A 2013 Update On New California Laws That May Impact The Construction Industry

By
William C. Last, Jr.
Attorney at Law

Last year the California legislature passed and the governor approved a large number of new bills; many of which will impact the construction industry. The remainder of this article sets forth a brief summary of a number of the new California construction industry related new laws.

Bill Number

What it does

Licensure Laws

AB 237

Anyone who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a project is, in fact, acting in the capacity of a contractor and must be state-licensed. Commentary: This essentially nullifies a California appellate court decision that allows a construction manager to be unlicensed.

AB 2554

Amends Business and Professions Code sections 7011.4 and 7106.5 to enable the CSLB Enforcement division and its representatives to issue notices to appear in court related to disciplinary actions against a license

AB 2114

This bill/law enacts new construction permit requirements for swimming pools, spas, or public wading pools.

Lien Laws

SB 189/ Civil
Code section
8000 et seq.

Per legislation signed into law during 2010, Major mechanic’s lien law overhaul will be effective July 1, 2012 (SB 189) – SB 189 constitutes a significant overhaul of the statutory scheme governing mechanic’s liens, stop notices and payment bond claims. It was signed into law in 2010, but will become effective on July 1, 2012. This scheme will be re-codified as Civil Code section 8000 et seq. The changes are meant to simplify, streamline and modernize the scheme, including many terminology changes. There are also many substantive amendments, including modifications to requirements relative to Preliminary 20-Day Notices, lien waivers, lien release bonds, completion determinations, and removing liens from title.

Public Works Projects and Contracts

SB 293/ Public
Contract Code 7201

With respect to all contracts entered into on or after January 1, 2012, between a public entity and an original contractor, between an original contractor and a subcontractor, and between all subcontractors thereunder, relating to the construction of any public work of improvement.(b) (1) The retention proceeds withheld from any payment by a public entity from the original contractor, by the original contractor from any subcontractor, and by a subcontractor from any subcontractor thereunder shall not exceed 5% of the payment. In no event shall the total retention proceeds withheld exceed 5 percent of the contract price. In a contract between the original
contractor and a subcontractor, and in a contract between a subcontractor and any subcontractor thereunder, the percentage of the retention proceeds withheld shall not exceed the percentage specified in the contract between the public entity and the original contractor.

AB 812/Public
Resources Code 42704

This bill/law authorizes the Department of Transportation, by January 1, 2014, to establish specifications for the use of reclaimed asphalt pavement (RAP) of up to 40% for hot mix asphalt mixes. The bill specifies that this authorization does not limit the authority of the department to establish specifications for this use of reclaimed asphalt pavement in amounts greater than 40%.

AB 1671/Public
Contract Code
7202, 10167

Existing law prohibits the Department of Transportation, until January 1, 2014, from withholding retention proceeds when making progress payments for work performed by a contractor. This bill/law extends those provisions to 1/1/2020.

AB 2498/Public
Contract Code
6700-6708

This bill/law authorizes the Department of Transportation to engage in a
Construction Manager/General Contractor project delivery method, as specified, for projects for the construction of a highway, bridge, or tunnel for a specified number of contracts.

SB 829/Public
Contract Code
2503

This bill/law prohibits the use of state funds for a project for a charter city which has banned the use of project labor agreements.

AB 1565/Public
Contract
Code21011.6

This bill/law requires pre-qualification for public school contracts over $1,000,000 for contracts awarded on and after January 1, 2014, and until January 1, 2019. The bill sets out what is in the form and a uniform system for rating the bidders.

AB 2440

This bill/law makes changes impacting those contracting for public works projects with the Los Angeles County Metropolitan Transportation Authority.

AB 1370

This bill/law requires the Department of Industrial Relations to post on its website prevailing wage requirements on public works projects

SB 1549

This bill/law makes changes public works contract bidding in the San Diego region.

