2013 California Construction Law Update

by Wendel, Rosen, Black & Dean LLP
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More than 4,000 bills were introduced in the California State Legislature during the 2011-2012 legislative session.  Of these bills, 996 made it to Governor Brown’s desk, of which 876 were signed into law, and 120 were vetoed. 

Among the new laws impacting the construction industry are new licensing requirements for construction managers, extension of the authority of school districts and community college districts to enter into design-build contracts, and extension of the prohibition by the California Department of Transportation (“Caltrans”) to withhold retention.

INDEMNITY

SB 474

One of the most talked about new laws is not technically “new” at all, but rather, a bill that was signed into law in 2011 but with an effective date of January 1, 2013.

Beginning January 1, 2013, construction contracts that require a subcontractor to insure, indemnify, or defend a general contractor, construction manager, or other subcontractor from their: (1) active negligence or willful misconduct; (2) design defects; or (3) claims that do not arise out of the scope of work of the subcontractor, are void and unenforceable.

The new law effectively eliminates “Type I” indemnity clauses in construction contracts.  Type I indemnity clauses were, prior to the enactment of the new legislation, already prohibited in residential construction contracts (except for homeowners performing home improvement projects on a single family dwelling).

Under the new law, Type I indemnity clauses are now prohibited in private commercial construction contracts, as well as public works projects.  However, as it applies to owners and public agencies, it only restricts owners and public entities from requiring indemnity for their “active negligence” but applies broadly to contractors, subcontractors, and material suppliers.

The new law does have a number of exceptions, however.  It does not apply to design professionals, has no effect on additional insured obligations, and does not apply to owner controlled insurance programs.  The new law also does not affect “Type II” indemnity clauses in which a party is indemnified for their “passive,” as opposed to “active,” negligence.

LICENSING

AB 397

Requires proof of workers’ compensation coverage, or proof of exemption, at the time of license renewal with the California Contractors State License Board (CSLB).

AB 1794

Authorizes the California Employment Development Department (EDD) to share information with the Joint Enforcement Strike Force on the Underground Economy (JESF), the CSLB, and the California State Compensation Insurance Fund through January 1, 2019.

AB 2219

Existing law, which requires roofing contractors to have workers’ compensation insurance whether or not they have any employees, and which was set to expire on January 1, 2013, has been made permanent.

AB 2237

Requires construction managers to be licensed by the CSLB in order to provide services in connection with a home improvement contract.

SCHOOL PROJECTS

AB 1565

Requires school districts, except for districts with an average daily attendance under 2,500, to use a bidder prequalification process for projects receiving State School Facilities Program (SFP) funding on all projects through January 1, 2018.

AB 1598

Includes within the definition of “public works,” modular office systems such as portable classrooms, for purposes of prevailing wage and listing laws.

SB 1509

Existing law, which authorizes school districts and community college districts to enter into design-build contracts, and which was set to expire on January 1, 2014, has been extended to January 1, 2020.

CALTRANS

AB 1671

Existing law, which prohibits Caltrans from withholding retention, and which was set to expire on December 31, 2013, has been extended to January 1, 2020.

AB 2498

Establishes a pilot program authorizing Caltrans to designate six projects for a construction manager/general contractor project delivery method.

DISABILITY ACCESS

SB 1186

Reduction in minimum statutory damages in disability access litigation from $4,000 to $1,000 if property was certified by a Certified Access Specialist (“CASp”).  Owners must disclose to tenants whether property has been certified by a CASp.

GREEN BUILDING

AB 930

Requires that at least one member of the California Building Standards Commission be experienced and knowledgeable in sustainable building, design, construction, and operation.

CONSTRUCTION VEHICLES

SB 341

Requires vehicles, which operate at or transport materials to a construction site, and with a gross vehicle weight rating in excess of 14,000, to have an automatic audible backup alarm.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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