With hurricane season upon us, employers are justifiably concerned about the potential impact of a natural disaster on their business. A hurricane, natural disaster, or any other crisis in the workplace, can bring a business to a screeching halt and devastate the lives of a business’ most valuable asset, its employees. This article was first published in the wake of Hurricane Katrina based on lessons learned in managing through that crisis. These lessons continue to ring true year after year, crisis after crisis. Thus, we continue to update and republish this article each hurricane season.

To minimize the impact of a natural disaster, employers should have plans in place before disaster strikes, including, for example, a crisis management plan, a communications plan, and a disaster response and recovery plan. These plans must take into account the effect a catastrophe may have on workers and include ways to help impacted employees return to work as soon as practical to ensure continued productivity of your workplace even in the face of personal loss. Any enacted plan should consider the application of relevant federal and state laws to ensure compliance and avoid any employment-related lawsuits or any agency enforcement actions following a natural disaster. Continue Reading Planning for a Catastrophe

Please find below a recently published article from our Construction Team members, Stephen T. Miller and Tiffany C. Raush. The article “When Force Majeure Is For Sure: The Business of Constructing in Disaster-Prone Areas” was first published in the ConsensusDocs Construction Law Newsletter Volume 4, Issue 3. 

One could have predicted in early 2017 that at least some portion of the Gulf Coast would be struck by a hurricane that year.  The reality is that constructing in Texas, Louisiana, Mississippi, Alabama, or Florida in July, August, or September carries with it the very real risk that your construction site will be struck by a hurricane or tropical storm.  The 2017 Atlantic hurricane season saw 17 named storms with more than $200 billion in damages.  Three of those named storms—Harvey, Irma, and Maria—made the 2017 Atlantic hurricane season the costliest ever on record.

Of course, thankfully, not every year will be such a record-setter.  But constructing along the Gulf Coast, or any area similarly “disaster-prone,” carries with it unique considerations.  Construction contracts almost universally include “force majeure” provisions that apply in the event of a hurricane.  But force majeure provisions typically only buy the contractor some time.  Moreover, such provisions are breeding grounds for disputes.  For example, most force majeure clauses include hurricanes as qualifying events, but recall that “Hurricane Harvey” did most of its damage as a tropical storm.  “Tropical storm” may not be included in the force majeure definition in your contract.  Second, most contracts will require timely “notice” of the qualifying event, which can be difficult to do when you are in the midst of disaster recovery.  Third, contracts and case law will often require a demonstration that the contractor acted to mitigate the effect of the force majeure event.  See also In re S. Scrap Material Co., L.L.C., 713 F. Supp. 2d 568 (E.D. La. 2010) (noting that Hurricane Katrina was an “Act of God” but “[o]ne invoking Act of God as a defense must prove not only that the weather was heavy but also that it ‘took reasonable precautions under the circumstances as known or reasonably to be anticipated.’”).  That sounds reasonable.  But mitigation efforts at the height of a disaster are often easily criticized after-the-fact when time and circumstance allow for more analysis and reflection.  Finally, the contractor must be able to show that the force majeure event caused the delay at issue.  But often the contractor is moving so quickly—as are the sub-contractors, suppliers, laborers, insurance companies, etc.—to deal with the disaster at hand, that detailed meeting minutes, confirming emails, and contemporaneous reports are simply not possible to document all the ways the force majeure event is affecting the time line of the construction project.

Contractors along the Gulf Coast cannot simply hope for the best when constructing during hurricane season.  Nor can they expect to rely on insurance and a force majeure provision should the worst happen.  Instead, contractors should be fully prepared with a disaster action and recovery plan before signing a contract.  Indeed, owners in the Gulf Coast region—particularly in populated, industrial, burgeoning cities like Houston, and particularly following Harvey—are coming to expect their contractors on major projects to have detailed and thorough disaster contingency plans in place.

What’s In Your Disaster Action Plan?

