New California Construction Laws for 2022 - Smith Currie
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New California Construction Laws
for 2022
The California Legislature introduced more than 2750 bills in the first
half of the 2021-2022 session, up from the 2400 they produced in
the last half of the previous, COVID-19-hindered session, but still
fewer than the 3,033 bills in the last pre-COVID-19 half session.
Daniel F. McLennon This article summarizes some of the more important bills affecting
Partner
contractors in their roles as contractors, addressing issues such as
San Francisco, California
T: 415.394.6688 payroll liability and reporting, construction delivery and contracts,
E: dfmclennon@smithcurrie.com licensing, design-build, best value, and dispute resolution. [1] The
bills enacted into law become effective January 1, 2022, unless
otherwise noted. Not addressed here are many other bills that will
affect contractors in their roles as businesses, taxpayers, and
employers. Each of the summaries is brief, focusing on what is most
important to contractors. Because not all aspects of these bills are
discussed, each summary’s title is a live link to the full text of the
referenced bills for those wanting to explore the details of the new
laws.
PAYROLL RESPONSIBILITY AND REPORTING
Prime Contractor Liability for Subcontractor Employee Wages
Expanded to Include Interest and Penalties (SB 727, Leyva)
Under AB 1701 enacted in 2018, direct contractors became liable in
private works (like long-standing public works) for wages, fringe, and
other benefit payments or contributions (including interest incurred
by a subcontractor of any tier), except penalties or liquidated
damages. Under the new law, the direct contractor’s liability includes
penalties, liquidated damages, and interest owed but unpaid by the
subcontractor on account of the performance of the labor for
contracts entered into on or after January 1, 2022.
Prime and Subcontractors Liable for Penalties for Late Payroll
Reporting (AB 1023, Flora)
The call for bids and contract documents for all public works projects
must specify if the project is subject to compliance monitoring and
enforcement by the Department of Industrial Relations. The public
entity must also specify if each contractor or subcontractor must
furnish certain payroll records directly to the Labor Commissioner.
Presently, the contractor or subcontractor must furnish required
records at least monthly in a format prescribed by the Labor
Commissioner. This amendment now requires that the contractor or
subcontractor furnish required records electronically at least once
every 30 days while work is being performed on the projectand
within 30 days after the final day of work performed on the project. A
contractor or subcontractor who fails to furnish those records timely
is liable for a penalty of $100 per day, following a 14-day grace
period, not to exceed $5,000 per project.
CONSTRUCTION PROCUREMENT AND DELIVERY
Job Order Contracting Authority Extended for School Districts and
Community Colleges through 2026 and “Skilled and Trained
Workforce” added (AB 846, Low)
The Local Agency Public Construction Act authorizes job ordercontracting for school districts and community college districts until January 1, 2022. This law extends that date through the end of 2026. Job order contractors must submit a questionnaire to the school district or community college district containing specified information verified under oath. This law adds that for job order contracts in excess of $25,000, the direct contractor must provide an enforceable commitment to the school district or community college district that the contractor and its subcontractors at every tier will use a skilled and trained workforce to perform all work on the job order contract that falls within an apprenticeable occupation in the building and construction trades, unless a project labor agreement already specifies that a skilled and trained workforce will perform the job order contract. “Best Value” Contracting Authorized for Santa Clara Valley Water District (AB 271, Rivas) Current law authorizes certain local entities to select a bidder for a contract on the basis of “best value.” This law authorizes Santa Clara Valley Water District, upon approval by the board of directors of the district, to award contracts on a best value basis for any works of construction with regard to the Leroy Anderson Dam and Reservoir and certain fish and aquatic habitat measures described in a specified federal-state settlement agreement. Department of Water Resources Authorized to Use CM/GC Procurement for Up to 7 Projects through 2033 (SB 626, Dodd) Current law authorizes the Department of Transportation, regional transportation agencies, and the San Diego Association of Governments to use the Construction Manager/General Contractor project delivery method for specified public work projects. This law now allows the Department of Water Resources to use the CM/GC method through January 1, 2033, for no more than seven projects for elements of State Water Facilities. Under the new law, the Department of Water Resources must use department employees or consultants under contract with the department to perform all project design and engineering services related to design, and construction inspection services, required for the CM/GC projects. CONTRACTS AND CHANGE ORDERS LA County Given Authority to Issue Change Orders up to $750,000, Adjusted Annually (AB 712, Calderon) The Local Agency Public Construction Act regulates contracting by local agencies, including counties and special districts. The act imposes a variety of caps on the amounts that the entity may allow for change order work, generally about 10% of the base contract value or 5% for larger projects. This law allows the County of Los Angeles to add a new change order cap of $400,000 for contracts whose original cost exceeds $25,000,000 and of $750,000 for contracts whose original cost exceeds $50,000,000, both of which will be adjusted annually to reflect the percentage change in the California Consumer Price Index. LICENSING New Regulations for Responsible Managing Employees (AB 830, Flora)
