Posts By: Gregory Cokinos

All Construction Work Now Permitted in Austin

The City of Austin has confirmed that all construction work is now permitted in Austin.  The City issued Supplemental Guidance late yesterday based on Governor Abbott’s March 31 Executive Order, confirming that it will no longer prohibit residential or commercial construction.  The City stressed in a memo to the public that safety precautions must still be observed:

Governor Abbott’s Stay at Home orders regarding essential services and activities include some differences from the City’s previous Order, specifically regarding construction.  Consistent with the Governor’s orders, all construction is considered essential.  Committee review is no longer required to determine eligibility for project continuation.

The City’s worker protection requirements remain in place.  Austin Code inspectors will continue to monitor construction sites to ensure that social distancing and recommended hygiene practices are being observed.  The Supplemental Guidance Based on Executive Order No.GA-14 provides additional information regarding compliance with the Order.”

Travis County has issued its own supplemental guidance permitting all construction that also now places the focus on safety.  That order can be found at https://traviscountytx.gov/images/docs/covid-order-construction-industry-guidance.pdf.

Safety Requirements

Per the City’s latest order, construction workers must maintain social distance requirements and practice good hygiene, as outlined by the CDC and local health authorities.  For job sites with more than 10 people, the Site Manager shall:

  1. Post a notice showing the sizes and types of shift crews on site and how the Site Manager is limiting crew sizes and shifting rotations;
  2. Conduct a jobsite pre-screening of each worker’s health;
  3. Ensure there is a handwashing station for each 15 workers on site;
  4. Prohibit the use of community water coolers;
  5. Ensure shared tools are disinfected between users while common areas and collective touchpoints are disinfected twice a day; and
  6. Post a notice with the social distancing requirements once such signage is made available by Travis County.

If a worker contracts the COVID-19 virus, the worker is to immediately return home, and the Site Manager shall notify the Austin/Travis County Health Authority and follow its directions regarding the sick worker.

Additionally, the Site Manager shall keep a list and contact information of every worker that enters the jobsite for the purposes of identifying and notifying workers that shared a jobsite with someone who contracts COVID-19.

Critical Infrastructure Construction in Austin Allowed Under Governor Abbott’s Latest Order

On March 31, Governor Greg Abbott issued Executive Order GA 14 to provide statewide continuity regarding essential services that are exempt from the stay-at-home orders issued by municipalities in response to the COVID-19 disaster.  For the Austin construction industry, the Order contains welcome guidance regarding what construction work is exempt from the City of Austin’s restrictive Stay-at-Home Order issued on March 24.

Addressing Order GA 14, Mayor Steve Adler confirmed in his April 1 televised interview that residential construction is permitted in Austin.  Adler signaled that commercial construction in Austin “may very well be allowed” and advised that City of Austin attorneys are reviewing the Governor’s order as it applies to commercial construction.  Additional guidance from the City is expected soon, and efforts will likely shift to enforcing safety regulations instead of shutting down projects.

Executive Order GA 14 Overrides Conflicting Local Orders

In defining the scope of exempt work in Texas, Governor Abbott adopted the guidance issued by the Cybersecurity and Infrastructure Security Agency (CISA), the federal agency tasked with identifying critical infrastructure industries necessary for public health and safety.  Work that is part of the critical infrastructure industries identified by CISA is exempt, per Order GA 14.  Those industries include both the residential and commercial facilities sectors.

Governor Abbott also made clear that Order GA 14 supersedes “any conflicting order issued by local officials in response to the COVD-19 disaster” and requires that local officials not impose restrictions inconsistent with the order.  Mayor Adler conceded today that the Governor’s executive order takes precedence over the City of Austin’s order.

CISA Guidance on Construction

On March 28, CISA updated its guidance to clarify that the following workers within the residential facilities sector are essential critical infrastructure workers:

  • “workers performing housing construction related activities to ensure additional units can be made available to combat the nation’s existing housing supply shortage”;
  • “workers supporting the construction of housing”.

Within its guidance for workers within the commercial facilities sector, CISA included as essential critical infrastructure workers:

  • “workers who support the supply chain of building materials…through installation”.

The above language, coupled with the Governor’s desire to establish continuity of essential services and activity across Texas, appears to allow both residential and commercial construction to proceed statewide.

In his April 1 interview, Mayor Adler agreed that residential construction is clearly permitted under Governor Abbott’s executive order.  Adler suggested that he and Travis County Judge Sarah Eckhardt “may very well” allow commercial construction to proceed locally.  Adler also hinted that the City’s focus will likely shift to enforcing safety regulations on-site instead of trying to shut projects down.

Summary

Industry groups have been urging the City to grant an exemption for construction since the Austin Stay-at-Home Order was issued.  While exempted construction in Austin must still comply with applicable safety requirements, Order GA 14 finally provides the relief that the construction industry has been seeking with regard to critical infrastructure construction.

As Governor Abbott noted, a list of exempt, essential services can be found at http://tdem.texas.gov/essentialservices.  Businesses not included in one of CISA’s critical sectors may also use that link to request a determination from The Texas Division of Emergency Management that their businesses be designated as essential.  Cokinos Young is actively working on preparedness plans, indemnification agreements, and other materials to protect its clients and facilitate continued work on projects in Austin and Travis County.  Cokinos Young will continue to monitor developments and update our clients with operations in Central Texas.

