The California Legislature recently passed about 1,300 laws and the Governor signed 893 of them into law. This continues a long run of California enacting approximately 1,000 laws a year. While it can be hard to keep up with the new legislation, below are some of the ones impacting the construction industry. Some notable cases are also referenced.
SB 150 – PLA on Projects Over $35 Million-Adds section 14017 to Gov. Code, and 2500.5 to Public Contract Code. Requires DOT (Caltrans) to work with CA Workforce Development Board to develop “high road construction jobs.” High Road jobs are jobs that pay family supporting wages, compete based on the quality of their services and products, and engage workers and their representatives in the project. Projects, in the aggregate of $35 million may be required to enter into PLAs if it is determined the project is not meeting community benefits (undefined).
AB 1204 – Adds section 7035 to B&P Code. Limits specialty contractor work. Prohibits specialty contractors from entering into contracts for the performance of work on the same or single project with more than one subcontractor in the same license classification. Exception if subcontractor employs persons who are classified employees to perform work in that license classification on the single project or the specialty contractor is a signatory to a bona fide collective bargaining agreement.
AB 336 Worker’s Compensation – Adds section 7125.6 to Business & Professions Code (“B&P”). Combats worker compensation fraud through worker classification gamesmanship, i.e., misclassifying employees to get a lower premium. Requires Contractor to certify when providing a worker’s comp renewal to list worker classification codes on the certificate. Prohibits renewal if classifications are not identified. Effective July 1, 2024.
SB 706 Progressive Design Build – Adds and repeals 22185 of Public Contract Code (“PCC”). Allows until January 1, 2028, local agencies (city, county, or special district) to use the progressive design build process for up to 10 public works projects in excess of $5 million.
AB 1433 Contractor Prequalification – Amends PCC 20111.6. Extends contractor prequalification requirements to public projects if the governing board of the school district uses state general funds. Imposes the crime of perjury for false statements.
AB 334 Conflicts of Interest – Adds 1097.6 to Gov. Code. Current law prohibits state, county, district, judicial district and city employees or officers that had a financial interest in a contract they participate in from becoming an independent contractor who participates in the project. Now, they are eligible if they meet new criteria to be hired in the later stages of project, i.e., no longer will an officer or employee be barred as long as the person did not engage in or advise on a subsequent contract. Basically, a government employee can work for a company as an officer or employee that its former public employer had a financial interest in under specified conditions, if it was not the same or subsequent contract where the former public employee/officer/independent contractor participated in the selection or evaluation.
SB 423 Streamlined Housing Approvals-Multi Family Housing – Expedites ministerial approval of multi-family housing. Supersedes local housing regulations and local zoning rules. Approvals not subject to Conditional Use Permits (CUP). Coastal Zone permits still required if building in coastal zone. All construction workers to be paid prevailing wage, no skill or trained workforce requirement.
AB 1490 Affordable Housing Developments Priority Funding – Adds sections to Government Code 65913.12 and 65960.1. Applies to affordable housing in urban infill areas. Allows adaptive housing reuse on smaller infill parcels. Goal is to create “extremely affordable housing,” new category of housing. Can be built in or on dedicated industrial sites. Defines “extremely affordable adaptive reuse project.” Requires a local source of funding. Sets out approval time limits local agency must meet.
2023 Notable Cases
Hernandez v. City of Stockton, 90 Cal. App. 5th 122 (2023), Government Claims Must “Fairly Reflect” Factual Claims Made in the Underlying Government Claim Submitted. Cannot introduce materially different facts or circumstances that vary from the government code claim, even if government entity knows of the underlying facts.
Suffolk Construction Company, Inc. v. Los Angeles Unified School District, 90 Cal. App. 5th 849 (2023), Public Contract Code 1104 (prohibits bidder to assume responsibility for accuracy and completeness of plans and specs) but does not prohibit public entities from contractually requiring contractors to determine the means and methods of achieving performance standards. Case turned on performance standards vs. design standards regarding concrete mix.
Hendrix v. J-M Manufacturing Company 76 F. 4th 1164 (2023), 9th Circuit Weighs in on False Claims. Failure to comply with industry standards in the manufacture of a pipe could be a false claim, no need to test every piece of the commodity. Court rejected argument that the entire contract price amount paid is the proper measure of damages. In deciding, the court stated the jury may make a just and reasonable estimate of the damages based on relevant data and is allowed to act on probable and inferential as well as (upon) direct proof and positive proof. A jury cannot speculate. Plaintiff failed to prove damages on the lost “value.” Plaintiff was unable to collect contract amount or lost value due to failure of proof.
GRFCO, Inc. v. Superior Court, 89 Cal. App. 5th 1295 (2023), Failure to Comply With Apprenticeship Requirements. Failure to comply can lead to a 3-year debarment, Labor Code 1777.5. Five criteria are laid out that Labor Commissioner is required to consider in debarment length. Debarred contractor raised a number of issues on appeal of the Labor Commission decision re debarment but never addressed adequately the criteria application errors and instead made claims regarding hearing bias, inability to call the Labor Commissioner as a witness, and refusal to open the case. Appellate court rejected each such argument of contractor since there were no facts to support these allegations.