Your disaster preparedness and recovery action plan depends on the disaster and the construction project.  It should cover pre-construction disaster planning such as identifying roles and responsibilities in the event of a disaster, identifying potential off-site quarters in the event of a local evacuation order, creating an emergency call list, among other items.  This stage—i.e., before a storm is barreling down on your project—is a good time to consider potential labor and supply shortages that typically result after hurricanes.  For example, demand for construction supplies and services sky-rocketed after Hurricane Harvey.  Thomasnet.com, an online sourcing and supplier selection platform, analyzed searches for particular products and supplies before and after Harvey.  The below tables summarize some of the results, including 1,200% increase in searches for doors, 1,700% increase in searches for steel buildings, and 4,600% increase in searches for trucking services.  See https://blog.thomasnet.com/thomasnet-trends-hurricane-harvey.

TABLE 1 TABLE 2

Identifying potential suppliers, labor sources, and transportation that may be available to you ahead of time could make a huge difference in your recovery and your bottom line.  Remember that most force majeure clauses will not allow you to recover increased costs if the cost of materials suddenly surges after the storm.  See, e.g., S&B/Bibb Hines Pb3 Joint Venture v. Progress Energy Fla., Inc., 365 Fed. Appx. 202 (11th Cir. 2010) (denying contractor’s $40 million claim after four hurricanes struck the Gulf Coast resulting in a shortage of materials and a corresponding increase in the costs of construction for the contractor).  If you are a large contractor, consider whether you have projects in other locations that could spare materials at cost until prices come down.  Alternatively, consider mitigating the risk through agreements with construction companies in other locations that may be willing to “come to your aid” should you be impacted (knowing that, as part of the risk-sharing arrangement, you would be willing to reciprocate).

Your disaster action plan should also cover what to do when a storm has been predicted, when it is occurring, and after it has passed.  There is plenty of hurricane-preparedness advice out there, but one we like as a starting point is Allianz’s The Calm Before the Storm: Construction Site Hurricane Protection.  The 33-page booklet available online includes useful information, suggestions, checklists, and forms for contractors working in hurricane-prone areas.

The point is this: as the heart of hurricane season approaches in the Gulf Coast, do not be lulled into a false sense of security that (1) a storm probably won’t happen or (2) that a force majeure or similar contract provision will provide adequate protection.  In the Gulf Coast, hurricanes and tropical storms are a factor and force majeure provisions are better left as a last resort.

With hurricane season upon us, employers are justifiably concerned about the potential impact of a natural disaster on their business. A hurricane, natural disaster, or any other crisis in the workplace can bring a business to a screeching halt and devastate the lives of a business’s most valuable asset, its employees.

To minimize the impact of a natural disaster, employers should have plans in place before disaster strikes, including, for example, a crisis management plan, a communication plan, and a disaster response and recovery plan. These plans must take into account the effect a catastrophe may have on workers and include ways to help impacted employees return to work as soon as practical to ensure continued productivity at the workplace following a natural disaster. Any enacted plan should consider the application of relevant federal and state laws to ensure compliance and avoid any employment-related lawsuits or any agency enforcement action following a natural disaster. Continue Reading Planning for a Catastrophe

Houston residents who suffered damage in Harvey and have not applied for FEMA or SBA assistance must do so by Thursday.

The deadline to apply for disaster assistance from the Federal Emergency Management Agency (FEMA) and Small Business Administration (SBA) is Thursday, November 30th.  Residents who sustained damage during Harvey must apply by the deadline to be eligible for assistance.

Federal assistance includes help for temporary housing, rental assistance and repair or replacement of damaged homes for eligible individuals and families who have suffered losses as a result of the storm.

Additionally, grants may be available to help with other expenses such as medical and dental care, child care, funeral and burial costs, replacing essential household items, moving and storage, vehicle repairs and some clean-up items.

Survivors may register in many ways:

  • Online at DisasterAssistance.gov.
  • Calling the FEMA Helpline at 800-621-3362 (voice, 711/VRS-Video Relay Service) (TTY: 800-462-7585). Multilingual operators are available (press 2 for Spanish).
  • Via the FEMA app, available for Apple and Android mobile devices. To download visit: fema.gov/mobile-app.
  • Visiting a Disaster Recovery Center (DRC). Find the location of nearby DRCs online at www.fema.gov/DRC.