UPDATE: Procedure for obtaining “commercial activity” exemption for travel from Louisiana to Texas revised by Texas Executive Order GA-14

We recently reported regarding Texas Executive Order GA-12, which imposes a mandatory self-quarantine for persons entering the State of Texas through roadways from Louisiana, as well as the exemption for travel in connection with commercial activity. To read that article, click here: https://www.cokinoslaw.com/texas-executive-order-requiring-self-quarantine-for-travelers-from-louisiana-and-the-commercial-activity-exception/. The State of Texas is taking measures to standardize and simplify the procedure for persons entering Texas through roadways from Louisiana in connection with commercial activity.

On March 31, 2020, Governor Abbott issued Executive Order GA-14, which adopted the CISA Guidance identifying essential critical infrastructure workers during the COVID-19 response. If a company falls under one of the 16 critical infrastructure sectors identified by this guidance, it is now exempt from the travel-related quarantine orders required under Executive Orders GA-11 and GA-12.

The Texas Division of Emergency Management (TDEM) has advised that because of this development, it is no longer necessary for to request an individualized exemption via the Travel-Related Quarantine Exemption Form. Employees of companies covered by the CISA Essential Critical Infrastructure Guidance should carry a letter from their employer identifying them as such and stating that they are traveling for a business purpose.

If a company is not covered by the CISA Essential Critical Infrastructure Guidance, an inquiry should be submitted via the form found at http://www.tdem.texas.gov/essentialservices to request a determination from the TDEM in order to be classified as an “Essential Service”.

The CISA Essential Critical Infrastructure Guidance can be found here: CISA Link

The government’s guidelines and procedures in response to the COVID-19 pandemic are changing at a rapid pace, and the team at Cokinos|Young is committed to providing real time updates as they evolve.

For more information regarding Executive Order GA-12 and GA-14 and the implications on Texas and Louisiana businesses, please contact Matt Thompson in our Houston office. Matt is licensed in both Louisiana and Texas.

Texas Executive Order Requiring Self-Quarantine for Travelers from Louisiana and the “Commercial Activity” Exception

On March 29, 2020, in response to the COVID-19 pandemic, Governor Gregg Abbott issued Executive Order GA-12 imposing a mandatory self-quarantine for persons entering the State of Texas through roadways from Louisiana. Importantly, the executive order’s self-quarantine requirement does not apply to people traveling in “connection with commercial activity,” among other defined travel purposes. The executive order states:

This order to self-quarantine shall not apply to people traveling in connection with commercial activity, military service, emergency response, health response, or critical-infrastructure functions, as may be determined by the Texas Division of Emergency Management.

Therefore, Governor Abbott’s executive order is not a complete travel ban of people entering Texas from Louisiana, and travel in connection with commercial activity is permitted.

The Texas Department of Public Safety (DPS) is responsible for enforcing the executive order along the Texas-Louisiana border. Travelers entering the state of the Texas from Louisiana should be prepared to demonstrate to DPS officers that the travel is in connection with commercial activity. The Texas Division of Emergency Management (TDEM) has published a “Travel-Related Quarantine Exemption Form” that businesses can submit to obtain an exemption from the quarantine requirements.

To submit the Travel-Related Quarantine Exemption Form, visit: https://tdem.texas.gov 

Companies submitting the Exemption Form will need to provide:

  • the company’s name;
  • the critical infrastructure sector in which the company provides services;
  • the company’s EIN Number;
  • the company’s phone number, email address, and website;
  • the address of the company’s headquarters address; and
  • the positions for which an exemption is requested and the justification for the requested travel exemption.

When providing the justification for the requested travel exemption on the TDEM website, a company requesting an exemption for travel in connection with commercial activity should be prepared to explain, at a minimum, the reason for the travel, the traveler’s final destination, and the commercial/business purpose of the travel.

To read Executive Order GA-12, click here: https://gov.texas.gov/uploads/files/press/EO-GA-12_roadway_quarantine_for_COVID-19_IMAGE_03-29-2020.pdf

For more information regarding Executive Order GA-12 and the implications on Texas and Louisiana businesses, please contact Matt Thompson in our Houston office. Matt is licensed in both Louisiana and Texas and stands ready to assist our friends east of the Sabine River.

Dallas County Rules for the Construction Industry

Construction is an Essential Business and Critical Infrastructure in Dallas County. The county has released a document to guide the Construction industry on the meaning and application of the Order issued by Dallas County Judge Clay Jenkins on March 29, 2020. The document also includes clarity on safety precautions to be taken at the job site.

To read the full document, click here: Dallas County Rules for the Construction Industry

Texas “Stay-At-Home” Emergency Ordinances

As many of you are aware, numerous Texas cities and larger counties enacted “stay-at-home” emergency ordinances. ALL of these orders have some sort of exemptions, However, the specifics of those exemption varies from county to county.

We are on top of this and we are here to help. Each of our attorneys are prepared to provide language that employers can use to put on company letterhead to post at job sites and for workers to carry in their vehicles indicating that they work for a business that is exempt from the stay at home order. Below is a an example with what our firm is using. PLEASE NOTE: The language is being given as an example that would only apply to legal services providers and not to other businesses.

FOR HARRIS COUNTY (HOUSTON):
Essential Business

Cokinos | Young is an essential business involved in providing professional legal services primarily to clients recognized as critical infrastructure providers or essential businesses whose work is necessary to the operations and maintenance of one or more of the 16 critical infrastructure sectors identified by the National Cybersecurity and Infrastructure Agency (CISA).  These operations and maintenance tasks include public works construction, construction of housing or other types of construction including commercial, manufacturing, airport operations and aircraft manufacturing, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, and internet and telecommunications systems.  These critical infrastructure sectors have been designated by the U.S. Department of Homeland Security as being so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.  For more information, please visit www.cisa.gov.

