Is construction in California an essential business?

States, counties, and cities across the United States continue to implement safety precautions to slow the spread of the coronavirus outbreak (COVID-19). The coronavirus is affecting construction projects, and many are wondering if they can still work. Here, we’ve collected the orders issued within the state of California to determine whether construction is considered an essential business in California.

Federal guidelines for essential businesses

On March 28th, the Cybersecurity & Infrastructure Security Agency (CISA) issued an advisory memorandum on what constitutes “essential critical infrastructure workers” during the COVID-19 pandemic. This list was intended to be a guide for state and local officials to protect their communities while ensuring the continuity of functions critical to public health and safety, as well as economic and national security.

However, states differ in their interpretation of “essential.” Some have adopted a broader definition, including construction in the list of essential businesses.

The list identifies 16 different sectors that are considered essential. These include:

  • Chemical Sector
  • Commercial Facilities Sector
  • Communications Sector
  • Critical Manufacturing Sector
  • Dams Sector
  • Defense Industrial Base Sector
  • Emergency Services Sector
  • Energy Sector
  • Financial Services Sector
  • Food and Agriculture Sector
  • Government Facilities Sector
  • Healthcare and Public Health Sector
  • Information Technology Sector
  • Nuclear Reactors, Materials, and Waste Sector
  • Transportation Systems Sector
  • Water and Wastewater Systems Sector

For details under each sector, see: CISA: Advisory Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response

Does California consider construction essential?

Is construction an essential business? On March 22, 2020, Governor Newsom issued California Executive Order N-33-20, which lists what the State of California considers an “essential business.” According to the governor’s order, California does consider construction an essential business.

Under “Essential Workforce,” the governor’s order lists:

  • Construction Workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)
  • Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, construction material sources, and essential operation of construction sites and construction projects (including those that support such projects to ensure the availability of needed facilities, transportation, energy and communications; and support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste)

However, this order does not mean that construction is allowed to continue everywhere in California. County and city governments are allowed to set their own definition of “essential business,” which can be more strict than the state order.

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Construction in California Counties

We’ve separated county, city, and local governments’ “shelter in place,” “stay-at-home orders,” and other restrictions into broad categories. Each public health order is linked for more details. These will be regularly updated as things progress.

CA counties that follow the state order

These counties follow the governor’s order (see above) to determine whether construction is an essential business:

CA counties that allow specific construction projects

These counties and cities (most of which are in the San Francisco Bay Area) only permit certain construction projects:

They consider 8 specific types of projects to be “essential business”:

  1. Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure
  2. Projects associated with Healthcare Operations, including creating or expanding Healthcare Operations, provided that such construction is directly related to the COVID-19 response
  3. Affordable housing that is or will be income-restricted, including multi-unit or mixed-use developments containing at least 10% income-restricted units
  4. Public works projects if specifically designated as an Essential Governmental Function by the City Administrator in consultation with the Health Officer
  5. Shelters & temporary housing, but not including hotels or motels
  6. Projects immediately necessary to provide critical non-commercial services to individuals experiencing homelessness, elderly persons, persons who are economically disadvantaged, and persons with special needs
  7. Construction necessary to ensure that existing construction sites that must be shut down under the Order are left in a safe and secure manner, but only to the extent necessary to do so
  8. Construction or repair necessary to ensure that residences and buildings containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot be reasonably be delayed.

Sonoma County allows the same 8 project types listed above, but also includes:

  • “Construction or debris removal activities undertaken pursuant to Chapters 40 and 40A of the County Code, or any other rebuild construction and debris removal activities on fire damaged or destroyed properties within the incorporated areas of the County.”

Sutter County and Yuba County also use the same categories above in their definition of essential business, but replaces “affordable housing” with “construction of new housing.”

CA counties that allow public works projects & some private projects

The orders in these counties allow public works and housing construction:

The orders state that individuals may provide any services or perform any work necessary for the operations and maintenance of “Essential Infrastructure,” including:

  • Public works construction
  • Construction of housing (in particular affordable housing or housing for individuals experiencing homelessness)

Additionally, these orders include, “Plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of places of residence, Essential Activities, and Essential Businesses.”

CA counties that allow public works projects, and ongoing commercial construction

These counties allow the same construction projects as above but also allow “on-going” commercial construction projects. These include commercial construction that actually commenced, not just permitted, prior to the effective date of the order.

What California contractors should do now

Whether your construction project is considered essential business or not, contractors and suppliers in California should act now to get paid and protect cash flow.

If your CA project is canceled

If a California county doesn’t consider your construction project essential business, the best thing to do right now is to file a mechanics lien. Everyone is trying to get for the work they’ve already done; filing a lien will put you first in line.

Apply for an SBA Paycheck Protection Loan, and explore other avenues to get cash. Funding will get harder to access as more time passes.

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If your CA project is considered essential

If you’re working in a part of California where your construction project is allowed to continue, take every step you can to get paid for your work — and get paid faster. The only thing that’s certain right now is that nothing is certain. Set up a strict payment process to send:

and other documents on every single project. Pay close attention to California’s deadlines to file a mechanics lien or bond claim.

Amidst coronavirus chaos, the construction businesses that communicate, document, and diligently pursue their payments are the ones that are most likely to come out on the other side, ready to thrive.

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