An RME must be “a bona fide employee of the applicant” who is permanently employed by the applicant and “actively engaged” in the business—meaning working 32 hours per week, or 80% of the total hours per week that the applicant’s business is in operation, whichever is less. The RME must exercise supervision and control of their employer’s or principal’s construction operations as necessary to secure full compliance with the contracting licensing rules and regulations. The new law defines “supervision or control” to mean direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated. It defines “direct supervision or control” to mean supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or supervision on construction job sites. The RME’s employer must, starting in 2022, prepare and submit to the Contractors State Licensing Board (“CSLB”) an employment duty statement detailing the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations. A contractor who fails to submit this statement is subject to disciplinary action and misdemeanor punishment. Contractor Licenses May Now be Disciplined for Illegal Dumping (AB 246, Quirk) Under current law, willful or deliberate disregard by a licensed contractor of various state building, labor, and safety laws constitutes a cause for disciplinary action by the CSLB. This law reorganizes these provisions and adds illegal dumping to the list of violations that constitute a cause for disciplinary action against a contractor by the board. Solar Projects Requirements Expanded Under Consumer Protections Laws (SB 757, Limon) Current law defines the term “home improvement” to include installation of solar energy systems among a host of other home improvement or remodel work. This law subjects a solar energy installer to discipline if the installer fails to install equipment that lives up to representations about trademark or brand name, quality, or size of any goods or materials. Licensing Fees Waived for Armed Forces Personnel Significant Others (SB 607, Min) Current law requires a board within the Department of Consumer Affairs to expedite the licensure process for an applicant who holds a current license in another jurisdiction in the same profession or vocation and who supplies satisfactory evidence of being married to, or in a domestic partnership or other legal union with, an active-duty member of the Armed Forces of the United States who is assigned to a duty station in California under official active-duty military orders. Starting July 1, 2022, the CSLB must waive the licensure application fee and the initial or original license fee for such persons. Limits Increased for Fines and Penalties Levied by CSLB (AB 569, Grayson) Presently, the CSLB may not levy a civil penalty or an administrative fine greater than $5,000 against licensees. Also, presently the CSLB can levy a civil penalty not to exceed $15,000 for certain
violations related to aiding or abetting work of unlicensed persons. This law increases the civil penalty limit from $5,000 to $8,000, notwithstanding the administrative fine maximum, and increases the enhanced civil penalty limit from $15,000 to $30,000 for aiding and abetting, and also applies the enhanced penalties to workers’ compensation insurance violations. DESIGN-BUILD Town of Paradise Authorized to use Design-Build Contracts for Sewer Treatment Facilities (AB 36, Gallagher) The Paradise Irrigation District may now use design-build contracting to award a contract for a water conveyance pipeline from the Town of Paradise to the City of Chico. The law also allows the Town of Paradise to use design-build contracting to provide for sewer treatment for the Town of Paradise, including infrastructure connecting the Town of Paradise to an existing treatment facility. Regional Transportation Agencies May Use Design-Build Through 2034 (AB 1499, Daly) Current law authorizes regional transportation agencies to use design-build procurement for projects on or adjacent to the state highway system and certain expressways that are not on the state highway system. This law extends the operation of these provisions until January 1, 2034, or for one year from the date that the Department of Transportation posts on its internet website that the provisions related to construction inspection services for these projects have been held by a court to be invalid. Under this section, the department must submit a report to the Legislature on or before January 1, 2033, on its experience with design-build procurement. DISPUTE RESOLUTION Prevailing Excavator Entitled to Recover Attorney Fees Incurred in Defense (AB 930, Levine) An excavator must delineate the area to be excavated before notifying the appropriate regional notification center of the planned excavation. An operator, before the legal start date and time of the excavation, must locate and field mark, within the area delineated for excavation, its subsurface installations. This law now requires a court or arbitrator to award reasonable attorney’s costs and fees, including expert witness fees, to an excavator who has been found not liable for damage to a subsurface installation for reasons related to inaccurate field marking, or if the excavator makes an offer to settle the matter that is not accepted and the plaintiff fails to obtain a more favorable judgment or award. MISCELLANEOUS Standards in Department of Toxic Substances Control regulations Made Into Law (AB 332, Committee on Environmental Safety and Toxic Materials) This law gives the Department of Toxic Substances Control until July 1, 2028, to present a plan to the Legislature on its update for the future disposal of Treated Wood Waste (“TWW”). This extension was necessary for the construction industry because the alternative management standards for TWW expired on December 31, 2020.