As an essential business, Cokinos | Young provides essential professional legal services to clients necessary to many of the above operations and maintenance tasks within the critical infrastructure sectors designated by CISA and Homeland Security, and is therefore permitted to continue operating, as specified in Section 2(b)(xvi) of the Order of Harris County Judge Lina Hidalgo styled “Stay Home, Work Safe,” issued March 24, 2020.  For questions, please contact Chief Operating Officer Loren Jackson at 713-535-5500.

Each county and city has adopted their own “stay-at-home” ordinances. We want to make sure you are covered. Below is a comprehensive list of Texas jurisdictions with stay-at home orders. Please note that as time progresses this list may not be comprehensive. We will continue to update this list for future correspondence.

Counties as of Tuesday, April 14th 1:30 PM

  • Bell County
  • Bexar County
  • Bowie County
  • Brazoria County
  • Brazos County
  • Burnet County
  • Cameron County
  • Cass County
  • Castro County
  • Chambers County
  • Collin County
  • Comal County
  • Dallas County
  • Denton County
  • El Paso County
  • Ellis County
  • Fort Bend County
  • Galveston County
  • Gregg County
  • Harris County
  • Harrison County
  • Hays County
  • Hidalgo County
  • Hunt County
  • Kaufman County
  • Liberty County
  • Matagorda County
  • McLennan County
  • Milam County
  • Montgomery County
  • Nacogdoches County
  • Nueces County
  • Polk County
  • Rockwall County
  • San Jacinto County
  • Scurry County
  • Starr County
  • Tarrant County
  • Travis County
  • Willacy County
  • Williamson County
  • Wood County
  • Young County

CARES Act Stimulus Plan Update

The CARES Act passed the House earlier today and President Trump just signed it into law. Cokinos | Young is following these developments closely and has broken the CARES Act down into what you need to know. Please do not hesitate to reach out to our team with any questions you may have.

Small Business Administration (SBA) Loans:

  • Known as the “Paycheck Protection Program”
  • Companies with 500 or fewer employees, in business prior to Feb. 15, 2020
  • Pool of nearly $350 billion
  • Can receive loans up to $10 million
  • Loan amount based on amount business paid to employees from Jan. 1-Feb. 29, 2020
  • Maximum interest rate of 4%
  • Principal of loan forgiven if funds used for “approved purposes” and lender maintains average size of full-time workforce based on loan date
  • Forgiveness period only covers principal used to cover “approved purposes” expenses paid in first 8 weeks after loan date, though this may ultimately be extended
  • Terms may allow as much as 30 years to repay, but will vary from loan to loan
  • “Approved purposes” include payroll, rent, mortgage interest, and utility payments
  • Expedited loan origination process, possibly with loans signed and disbursed within 24 hours
  • Loans provided through banks, credit unions, and other lenders, guaranteed by SBA
  • Loan applications should be submitted through lenders partnered with SBA
  • Administered through SBA’s existing 7(a) loan program
  • Employers who opt for CARES Act payroll tax credit are not eligible for Paycheck Protection Program loans; CARES Act payroll tax credit is described below and is different from the FFCRA tax credit for paid sick leave/FMLA
  • Employers who have already laid off workers may still be eligible for Paycheck Protection Program loans, especially if loans are used to rehire laid-off workers and/or reopen business

Other Relief for Small Businesses:

  • 50% refundable payroll tax credit on worker wages (intended to incentivize worker retention, also available to larger businesses); if you opt for tax credit, you are ineligible for Paycheck Protection Program SBA loan
  • Looser net operating loss-reduction rules that will allow businesses to offset more
  • Delay in employer-side payroll taxes for Social Security until 2021 and 2022
  • Sole proprietors and other self-employed workers may be eligible for expanded unemployment benefits under CARES Act

Department of Treasury Loans for Specific Industries:

  • Pool of $500 billion
  • Primarily geared toward mid-size and large employers (more than 500 employees)
  • Certain funds have been reserved for specific industries, while some industries are specifically barred from receiving funds
  • Oversight of loan program by an Inspector General and an Accountability Committee, rather than by Treasury Secretary Steven Mnuchin
  • Loan recipients may not cut workforce by more than 10% until Sept. 30, 2020
  • Loan recipients may not issue stock buy-backs, and are subject to certain restrictions on executive compensation above $425,000 annually
  • Loan recipients’ identities will be publicly disclosed, though it is unclear what additional information about them may be publicly disclosed
  • Most details will have to be finalized via regulations to issue later

Increased Unemployment Benefits:

  • Unemployed individuals entitled to additional $600/week for up to four months, on top of state-issued unemployment benefits
  • Controversial for fear that some individuals may receive more money through unemployment than they received as wages while working
  • Congress has indicated additional expansion of unemployment benefits may be needed, depending on length of COVID-19 economic downturn

Checks to Individuals:

  • U.S. residents with adjusted gross income up to $75,000 ($150,000 for married couples) receive a $1,200 ($2,400 for married couples) “rebate” payment
  • Eligible residents also receive an additional $500 per child
  • Payments phase out above these income thresholds
  • Single tax-filers earning more than $99,000 (joint-filers earning more than $198,000, head-of-household-filers with one child earning more than $146,500) do not receive resident “rebate”
  • Unclear whether those above income cap would still receive per-child payments

DOL Guidelines & FFCRA Tax Credits

Through the COVID-19 chaos and daily updates of the guidelines, we know you are receiving an overwhelming amount of information to digest. Cokinos | Young is here to help. We have broken it down to the highlights that employers should be aware of below. If you need any help applying these new COVID-19 related requirements for your business, whether it be related to furloughs, work stoppage orders, leave, tax credits or other critical business decisions, please reach out to our team members, who are following these developments closely.

