The U.S. Occupational Safety and Health Administration (OSHA) has just issued an emergency temporary standard (ETS) to require employers to ensure their workers are fully vaccinated against COVID-19 or tested on at least a weekly basis. The legal and contractual implications will wreak havoc on existing and prospective construction contracts. The OSHA ETS applies to employers with 100 or more employees to either be vaccinated or test regularly and it will apply to both private and public construction contracts. Provisions in ConsensusDocs standard contract documents provide advantages in both substance and stylistic clarity as compared to other standard contract documents, including those by the American Institute of Architects (AIA), such as the AIA A201 Terms and General Conditions document.
ConsensusDocs, like most construction contracts, explicitly requires the contractors to comply with all laws. See ConsensusDocs 200 §3.21 Standard Agreement and General Conditions Between Owner and Constructor (Revised 2019). “Laws” are defined in section 2.4 broadly as “federal, state, or local law, ordinance, code, rule, and regulations applicable to the Work with which Constructor must comply that are enacted as of the Agreement date.” It is worth noting the use of “enacted as of the Agreement date.” This addresses the potential issue for when a law might be passed by the legislature and approved by the executive branch, but not in effect yet. A general contractor and Owner can anticipate extra costs for complying with laws that are about to take effect with notice. This is contrasted with proposed legislation that could fail to pass or be amended significantly.
Significantly, ConsensusDocs is the only standard contract document that explicitly calls for a change order for time, money, or both, as a result of a change of law. Subsection 3.21.1 of the ConsensusDocs 200:
The Contract Price or Contract Time shall be equitably adjusted by Change Order for additional costs or time needed resulting from any change in Law, including increased taxes, enacted after the date of this Agreement.
This language clearly addresses how to handle a change-in-law like the new OSHA ETS, which owners and builders alike will need to confront from a practical and legal compliance perspective. To get a free copy of the ConsensusDocs 200 click here
The AIA A201 and other standard documents do not explicitly address entitlement for equitable adjustment for a change-in-law in regard to and therefore are more likely to lead to potential claims and litigation. These types of claims are handled in article 15 of AIA A201 and fall to the initial decision-maker (IDM) which defaults to the Architect.
In addition, the ConsensusDocs 200 subsection 6.3.1 provides a comprehensive list of justifications for a change order for additional time that include “adverse governmental actions,” as well as a catch all for “causes beyond the control of Constructor.” This language will help support a claim for equitable adjustment for additional time. Schedule delays and substantial completion dates will be pushed back due to the OSHA ETS legal obligations that were not anticipated at contract signing.
When Covid-19 risk arose, ConsensusDocs provided superior force majeure language to address, because it specifically included “epidemics.” The AIA A201 did not include equivalent language. Today, ConsensusDocs provides better standard contract language to address complex new laws like the OSHA ETS, which will dramatically impact private and public contracts.
This article first appeared in the ConsensusDocs Construction Law Newsletter which can be accessed here.