This measure keeps in effect Department of Toxic Substances Control regulations, providing needed guidance to the industry for the handling of TWW. Hefty Fines May be Levied Against Scofflaw Operators or Excavators Who Damage Subsurface Installations (SB 297, Durazo) Governor Newsom signed into law the Wade Kilpatrick Gas Safety and Workforce Adequacy Act of 2021. This law prescribes a civil penalty of up to $100,000 to be imposed on an operator or an excavator who knowingly and willfully violates provisions relating to excavations and subsurface installations resulting in damage to a gas or hazardous liquid pipeline subsurface installation in a way that results in the escape of any flammable, toxic, or corrosive gas or liquid. Women in Construction Week Declared (SCR 16, Caballero) This resolution proclaims the week of March 7, 2021, to March 13, 2021, inclusive, as “Women in Construction Week”. Construction Industry Suicide Prevention Awareness Day Declared (ACR 23, Villapadua) This resolution promotes awareness of the problem of suicide facing men and women in California’s construction industry by proclaiming March 18, 2021, as “Construction Industry Suicide Prevention Awareness Day” in California. PENDING BILLS FOR NEXT SESSION Proposed California Jobs Plan for Public Works (SB 674, Durazo) This bill, if enacted into law, would require the Labor and Workforce Development Agency to create two programs, to be known as the California Jobs Plan Program and the United States Jobs Plan Program. The bill would require the programs to meet specified objectives, including supporting the creation and retention of quality, nontemporary full-time jobs and the hiring of displaced workers and individuals facing barriers to employment. The bill would require, as a component of applications for covered public contracts, the creation of forms for each program that state the minimum numbers of proposed jobs that are projected to be retained and created if the applicant wins the covered public contract. More Trades (in Addition to Roofers) Required to Obtain Workers Compensation Even in Absence of Employees (SB 216, Dodd) This bill, if enacted into law, would, until January 1, 2025, require concrete contractors holding a C-8 license, warm-air heating, ventilation and air-conditioning (HVAC) contractors holding a C-20 license, or tree service contractors holding a D-49 license to also obtain and maintain workers’ compensation insurance even if that contractor has no employees. The bill, as of January 1, 2025, would require all licensed contractors or applicants for licensure to obtain and maintain workers’ compensation insurance even if that contractor has no employees, and it would also prohibit the filing of a certificate of exemption. Employer’s Time to Contest Worker’s Compensation Claim Reduced
to 45 Days (SB 335, Cortez) Current law prohibits a claim for workers’ compensation from being maintained unless, within 30 days after the occurrence of the injury, the injured person, or in case of the death, a dependent, or someone on the injured person’s or dependent’s behalf, serves notice of the injury upon the employer. Current law also requires an injured employee, or in the case of death, a dependent, or an agent of the employee or dependent, to file a claim form with the employer. Under current law, except for specified injuries, if liability is not rejected within 90 days after the date the claim form is filed with the employer, the injury is presumed compensable and the presumption is rebuttable only by evidence discovered subsequent to the 90-day period. This bill, if enacted into law, would reduce those 90-day time periods to 45 days and, for certain injuries or illnesses, including hernia, heart trouble, pneumonia, or tuberculosis, among others, sustained in the course of employment of a specified member of law enforcement or a specified first responder, would reduce those time periods to 30 days. Expanding Career Technical Education Opportunities to Community and Juvenile Court Schools (AB 102, Holden) This bill, if enacted into law, would specify that “high school,” for purposes of a College and Career Access Pathways (CCAP) partnership, includes a community school or juvenile court school. The bill would authorize county offices of education to enter into CCAP partnerships with the governing boards of community college districts in accordance with these provisions. The bill would extend the provisions authorizing CCAP partnerships indefinitely. California Apprenticeship Grant Program to be Established (AB 299, Villapudua) This bill, if enacted into law, would establish the California Apprenticeship Grant Program, commencing with the 2022–23 