DOL Guidelines

The DOL has issued its first two sets of guidance for employers and employees regarding some of the details of the paid sick leave and expanded FMLA leave passed into law last week under the FFCRA.  The DOL posted on its website the following helpful materials: (1) Model Workplace Poster for FFCRA compliance; (2) FFCRA Fact Sheet for Employers; (3) FFCRA Fact Sheet for Employees; and (4) FFCRA Q&As.  DOL indicated that additional guidance may be forthcoming, and is continuing to solicit public feedback as it develops regulations.

The highlights of this DOL guidance that employers should be aware of:

  • FFCRA leave goes into effect April 1, 2020 (this is a change from the previously-thought date of April 2, 2020).
  • DOL will observe a temporary non-enforcement period for the first 30 days of the FFCRA for employers who act reasonably and in good faith in their attempts to comply, and who remedy any violations identified from that 30 days as soon as practicable along with  written commitment to future compliance.
  • To take leave under FFCRA, an employee must be unable to work in the office or remotely (telework); while the guidance does not specify, this does strongly suggest that if an employee is able to telecommute while caring for a minor child whose school, daycare, etc., is closed, the employer can reasonably expect him or her to telecommute rather than seek paid sick leave/FMLA.  This may be an issue where more guidance is issued soon or during the non-enforcement period.
  • Employees who take paid sick leave and also paid FMLA to care for a minor child whose school, daycare, etc., is closed will have the paid sick leave paid and capped at the same rate as the paid FMLA (2/3 of regular rate to a maximum of $200/day).
  • Workers who are properly classified as independent contractors do not count toward the FFCRA employee thresholds.
  • DOL will be providing more details on seeking the small business exemption (fewer than 50) in forthcoming regulations, but employers are advised to “document why your business … meets the criteria” for the exemption; DOL indicated that it does not expect employers to have to send any materials to DOL to seek the exemption, but that is subject to change.
  • Paid sick leave/FMLA is not to be paid with any overtime premium.
  • Paid sick leave/FMLA is to be based on the number of hours the employee would normally have been scheduled to work even if that number is more than 40 hours in a workweek; however, for the paid sick leave requirement, the number of paid sick leave hours iscapped at 80 over a two-week period.
  • FFCRA leave is not retroactive.
  • FFCRA imposes a new leave requirement on employers independent from any prior paid sick leave provided to an employee.
  • Employers who pay leave under FFCRA qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the Act plus the cost of the employer portion of the leave-taker’s health insurance premium during the leave period, but DOL refers all questions about the tax credits to the Department of the Treasury’s website for now.
  • Employees are not eligible for paid sick leave/FMLA during furloughs or temporary layoffs.
  • Employers can require employees to submit appropriate documentation to verify their need for paid sick leave/FMLA, which can include quarantine or isolation orders, doctor’s recommendations, or a notice of the closure of a school or place of child care.
  • DOL advises employers to retain the documentation if they intend to claim a tax credit under the FFCRA for the paid leave.
  • Paid sick leave/FMLA generally must be taken in full-day increments.
  • Paid sick leave/FMLA may only be used intermittently for child care reasons and with employer consent.
  • DOL has not specifically addressed how paid sick leave/FMLA works with “stay at home” orders, but the guidance in the Q&As appears to strongly indicate that if an employee is unable to work because work is unavailable due to a “stay at home” order then the employee is not eligible for paid sick leave/FMLA but may be eligible for unemployment benefits.

 

FFCRA Tax Credits

A few more details about the employer tax credits to pay for paid sick leave/FMLA have also been released, with more guidance to come next week:

  • Complete Coverage
    Employers receive 100% reimbursement for paid leave pursuant to the act.

    • Health insurance costs are also included in the credit.
    • Employers face no payroll tax liability.
    • Self-employed individuals receive an equivalent credit.
  • Fast Funds
    Reimbursement will be quick and easy to obtain.

    • An immediate dollar-for-dollar tax offset against payroll taxes will be provided
    • Where a refund is owed, the IRS will send the refund as quickly as possible.
  • Small Business Protection
    Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened.

To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.

Prompt Payment for the Cost of Providing Leave

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance that will be released next week, eligible employers who pay qualifying sick or child-care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child-care leave that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.

Examples

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments, and file a request for an accelerated credit for the remaining $2,000.

Equivalent child-care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Small Business Exemption

Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. The Department of Labor will provide emergency guidance and rulemaking to clearly articulate this standard.

For More Information

For more information about these credits and other relief, visit Coronavirus Tax Relief  on IRS.gov. Information regarding the process to receive an advance payment of the credit will be posted next week.

Stay-Home Orders for the City of Austin AND Travis County

By Shelly Masters and Nick Gavrizi

The City of Austin issued Stay Home-Work Safe Order No. 200200324.007 (the “Austin Order”) which was quickly followed by a Guidance for the Construction Industry on March 24, 2020 (the “Guidance”). On the same day, Travis County issued its own Stay-At-Home Order by the County Judge of Travis County, County Judge Order No. 2020-5: Relating to the Declaration regarding COVID-19 (the “Travis Co. Order”)(collectively, the “Orders”). The Travis Co. Order, which in large part mirrors the Austin Order, likely supplants the Austin Order as it includes the City of Austin in its “List of Cities and Municipalities within Travis County Jurisdiction covered by the Order” as Exhibit A.  The Orders and Guidance require a shutdown of non-essential businesses and activities.