Workers Compensation Laws

AB 1794

This bill/law authorizes the Employment Development Department (EDD) to provide new employee information filed by employers with members of the Joint Enforcement Strike Force (which includes CSLB) to aid in prosecuting tax withholding and workers’ compensation insurance violations.

AB 2219

This bill/law indefinitely extends the requirement that all C-39 Roofing contractors obtain workers’ compensation insurance coverage, even if they certify that they have no employees. The bill also extends, indefinitely, the requirement that insurers conduct annual audits, and requires that these audits be conducted in person to verify the accuracy of the reported number of employees.

SB 691

This bill/law adds CSLB to the list of agencies approved to receive workers’ compensation insurance information from EDD.

SB 863

This bill/law is intended reform the workers compensation insurance laws.

Indemnity Laws

SB 474/Civil
Code 2782 et
seq.

This bill/law was signed into law during 2011 and goes into effect on 1/1/13 It provides for a ban on “Type 1 Indemnity” clauses in commercial construction contracts in California will take effect upon contracts and amendments executed or entered into on and after January 1, 2013. Any clause within a commercial or public works construction contract, entered into after January 1, 2013, that purports to impose on any subcontractor, or supplier of goods or services liability for the active negligence of the GC, the public agency or the private owner (as qualified) is void and unenforceable. Commentary: Additional information and commentary on this major change in the law can

CSLB and Other License Issues

AB 1588

This bill/law waives fees or continuing education requirements for a licensee whose license expires while on active duty in the Armed Forces or California National Guard.

AB 1904

This bill/law allows for the issuance of temporary professional licenses (including those issued by CSLB) to spouses of those serving in the military.

AB 2570

This bill/law prohibits a licensee from including provisions in settlements of a civil dispute that prohibit the consumer from contacting, filing a complaint, or withdrawing a complaint with CSLB (or any other consumer protection program overseen by the Department of Consumer Affairs).

SB 1576

This bill/law enables CSLB to take administrative action if a licensee files a false complaint against another licensee.

AB 1750

This bill/law specifies that a C-27 Landscaping contractor can enter into a prime contract for a rainwater capture project

Miscellaneous

Proposition 30

The Schools and Local Public Safety Protection Act of 2012, amends the California Constitution to impose a 1/4 cent sales and excise tax in addition to existing taxes. The sales tax applies to "gross receipts of any retailer from the sale of all personal property", while the excise tax applies to "the storage, use, or other consumption" of "tangible personal property" that is "purchased from any retailer." Commentary: The Proposition does not exempt the increase for materials used in pre-existing construction contracts. Thus the contractor will be responsible for those increased
taxes even thought the contract pre-dates the increase.

AB 1492

After January 1, 2013, in addition to any other sales and use taxes imposed by law, impose an assessment on a person who purchases a lumber product, as defined, or an engineered wood product, as defined, in this state, at the rate of 1% of the sales price. It includes other provisions concerning forest fires and restoration.

AB 2492

This bill/law is intended to bring the California False Claims Act into compliance with the Federal False Claims laws.

SB 1186

This bill/law is intended to stop abusive American Disability Act (ADA) lawsuits. It sets standards for filing such actions. It also significantly reduces damages against business owners who correct alleged violations within 30 to 60 days of receiving a complaint. This bill would require a commercial property owner to state on a lease form or rental agreement executed on or after July 1, 2013, if the property being leased or rented has undergone inspection by a certified access specialist.


The foregoing list is not intended to be an all inclusive list of new construction laws, but rather sets forth the primary construction related new laws. If you are interested in other new laws or want to review the full text of bills, resolutions, constitutional amendments they can be found on the internet at http://www.assembly.ca.gov/acs/acsframeset2text.htm. That website also has each bills status, history, votes, analyses, and/or veto messages.

This article, ©2013, was written by William C. Last, Jr. Mr. Last is an attorney who has been specializing in Construction Law for over 30 years.. In addition to belonging to a number of construction trade associations, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-696-8350. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.