The following information is helpful when registering:

  • Address of the location where the damage occurred (pre-disaster address).
  • Current mailing address.
  • Current telephone number.
  • Insurance information.
  • Total household annual income.
  • Routing and account number for checking or savings account (this allows FEMA to directly transfer disaster assistance funds into a bank account).
  • A description of disaster-caused damage and losses.

For additional information on Harvey recovery from the City of Houston, visit houstonrecovers.org.

City of Houston Opens Pilot Neighborhood Restoration Center in Northeast Houston for Harvey Flood Survivors

The City of Houston, along with local non-profit organization partners, opened the first Neighborhood Restoration Center at the Kashmere Multi-Service Center on Wednesday, November 15, 2017 as part of a pilot program aimed at connecting Houstonians affected by Harvey with recovery services.

As part of this ongoing effort, a Neighborhood Restoration Center will be open at the Kashmere Multi-Service Center,  located at 4802 Lockwood Dr., Houston, TX 77028 every Wednesday during the hours of 9:00 a.m. – 7:00 p.m. to provide information, and connect survivors with resources, such as: legal aid, mental health and wellness, home repair and rebuilding information, employment help, and housing counselors. Case management services at the Center are being provided by BakerRipley and the Houston Area Urban League. 

Disaster-focused non-profit organizations, churches, businesses, governmental agencies, and volunteer groups are urged to join this collaborative effort. The City expects the number of participants and partners to expand each week as word of this initiative grows, with additional locations expected to roll out in the near future.

City Departments participating in the program include:

  • Department of Neighborhoods, New Americans & Immigrant Communities
  • Department of Neighborhoods, Mayor’s Citizens’ Assistance Office
  • Houston Public Works – Houston Permitting Center
  • Office of Business Opportunity
  • Housing & Community Development Department
  • Houston Health Department
  • Houston Health Department – Area Agency on Aging
  • Office of Emergency Management
  • Solid Waste Management Department

Additionally, some area non-profit agencies are providing case management, and access to recovery services, including:

  • All Hands Volunteers, Inc.
  • Care Connection – Aging and Disability Resource Center
  • Northeast Next Door Redevelopment Council

For locations, and hours of operation, visit houstonrecovers.org

Houston residents in need of assistance related to Harvey recovery, who cannot come to the center are asked to call Texas 2-1-1 (877-541-7905), so a trained case manager can be made aware of their individual needs, and connect them with recovery services.

Additional information on Houston’s disaster recovery can be found at houstonrecovers.org.

Information provided by the Federal Emergency Management Agency (FEMA)

Hotel Stays for Harvey Survivors Extended to Jan. 16, 2018

Eligible Hurricane Harvey survivors receiving Transitional Shelter Assistance (TSA) may receive an extension to stay temporarily in hotels while they look for an alternative place to live.

Disaster survivors with a continuing need for the hotel sheltering program may be extended to
Jan. 16, 2018. However, there is a mid-term eligibility review on Dec. 12 where survivors participating in TSA will receive a phone call, email, and/or text message advising them if they have continued eligibility for assistance through a participating hotel.

Hurricane Harvey survivors who recently applied for assistance will be notified automatically of their eligibility. To be considered for eligibility, disaster survivors must be registered with FEMA for disaster assistance, and meet other eligibility criteria.

FEMA Individual Assistance deadline extended to November 30th

Texans affected by Hurricane Harvey now have until November 30, 2017, to register for federal assistance.

The deadline was November 24, however, an additional six days now gives survivors more time through the Thanksgiving holiday.

Federal assistance includes help for temporary housing, rental assistance and repair or replacement of damaged homes for eligible individuals and families who have suffered losses as a result of the storm.
Additionally, grants may be available to help with other expenses such as medical and dental care, child care, funeral and burial costs, replacing essential household items, moving and storage, vehicle repairs and some clean-up items.