Unlike other Texas counties and states, the Austin and Travis County Orders dealt a solid blow to construction-as-usual in and around Austin, Texas with the broadest shutdown restrictions yet seen in response to the COVID-19 spread.  This move by local authorities came despite a growing national precedent even in the hardest hit states to exempt such “essential” activities deemed to be operations in furtherance of the critical infrastructure per an advisory issued by the Cybersecurity and Infrastructure Security Agency or “CISA” from such shutdowns. These operations and maintenance tasks include public works construction, residential construction, commercial construction, airport operations, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet and telecommunications systems, financial institutions, defense and national security-related operations, and essential manufacturing operations.  These critical infrastructure sectors have been designated by the U.S. Department of Homeland Security as being so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.  For more information, please visit www.cisa.gov.

Instead, the new Orders have sparked widespread confusion due largely to the extreme divergence from other shelter-in-place orders and unclear, vague and ambiguous language giving rise to differing legal interpretations of their import. Although the effective date of both Orders has passed  (11:59 p.m. on March 24, 2020), the City of Austin’s Guidance states it will not cite contractors who have not yet ceased non-essential operations until midnight tomorrow, March 27, 2020, so long as they can demonstrate the post-Order activities were for the purpose of shutting down the project. Contractors have already reported jobsite visits from city authorities requiring shutdown compliance on some commercial projects.

Construction industry participants have less than 48-hours to complete the difficult task of assessing which projects in their inventory must cease and which are allowed to continue under the Orders’ definitions of “critical infrastructure”, “essential businesses” and “essential activities”. This article includes a brief summary of the Orders, a detailed list of what types of construction are arguably allowed to proceed, a sample notification that construction is allowed to procced, guidance on jobsite safety measures which must be followed for those projects not subject to the shutdown, the repercussions of noncompliance and a short summary of the industry response to the Orders.

[1] Available at http://www.austintexas.gov/sites/default/files/files/Order%2020200324-007%20-%20Stay%20Home%20-%20Work%20Safe.pdf and https://www.aiaaustin.org/sites/default/files/construction-guidance-stay-home-order-03-24-20.pdf
[2] Available at http://www.austintexas.gov/sites/default/files/files/20200324%20Judge’s%20Order.pdf

City of Austin/Travis County Orders

The Austin Order permits individuals to leave their homes to perform and obtain services in connection with certain “Essential Activities,” “Essential Businesses,” and “Critical Infrastructure” as defined therein. Austin Order at §1. It also mandates that “Non-Essential Business” must cease all activities with some limited exceptions (working for home, securing inventory, and processing employee payroll/benefits). Austin Order at §§2, 6(g).

Construction as a whole as is not defined as an “Essential Activity” or “Essential Business”.  However, the list of essential businesses does include a few “Critical Trades” such as plumbers and electricians necessary to maintain the sanitation/operation of homes and other essential businesses/public facilities). Austin Order at §§6(b), 6(f)(ix). Further, the Austin Order also includes the following in its list of “Critical Infrastructure”:

Austin Order at Exhibit B, §2(p)(q). This language arguably exempts most commercial construction since it carves out construction of “critical infrastructure” and CISA identifies a broad range of commercial projects as critical infrastructure including hotels, motels, conference centers, office and apartment buildings, condominiums, mixed use facilities, retail centers and shopping as seen below.

Available at https://www.cisa.gov/commercial-facilities-sector.

Although the Travis Co. Order largely tracks the Austin Order, there are some key differences. First, the Travis Co. Order adds the highlighted sentence below to the definition of “Critical Trades” that qualify as essential businesses:

Travis Austin at §6(e)(ix). This suggests that the County does not view all general contractors or subcontractors as “critical trades” and certain discretionary activities associated with those trade are nonetheless subject to the shutdown under the order.

More importantly, the Travis Order removed the Austin Order’s reference to CISA-defined critical infrastructure from its own list of Critical Infrastructure:

Travis Order at Exhibit C. These changes suggest that County officials are trying to limit the scope of permissible construction activities.

After the Travis Order was issued, the City of Austin issued its Guidance.  In the Guidance, the City of Austin states that the “fundamental test” for determining Critical Infrastructure is whether it is “vital to the security, governance, public health, safety, and economic security of the City of Austin”:

Guidance Order at §1. However, it still includes in its list of “Critical Infrastructure” those sectors of critical infrastructure as defined in the Austin Order:

As a result, there is a conflict in the Guidance–although it states that most commercial projects are prohibited, it carves out “Critical Infrastructure” as defined in the Austin Order which would permit most commercial projects to continue.

Given this ambiguity, until there is further guidance from the City, County, or Governor, contractors should strongly consider continuing to work (especially if the project involves an “essential business” or public facility). A reality to consider is that a warning will probably be given before any fine is issued and the fine ($1,000/person) may pale in comparison to the cost of defending delay claims asserted by owners.  However, beware that an enforcement option is confinement. See Violation of Orders section below.

What is “Essential” or Exempt from the Shutdown?

As mentioned, the ambiguity in the language of the Orders does not give rise to a definitive answer for every project. A project-by-project analysis should be conducted to determine if any portion of the project falls within the definitions of “Essential Business”, “Essential Government Functions”, “Critical Infrastructure” or other exemptions.  The Guidance indicates that a project may been deemed essential or defined as critical infrastructure if even a small portion of the project qualifies as such. Further, there is no deadline by which construction must be completed in order to be considered exempt. Thus, it appears any project that falls within the below categories, in whole or part, may continue operations regardless of the stage of construction. However, purely single-family residential or commercial construction projects that do not fall into one of the below categories must cease.

