2014 California Construction Law Update

by Wendel, Rosen, Black & Dean LLP
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Approximately 2,000 bills were introduced in the California State Legislature during the 2013-2014 legislative 2014session. Of these, 896 bills made it to Governor Brown’s desk and 800 were signed into law.

Looking back, 2013 could be called the year of the labor unions. Strong Democratic majorities controlled both the Assembly and Senate. Democratic Governor Brown, enjoying record high approval ratings, surpassed Republican Earl Warren as the longest-serving governor in California’s history.  And, 2014 being a primary election year, incumbents are under pressure to show their supporters what they’ve done for them lately.

The stars aligned, labor unions saw the passage of legislation restricting the ability of charter cities to avoid prevailing wage laws, new laws expanding the authority of the California Labor Commissioner, and tighter restrictions on employers.  Not surprisingly, the year also saw a number of consumer-protection oriented changes to the licensing laws.

Licensing

AB 433 – Existing law provides that the installation of fire protection systems may only be performed by contractors with a C-16 fire protection license or by owner-builders of owner-occupied, single-family dwellings.  The new law will in addition authorize contractors with a C-36 plumbing license to install fire protection systems for one- or two-family dwelling units until January 1, 2017.

AB 1236 – Existing law requires contractors formed as limited liability companies to obtain and maintain insurance written by an insurer or insurers licensed by the State of California. The new law, in addition to insurers licensed by the State of California, permits such policies to be written by eligible surplus line insurers.

SB 261 – Authorizes the California Contractors State License Board (“CSLB”) to take disciplinary action against any person who uses a canceled, revoked, suspended, or altered contractor’s license, uses a forged contractor’s license, or uses or allows another to use a contractor’s license not issued to them.

SB 262 – Authorizes the CSLB to take disciplinary action against a qualifier and the licensee they are qualifying if the qualifier is not actively involved in the construction activities of the licensee.  In addition to administrative penalties, the qualifier is subject to misdemeanor criminal charges including imprisonment in the county jail up to six months, a fine of up to $5,000, or both.

SB 822 – Provides that licensees who submit an incomplete renewal application on or before expiration of their license will have 30 days to correct and resubmit their renewal application and not be required to pay a renewal delinquency fee.

Workers

AB 1336 - Existing law requires the California Labor Commissioner to issue a civil wage and assessment penalty against a contractor or a joint labor management committee to bring an action against a contractor no later than 180 days after the filing of a valid notice of completion or 180 days after acceptance of a public project, whichever occurs later.  The new law permits the Labor Commissioner to issue a civil wage and assessment penalty against a contractor and a joint labor management committee  to bring an action against a contractor up to 18 months after the filing of a valid notice of completion or 18 months after acceptance of a public works project, whichever occurs later.  The new law also requires that contractors, when providing payroll records to a joint labor committee, disclose the names of workers and in certain cases the last 4 digits of their social security number.

AB 1386 – Existing law allows the California Labor Commissioner to obtain a judgment against a contractor with the superior court once an order, decision or award by the Labor Commissioner becomes final.  The new law will in addition authorize the Labor Commissioner to record a certificate of lien on property owned by a contractor once an order, decision or award becomes final.

SB 7 - In response to a much publicized California Supreme Court decision this past year holding that charter cities do not have to pay prevailing wages, the new law requires that charter cities receiving state funding or financial assistance for a construction project require that contractors pay prevailing wages on projects exceeding $25,000 for construction work or $15,000 for alteration, demolition, repair, or maintenance work.

SB 776 - Prohibits contractors from receiving credit for fringe benefit payments used to monitor and enforce laws related to public works if those payments are not required by a collective bargaining agreement.

Design-Build

AB 195 - Existing law authorizes counties to enter into design-build contracts for the construction of buildings and wastewater treatment facilities in excess of $2.5 million through July 1, 2014.  The new law extends that authority until July 1, 2016.

AB 401 – Authorizes the California Department of Transportation to enter into design-build contracts (except for construction inspection services) for up to 10 projects on the state highway system and authorizes regional transportation agencies to enter into design-build contracts for projects on or adjacent to the state highway system and on expressways that are not on the state highway system until the earlier of January 1, 2024.

CM at-Risk

SB 328 - Authorizes counties to enter into construction manager at-risk (CM at-Risk) contracts for the construction, alteration, or repair of any building owned or leased by a county in excess of $1 million through January 1, 2018.

Public Private Partnerships

AB 164 – Requires that lease agreements between a governmental agency and private entity for the construction of public private partnership (P3) infrastructure projects include a requirement that performance bonds and payment bonds be furnished to ensure completion of the project and payment to laborers, subcontractors and material suppliers performing work on the project.

Public Bidding

AB 44 – Amends the Subletting and Subcontracting Fair Practices Act to require that prime contractors disclose the CSLB license numbers of subcontractors who will perform work on public works projects beginning July 1, 2014.

Excavations

AB 811 – Under existing law, contractors are required to call 8-1-1 (I wonder how long the bill’s author had to wait for that bill number) at least two days before any digging or excavation activity.  The new law authorizes the CSLB to develop a written examination for the certification of contractors engaged in excavation activities, requires regional notification centers to post on their websites statewide information regarding legal violations and damages resulting from violations, and subjects contractors who engage in illegal excavation activities to civil penalties up to $50,000 in addition to civil remedies and attendance at an educational program.

Hazardous Materials

SB 54 - Requires owners and operators of refineries other than oil and gas extraction operations, when contracting for construction, alteration, demolition, installation, repair or maintenance at the stationary source, to require that its contractors use workers from state-approved apprenticeship programs. Beginning January 1, 2014, at least 30% of the skilled journey persons must be graduates of apprenticeship program, beginning January 1, 2015, at least 45% must be, and beginning January 1, 2016, at least 60% must be.  The new law also authorizes the California Department of Industrial Relations to approve a curriculum of in-person classroom and laboratory instruction for approved advanced safety training for workers at high hazard facilities.

Davis-Stirling Act

AB 805 - AB 805, which repealed and replaces the Davis-Stirling Act, was actually signed into law in 2012.  However, like the effective date of the comprehensive changes to California’s statutory construction payment laws this past year, the effective date of AB 805 was postponed for two years due to the comprehensive nature of its changes. The new law repeals the Davis-Stirling Act formerly found beginning at Civil Code sections 1364 et seq. and replaces them with new sections beginning at Civil Code section 4775. Among other things, the new law requires that decisions to transfer reserve funds to pay for litigation must be provided by general notice, quarterly accounting of litigation expenses must be made available for inspection, and annual budget reports must include a major component repair statement, anticipated special assessment statement, and other information.

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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