academic year, under the administration of the office of the Chancellor of the California Community Colleges, to provide grants to encourage high school pupils, community college students, and employed and unemployed workers seeking to go into career technical education and vocational professions through participation in qualifying, state-approved apprenticeship programs. California Career Technical Education Incentive Grant Program Funding Increase (AB 839, O’Donnell) Current law appropriates specified amounts for the California Career Technical Education Incentive Grant Program from the General Fund for the 2015–16, 2016–17, and 2017–18 fiscal years. Existing law provides, for the 2018–19 fiscal year and every fiscal year thereafter, that $150,000,000 is made available for the program upon appropriation by the Legislature. Current law also specifies minimum eligibility requirements for grant applicants. Existing law also requires the department, on or before January 31, 2024, and on or before January 31 every 5 years thereafter, to submit to the Department of Finance, the Governor, and the appropriate policy and fiscal committees of the Legislature a report evaluating the progress that local educational agencies have made with respect to specified issues related to the program. This bill, if enacted into law, would provide that, for the 2021–22 fiscal year and each fiscal year thereafter, $300,000,000 would be made available to the
department, upon appropriation by the Legislature in the Budget Act or another statute, for the program. Shorter Statute of Limitations for Nonprofit Housing Defect Claims (AB 919, Grayson) Current law specifies the requirements for bringing actions for construction defects. Current law includes a statute of limitations that, except as specified, prohibits an action from being brought to recover under these provisions more than ten years after substantial completion of the improvement but no later than the date the notice of completion is recorded. Notwithstanding that 10-year limitation period, if enacted into law, this bill would shorten the timeframe in which specified actions against a nonprofit housing corporation may be brought for underlying construction projects using a certified skilled and trained workforce to no more than five years after substantial completion of the improvement but no later than the date the notice of completion is recorded. Inflation Adjustment for Work Not Requiring a License (AB 899, Cunningham) Current law authorizes a person who is not licensed as a contractor to advertise for construction work or a work of improvement covered by existing law only if the aggregate contract price for labor, material, and all other items on a project or undertaking is less than $500, and the person states in the advertisement that they are not a licensed contractor. This bill, if enacted into law, would require the CSLB to annually adjust the $500 amount by regulation to reflect the rate of inflation, as measured by the Consumer Price Index or other method of measuring the rate of inflation that the board determines is reliable and generally accepted. Inflation Adjustment for Home Improvement Work Not requiring a License (SB 304, Archuletta) The Contractors State License Law provides for the licensure, regulation, and discipline of contractors by the CSLB. Existing law exempts from this licensing requirement certain minor work projects when the aggregate contract price does not exceed $500, except when the person performing the work advertises to the public that they are a licensed contractor. Current law defines a home improvement contract as an agreement, as specified, for the performance of home improvement that exceeds $500 in aggregate price, and requires a home improvement contract for the sale, installation, and servicing of a fire alarm in conjunction with an alarm system, except when all costs attributable to making the fire alarm system operable do not exceed $500. Current law exempts certain service and repair contracts from certain home repair contract requirements and sets forth the requirements for a service and repair contract, including that the contract amount must total $750 or less. This bill, if enacted into law, would increase the maximum aggregate contract price eligible for the minor work exemption to $1,000 and would prohibit a person from using the exemption if they employ any workers to perform services for which a license is required. ___________________________________________________________________________ [1] Special thanks to Skip Daum, Capitol Communications Group for
his assistance in tracking bills.
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