Per the Orders, the types of construction projects listed below should be permitted to continue.  Some specific examples were included in the Orders and others have been added based on a reasonable interpretation of the language in the Orders.

Contractors who are unsure about whether or not the project is exempted should consider sending a written request to the project owner or upper tier contractor for guidance on whether the project is an “Essential Business”, “Essential Government Functions”, “Critical Infrastructure” or another exempted category.

Areas of Essential Business or Critical Infrastructure or Other Exemptions

  1. construction of public works and/or government buildings;
  2. affordable housing projects;
  3. construction of facilities for individuals experiencing homelessness;
  4. construction of any facility related to healthcare (e.g., hospitals, clinics, biotechnology facilities, medical research facilities, etc.);
  5. construction of facilities for businesses that sell food or other “household consumer products” (e.g., grocery stores, convenience stores, liquor stores,  and “big box stores”);
  6. construction projects performed for non-profits;
  7. construction projects performed for news media businesses;
  8. construction of gas stations, auto dealerships, and any other facility related to transportation (including airport projects);
  9. construction projects involving  banks, credit unions, title companies or any other type of financial institution;
  10. construction projects of hardware and supply stores (e.g., Home Depot, Lowes, etc.);
  11. construction of facilities that provide mail and delivery services (e.g., post offices, FedEx stores, etc.);
  12. construction of any type of educational facility (including dormitories);
  13. construction of restaurants;
  14. construction of facilities for businesses that supply products to work from home (e.g., office depot, best buy, etc.);
  15. construction of facilities that perform essential government functions (anything needed to ensure continuing operation of governmental agencies and provide for  the health, safety and welfare of the public);
  16. construction of facilities that provide home-based care and services for seniors and children (e.g., nursing homes, daycares, etc.);
  17.  construction of residential facilities and shelters (arguably this includes multi-family apartments as “residences” is defined to include “hotels, motels, shared rental units, and similar facilities”);
  18. construction of facilities that provide professional services (legal, accounting. insurance, and real estate services);
  19. construction of hotels and motels;
  20. construction of facilities that provide moving supply services;
  21. construction of facilities that provide funeral services;
  22. construction of facilities used for information technology or telecommunications services;
  23. construction of facilities that provide fire and law enforcement;
  24. construction of any facilities or public utility that provides power, water, natural gas, and sanitation services;
  25. construction of facilities that provide laundry services (e.g., laundromats, dry cleaners, etc.);[1]
  26. construction of facilities that perform “critical manufacturing” (e.g., “components for primary metals, machinery, electrical equipment and components, health and safety products and equipment, and transportation equipment”);
  27. construction of facilities for auto and vehicle parts manufacturing and assembly;[2]
  28. construction of facilities for technology manufacturing;[3]
  29. construction of facilities used for emergency services;
  30. construction of any government buildings; and,
  1. construction of facilities specifically required by the City to respond to the current COVID- emergency.

[3] Per the Travis Order these may not be exempted.
[4] Per the Travis Order these may not be exempted.
[5] Per the Travis Order these may not be exempted.

It should also be noted that plumbers, electricians, exterminators, pool cleaners and “other service providers” are allowed to continue to operate “to the extent that services are necessary to maintain the safety, sanitation, and operation” of residences and the essential businesses, critical infrastructure, and  governmental services described above.

Essential Business Notification

Owners, general contractors, and/or other authorities may require you to provide notice that project construction is allowed to continue per an exemption under the Orders.  While the Orders prescribe no specific language for any such notice, a sample is provided below for reference purposes only.  Before using any such language, it is recommended that you consult with legal counsel to assist in an assessment of whether or not an exemption applied and tailor the below language to the specific project.

SAMPLE NOTICE

[COMPANY NAME] is involved in infrastructure, development, operation, and construction whose work is necessary to the operations and maintenance of one or more of the Essential Businesses as defined by the City of Austin and/or Travis County and/or 16 critical infrastructure sectors identified by the National Cybersecurity and Infrastructure Agency (CISA) as being so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.  For more information, please visit www.cisa.gov.

[COMPANY NAME] provides materials, labor, and/or services necessary for one or more of the essential businesses, essential activities, essential government functions and/or within the critical infrastructure sectors and is therefore permitted to continue operating, as specified in the Order by the County Judge of Travis County, County Judge Order No. 2020-5: Relating to the Declaration regarding COVID-19 signed by Judge Sarah Eckhart on March 24, 2020 and the Stay-Home Work Safe Order #20200324-007 by the Mayor of the City of Austin signed by Mayor Steve Adler on March 24, 2020.

For questions, please contact [COMPANY CONTACT (SUGGEST IN-HOUSE OR OUTSIDE LEGAL COUNSEL)].

What must you do if your project is exempt from the shutdown?

If a project falls within any of the 31 types of construction projects exempt from the Order, the Guidance Memorandum requires employers to do the following:

  • create and implement an Infectious Disease Response Plan (OSHA provides further guidance on what must be included, your counsel can assist you with this);
  • to the extent possible, maintain confidentiality of people with suspected or confirmed COVID-19;
  • prior to entering any jobsite, ask employees if they meet any of the below criteria and direct them to return home if they do:
    1. have any signs of respiratory infection (cough, shortness of breath, sore throat);
    2. have a fever greater than 99.6 Fahrenheit (note that employers are just required to ask employees if they have a temperature, not actually take the temperature of employees prior to entrance);
    3. has had contact within the last 14 days with someone who received a confirmed COVID-19 diagnosis, is under investigation for COVID-19, or is ill with a respiratory illness; or
    4. has travelled to an area the World Health Organization or CDC considers a “Hotspot”
  • immediately separate and send home any employee who becomes sick or demonstrates a temperature greater than 99.6 Fahrenheit;
  • human resource departments must create alternate work plans to help employees remain productive while keeping workforce safe and healthy;
  • suspend nonessential employee travel;
  • prohibit employees from working within 6 feet of each other unless absolutely necessary;
  • minimize in-person meetings and conference;
  • require employees to stay home when sick;
  • maximize flexibility in sick leave benefits;
  • permit sick employees to stay home without a doctor note; and,
  • unless necessary to provide essential services, alter employee schedules so that not all employees are present at one item but are present on alternative days and times.

