The Construction Advantage, Coronavirus and Construction: Force Majeure and the 2020 Construction Season
Navigating the Federal Labor Laws for Employees On Call or Traveling for Business
Am I required to pay an employee for travel from home to a jobsite? What about travel from jobsite to jobsite? Am I required to pay an employee who is “on-call”?
The Fair Labor Standards Act (the “FLSA”) establishes the federal standards affecting employees in the workplace, such as minimum wage and overtime. Under the FLSA, an employer is required to pay an employee all wages for “hours worked.” Although the term “hours worked” may appear self-explanatory, on-call and travel time complicate the issue.
The FLSA provides that an employer is required to compensate an employee for on-call time when, during the on-call period, the employee is required to (1) remain on the employer’s premises, or (2) remain so close to the employer’s premises that s/he cannot effectively use the time for his/her own purposes.
In contrast, an employer is not required to pay an employee for on-call time when the employee is not required to remain on the employer’s premises, even though the employee may be required to leave word with his/her employer about where s/he may be reached while on-call.
Generally, an employer is not required to compensate an employee for ordinary travel from home-to-work. With that said, the law provides a few exceptions to this general rule. Please note that this article does not include all of the travel time exceptions under the FLSA.
Special One-Day Assignment in Another City
First, an employer is required to compensate an employee for a “special one-day assignment in another city.” This exception is best explained through an example. Sam Employee works for ABC in Washington, D.C. Sam has regular working hours from 9:00 a.m. to 5:00 p.m. On February 1, 2020, ABC sends Sam to New York City for a special assignment. ABC instructs Sam to depart Washington, D.C. via bus at 8:00 a.m. Sam arrives in New York at noon, completes his special assignment at 3:00 p.m., and then arrives back in Washington, D.C. at 7:00 p.m.
Under this scenario, ABC is required to pay Sam for all of the time he spent traveling (8:00 a.m. to 7:00 p.m.). However, ABC may deduct for usual mealtime. Additionally, ABC may deduct for travel time to/ from Sam’s home and the bus station, since such time would be considered ordinary home-to-work travel.
All in the Day’s Work
Second, an employee who travels as part of his/her typical workday must be paid for that travel time. For example, an employee who travels as part of his/her principal work activities, such as travel from jobsite to jobsite during the workday, must be paid for travel time as “hours worked.” Similarly, an employer who requires employees to report to a meeting place to retrieve instructions and/or pick-up tools before traveling to a job site must pay employees for the travel to/from the meeting place and the jobsite.
For example, Sam Employee normally completes his work at the jobsite at 3:00 p.m. On February 12, 2020, ABC sends Sam to another jobsite where he works until 6:00 p.m. At that time, Sam travels directly to ABC Headquarters to drop-off his tools, and he finally leaves ABC Headquarters at 7:00 p.m. Under this scenario, ABC is required to pay Sam for all of his travel time from 3:00 p.m. to 7:00 p.m.
Travel Away from Home Community
Third, when an employee is required to travel away from home overnight, the employer must compensate that employee for all time spent traveling during the employee’s normal working hours. This includes time spent traveling during regular working hours on nonworking days. However, an employer is not required to compensate employees for time spent as a passenger on an airplane, train, boat, bus or car that is outside of regular working hours.
For example, Sam Employee regularly works for ABC on Monday to Friday from 9:00 a.m. to 5:00 p.m. On Friday, February 21, 2020, Sam travels overnight for work, and he returns on Saturday at 1:00 p.m. Under this scenario, ABC is required to compensate Sam for all time spent traveling on that Saturday between the hours of 9:00 a.m. – 1:00 p.m.
This article is intended to provide an overview of federal law concerning on-call and travel time. Please keep in mind that state law might provide certain exceptions that are not discussed in this article.
Coronavirus and Construction: Force Majeure and the 2020 Construction Season
As we hear about more United States cases of positive tests for coronavirus and we recover from the worst week on the stock market since the Great Recession, we are just starting to understand the impacts that the spread of the virus is likely to have on the economy. As we enter the busy season for construction projects, the negative impact on projects that are breaking ground now or that are already in the construction process are almost inevitable. This article addresses some of the likely delays that are going to occur, including the long-worn construction concept of force majeure to excuse, or compensate for, late performance on construction projects.
One would think that a hurricane, tsunami, earthquake, or yes, the coronavirus, would qualify for force majeure status. Force majeure is commonly thought of as an Act of God, or a superior and unforeseen force or event beyond the control of the parties that justifiably delays the progress and completion of a construction project. That said, it is almost certain that your existing construction contract does not contain the word “coronavirus” in it, and most likely, it refers to major weather events, war, or labor strikes. Not a widespread new virus such like we are currently experiencing.
What are the impacts that are likely to occur? One of the most obvious impacts to construction is the reliance on foreign products, including Chinese made construction products. Not only are the costs of the goods likely to increase in the short term, but there are likely to be obvious supply issues that can lead to slower project completions. Reminiscent of the Chinese drywall fiasco, it is worth noting that China provides well over 25% of building imports, including steel, components for modular buildings, plumbing and electrical fixtures, concrete, drywall, and flooring tiles.
The labor market here in the U.S. could also be further stretched. If the current trend of positive cases in the U.S. increases, the labor shortage will get worse, by losing labor hours and days not just for the employees who contract the virus, but also because schools or daycares are closed, or other family members such as elderly parents or relatives fall ill. While many industries can “work from home,” construction projects are hard to advance if you are on site to progress the work.
Those construction companies that operate from a position of strength, of course, may find even more work in the short term. We all have now heard about the hospital in China being built in a week to house patients. A county in Washington state is purchasing a hotel to house patients in need of quarantine there amidst the outbreak that occurred late last week. Temporary housing, or renovations of existing but empty current spaces in a worst case scenario, may require immediate construction to house sick or quarantined individuals. Some, but not all, construction companies will be poised to assist in this effort if it is required.
What can you do at the beginning of March of 2020? What should you do now with respect to the upcoming construction season? Apart from the protections you need to take internally at your home offices with your employees, you must also start to address any schedules for projects that already are under contract and may suffer delays. Is the coronavirus and Act of God? One can easily argue it, but the argument is not yet tested in the courts. Will the delays result in compensable time and compensation (such as extended general conditions) on current projects? Do you have an escalation clause in your terms and conditions, and if so, would it cover materials delayed by the virus? Time will tell on these issues, but the time to assert claims on existing projects is now and in the coming weeks if your project is affected.
If you are currently negotiating a project, whether you are the owner, contractor, subcontractor or supplier, up front communication and contractual negotiation must take place to avoid problems later, both with respect to labor and materials. While everyone hopes that the impact of the virus in the United States is minimal, one must prepare now for projects that are starting now to be finished later than scheduled, and maybe not even in this construction season. The failure to address the issues now, specifically in contractual negotiations with respect to time, labor, and material shortages and price increases, can only lead to claims and lawsuits in the coming months when substantial completion, occupancy certificates, and closings get delayed amidst our collective response to the virus outbreak.