Read More at houstonrecovers.org

Twelve years following Hurricane Katrina in New Orleans, when universities and colleges around the country embraced Tulane students displaced by the storm, Tulane has announced that it will offer a tuition-free semester for students from universities and colleges in Puerto Rico. The program, offered for the spring 2018 semester, is also open to students in other areas affected by recent storms in the USVI and St. Maarten/St. Martin. Tulane is requesting that students pay tuition at their current school to aid schools in the recovery process. For more information visit the Tulane University Admissions Blog.

The disaster wrought by Hurricanes Harvey, Irma, and Maria has also occasioned a flood of federal relief dollars into the areas impacted. Projects seeking federal funding must meet a variety of legal requirements, each of which warrant separate analysis. Here, we discuss a single federal construction contract requirement and how it has changed in light of these natural disasters: the requirement that federal contracts have written affirmative action programs.

Over the course of the last month, the U.S. Department of Labor, and specifically the Office of Federal Contract Compliance Programs (OFCCP), has worked to support relief efforts from the devastation of Hurricanes Harvey, Irma, and Maria by temporarily relaxing federal contractors’ requirements to have written affirmative action programs. The OFCCP’s National Interest Exemptions—or NIEs—protect contractors for a limited time and in limited areas: for a period of three months (subject to possible extension) following these weather events, new Federal contracts to provide hurricane relief efforts will be exempt from the written affirmative action programs contained in Executive Order 11246, the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), and Section 503 of the Rehabilitation Act of 1973. But these exemptions are limited in breadth, as well as temporally and geographically.

What contracts are covered?

The NIEs apply to new supply & service and construction contracts which are entered into within the three-month period (discussed below) and which are solely for the specific purposes of providing hurricane relief. Let’s break that down. According to OFCCP, the contract must be:

  1. New. That means that if it is a contract entered into before the NIE applied, even if for hurricane relief, it is not covered by the NIE.
  2. For the specific purpose of providing hurricane relief. The OFCCP takes a Justice Stewart “I know it when I see it” approach to defining this requirement. While the OFCCP says it has notified all federal contracting agencies of the NIE and provided them with “language to include in new supply & service and construction contracts,” it goes on to state that “Federal contracting officers know the terms and conditions of the contracts they execute. Therefore, they are in the best position to determine what constitutes a supply & service or construction contract specifically to provide Hurricane Harvey relief and whether it is appropriate to include the NIE language in the contract.”
  3. Solely for the specific purpose of providing hurricane relief. So if the contract is for hurricane relief and something else, it is not covered by the NIE.

Further, the NIEs also apply to subcontractors as long as the subcontractor is providing goods or services as part of a prime contract specifically for hurricane relief.

For what time period does the NIE apply?

  • For Hurricane Harvey: applies to new supply & service and construction contracts entered into between September 1, 2017, and December 1, 2017 (with possible extension).
  • For Hurricane Irma: applies to new supply & service and construction contracts entered into between September 8, 2017, and December 8, 2017 (with possible extension).
  • For Hurricane Maria: applies new supply & service and construction contracts entered into between September 21, 2017, and December 21, 2017 (with possible extension).

What geographic areas are covered?

For all three hurricanes, this is defined as any area that has been designated a Designated Area by FEMA to receive both individual and public assistance (FEMA categories A and B). For Harvey, the OFCCP lists some specific counties in Texas: Aransas, Bee, Brazoria, Calhoun, Chambers, Colorado, Fayette, Fort Bend, Galveston, Goliad, Hardin, Harris, Jackson, Jasper, Jefferson, Kleberg, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Refugio, Sabine, San Jacinto, San Patricio, Victoria, Waller, Wharton. The ultimate list is available on FEMA’s website: www.fema.gov/disasters.

What the NIE does not exempt?

New supply & service and construction contracts falling under NIE continue to be subject to the nondiscrimination requirements of EO 11246, VEVRAA, and Section 503, and must still meet the following FAR requirements:

  • Posting of the “Equal Opportunity is the Law” notice under all three laws;
  • Record keeping and record retention requirements under all three laws; and
  • Employment listing with the appropriate employment service delivery system as required under VEVRAA.