to their supply chain and confirm whether they anticipate any changes in delivery times or methods for materials and equipment.

 


Authors

Christopher Moore Sweeney

Member

csweeney@cozen.com

(202) 912-4828

Stephen M. Seeger

Member

sseeger@cozen.com

(202) 747-0793

Jesse S. Keene

Member

jkeene@cozen.com

(202) 747-0795

Alexandra Elena Busch

Associate

abusch@cozen.com

(202) 912-4862

Related Practices


Related Industries

For strategies on responding to and documenting impacts from these government actions and COVID-19 in general, please refer to our previous client alert, COVID-19 Strategies for the Construction Industry. Additionally, visit Cozen O’Connor’s COVID-19 website for new updates. For additional guidance on whether your company may continue to operate as a result of governmental action, and/or for advice on preparing for and responding to pandemic-related construction cost and schedule impacts, please contact any one of Cozen O'Connor’s Construction Group attorneys who can help guide you through the legal challenges.