Violation of Orders

Both Orders include a monetary fine and/or confinement as a penalty for noncompliance (i.e., failing to cease construction operations by the deadline). See below.  The monetary fine may be up to $1,000 and may issue against any “persons” in violation of the order – meaning, any individual on the jobsite may be cited and not just the contracting company who fails to cease operations which are non-essential. A defense to any such citation or probable cause affidavit will be that the person was in compliance with the order. For example, the person may argue the project was exempt from the shutdown.  Any persons cited should consider retaining legal counsel to appear and defend them before the designated magistrate.

Industry Trade Associations

Construction and other industry groups are making a concerted effort to communicate with local and state authorities to seek further clarification and/or a broader exemption of construction activity consistent with CISA’s mandate, as outlined in the Department of Homeland Security Cybersecurity and Infrastructure Security Agency’s March 19 Guidance on the Essential Critical Infrastructure Workforce: Ensuring Community and National Resilience in COVID-19 Response and refrain from any action to curtail ongoing critical construction services.  Leaders of the Real Estate Council of Austin, Austin Chamber of Commerce, Austin Board of Realtors, the Downtown Austin Alliance, Austin Apartment Association, Home Builders Association of Greater Austin, LGBT Chamber of Commerce and Austin Contractors and Engineers Association submitted such correspondence to Mayor Steve Adler and Judge Eckhart on March 25, 2020. Member companies of local and state trade associations are being asked to actively participle in educating governmental authorities on the immediate and long-term impact of such a shutdown to critical infrastructure.

The Impact of Coronavirus on Mechanic’s Lien Claims

Practical Guidance for Protecting Your Right to Payment in Times of Uncertainty

I. Introduction

As the construction industry, along with everyone else in the commercial sector, continues to grapple with the rapid spread of the novel coronavirus (“COVID-19”) throughout the United States, immediate concerns involve delayed performance, unavailability of materials and labor, and government-ordered shutdowns. Looking ahead, however, construction contractors, subcontractors, and suppliers should also pay close attention to the potential for payment disruption that could arise as a result of negative impacts to construction projects across the country.

One of the most valuable tools in the belts of downstream providers in the construction industry is the right to assert a Mechanic’s and Materialmen’s lien against real property improved by virtue of labor or materials provided. However, that right is governed by statutes that impose strict requirements upon claimants in order assert a valid lien claim. Those requirements include time-sensitive notices and strict filing deadlines, so industry professionals must remain vigilant in the best of times to ensure their rights are protected. In a time of local, statewide, and national crisis, heightened vigilance is necessary.

II. Meeting Deadlines in the Wake of COVID-19

As of March 24, 2020, twelve Texas counties have issued shelter-in-place orders for protection of Texas citizens during the COVID-19 outbreak. The majority of businesses are ordered to close, and Texas courthouses have shuttered their doors, maintaining only the minimal staff necessary to supply basic court functions. Essential businesses are excepted from application of the various shelter-in-place orders, but the definition of “essential business” varies from jurisdiction to jurisdiction. Looking ahead, it is not inconceivable access to critical facilities will become increasingly difficult, if not barred altogether. In that environment, complying with timing requirements to perfect lien rights may require alternative measures.

a. Sending Timely Notice

For subcontractors on Texas projects, perfecting a lien claim requires sending timely monthly notices for unpaid work. The content of those notices is dictated by the lien statute, and the deadlines to put the notices in the mail are explicit and strictly enforced. Contractors also have notice requirements to observe—specifically, the obligation to notify owners once a lien has been filed. Issues often arise with proving exactly when notice was actually mailed, so the accepted (and recommended) practice is to send all notices via certified mail, return receipt requested. In fact, Chapter 53 of the Texas Property Code (the statute governing mechanic’s liens on private construction projects) expressly requires certified mail delivery in multiple sections. The question then arises: What to do if certified mail is unavailable (e.g., closure of the post office or, more likely, inability to access the post office due to quarantine measures)?

Fortunately, Chapter 53 of the Texas Property Code also provides a) delivery in person is always acceptable, and b) the manner of delivery is immaterial as long as the person entitled to receive the notice actually receives it. In-person delivery is probably unreasonable given the social distancing measures currently in effect, but the carve-out for actual receipt is a viable alternative if certified mail is not an option. Our recommendation: First, attempt to send all notices by certified mail, if possible. When sent by certified mail, proof of receipt by the recipient is not required, and the certified mail receipt establishes proof of the date of mailing. If certified mail is not possible, send by regular mail and document the date and time the notice was sent. That documentation could be anything from a logbook kept in the regular course of business to a verified affidavit signed by the person who mailed the notice. Lastly, consider
“doubling up” notices and sending any notices contemporaneously by email delivery, requesting a read receipt (and by fax if you have a fax number). Some obligations of the owner (e.g. fund trapping) are only triggered if the owner actually receives notice—even if the notice was sent via certified mail. While email and fax delivery will not guarantee compliance with notice requirements, they may result in faster notification and will undoubtedly be valuable as additional evidence when a stamped receipt from the post office is unavailable.

