Working within one of the most stressful industries, construction workers face intensive stress loads that adversely affect safety and productivity. While different factors induce stress, time pressure and mental demand are two industry characteristics that can trigger workers’ occupational stress. Although previous studies demonstrated the adverse effects of time pressure and mental demand on workers’ safety performance, no study has empirically investigated the direct impacts of such factors as task stressors on workers’ arousal and stress levels. Further, little is known about the impacts of imposed stress on workers’ situational awareness and risk decision-making. Accordingly, this study evaluates changes in individuals’ situational awareness and decision dynamics when working under stress imposed by time pressure and mental demand. The study simulated a high-risk electrical activity within a multimodel mixed-reality environment and captured participants’ physiological and cognitive responses to measure their stress levels and cognitive processes while completing the electrical task under normal and stressful conditions. Results showed high stress levels triggered by task stressors adversely affect one’s cognitive processes, including attentional distribution: Excessive stress led subjects to miss surrounding hazards, leading to impaired risk perception and increased risk-taking behaviors. The findings of this study provide valuable insights into how the occupational stress imposed by task stressors can disturb workers’ cognitive processes, reduce their situational awareness, and give rise to high-risk behaviors.