Also, keep in mind the business entitled to receive notice may have multiple addresses. Research the corporate structure and avenues of contact via the company’s website, the “contact” section of the prime contract, the Secretary of State website, or even social media sites like Facebook. Sending to multiple addresses increases your odds of receipt by an authorized representative, which would meet the minimum requirement of actual receipt.

b. Timely Filing of Lien Affidavits

All claimants seeking to assert a lien claim against real property also have filing deadlines dictated by statute and, like the statutory notice requirements, those deadlines are strictly enforced. Whereas some aspects of compliance with the statute may be forgiven if you can prove “substantial compliance” with the requirements, filing and notice deadlines offer no leeway. Texas courts have consistently held it is not possible to substantially comply with a statutory deadline—you either make the deadline, or you don’t. Absent official action by the Texas Supreme Court to extend deadlines (more on that below), that fact will not change. Thus, regardless of any impediments, you must timely meet all filing deadlines for your lien claim to be enforceable.

If your local court clerk’s office is closed or inaccessible to the public due to heightened COVID-19 protection measures, all is not necessarily lost. In 2014, Texas implemented a mandatory electronic filing system (“e-file”) statewide that is now available in all of Texas’s most populous counties. Some smaller or remote counties still lack e-filing capability, but in counties where e-file is available, lien affidavits can be readily filed online without the need to visit the courthouse (or even go outside). As a general rule, e-filed documents are deemed filed when transmitted to the filing party’s electronic filing service provider, though there are exceptions for documents filed on weekends or holidays. Like many other kinds of filings, weekends and holidays do not extend deadlines for lien claims, so if your deadline falls on such a day, it is important to file earlier to meet the deadline.

With the uncertainty surrounding what new obstacles may present themselves over the coming weeks or months, early and advance action should be treated as a universal norm with respect to preservation and pursuit of lien claims—do not wait until the last minute to get a lien affidavit on file or send a lien notice. Although e-filed documents are treated as filed as of the date of transmittal, it is possible some county clerk’s offices will shut down entirely at some point, leaving electronically transmitted affidavits floating in the ether waiting to record. You may not face a technical timeliness issue in that event (provided you have good documentation of the transmittal), but an unrecorded lien does nothing to protect your rights against third parties or prompt payment from the project owner.

Also, do not wait to determine what steps will be necessary when it comes time to file your lien claim. For projects currently underway, identify the respective counties where the work is being performed to determine whether that county clerk’s office is currently open and whether that county has e-filing capability. If not, filings will almost certainly need to be submitted by mail, since the majority of courts are closed to the public as of this writing, and thus additional information must be obtained. What is the appropriate mailing address for the county clerk? What are the filing fees required to file a lien claim? Does the county require any additional documentation in order to file a lien?

You may also need some extra time to gather all of the information you need to populate the lien affidavit itself. Some types of lien claims (e.g., mineral liens) require an itemized statement of account be included with the filed affidavit. As more and more offices and businesses are forced to work remotely, documentation once available at a moment’s notice may now take extra time to track down. Identifying the appropriate description of the property may be another hurdle. Section 53.054 of the Texas Property Code requires only a description “legally sufficient” to identify the property, but common (and best) practice is to use a legal description that includes metes and bounds information. That kind of information will not be readily available without access to title companies to research real property records, and the days of causally ringing up a landman to investigate mineral property ownership are likely on hold for the time being. Do not let lack of a thorough legal description deter you from getting something on file, however. A formal legal description is not technically required, and descriptions similar to “the dry goods store on the corner of 5thand Atlantic Avenue” have been found sufficient in the past. The test imposed by courts is whether a reasonable person could accurately identify the property using the information provided.

As for actually getting your lien on file, if submitting a physical lien affidavit via standard mail, we strongly recommend use of certified mail with return receipt requested or, in the alternative, a commercial carrier such as FedEx or UPS that can provide tracking services for your package. You should contact the county clerk ahead of time to determine all documents that should be included, but at a minimum expect to send 1) an original, notarized affidavit of the lien claim, 2) a completed check for payment of the filing fee, and 3) a cover letter requesting immediate filing of the claim.

c. Is There a Possibility Deadlines Will Be Extended?

For the most part, we are currently navigating uncharted waters. People struggling to come to grips with how quickly and severely COVID-19 impacted our communities would be forgiven for wondering how fair-weather deadlines could possibly be enforced once the dust settles. After all, many court dockets have been postponed or entirely suspended for the foreseeable future, and the county court offices themselves have barred their doors. There is even relatively recent precedent for lien deadlines to be extended in the face of disaster. In 2008, the Texas Supreme Court issued an emergency order to extend deadlines for the filing of pleadings and other matters following widespread closure of government offices due to damage sustained from Hurricane Ike.

Whether a similar extension will be ordered in the present case is unknown, but it seems unlikely as long as courthouses remain accessible via alternate means such as e-filing (an amenity unavailable following Hurricane Ike). In fact, court announcements of certain litigation-related deadlines have expressly cautioned that all deadlines established by statute (e.g., lien deadlines) will remain in effect absent any further order.

Our present advice is to continue perfection and prosecution of claims timely and without delay. Where intervening circumstances prevent or complicate compliance with any statutory requirements, take whatever alternative measures you can and document all efforts thoroughly. Give prompt notice of any and all claims and keep records of all communications. Above all, if you have any questions or concerns, or if you need assistance with the preservation or prosecution of lien claims or claims for payment, please do not hesitate to contact our offices for assistance. We are closely monitoring the situation, adapting as necessary, and we stand ready to assist in any way.

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