2017 Construction Legislative Developments: California

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 Article provided by California Surety Federation

Effective January 1, 2017, California will see over 1,000 legislative bills enacted that were signed into law by Governor Jerry Brown.   Many of these laws will directly impact contractors and surety companies. Below is a summary provided by the California Surety Federation outlining the key areas to consider when contracting in the “Golden State”.

Below is a brief description; for complete information of each bill, go to http://leginfo.legislature.ca.gov.

Public Works Contracting – Alternative Procurement

Lease/Leaseback School Construction – AB 2316 (O’Donnell) – Reforms the lease-leaseback procurement process for school construction to address recent court decisions and protect contractors from possible disgorgement of monies paid under current and past lease-leaseback contracts. (Co-Sponsored by AGC and the Construction Employers Association)

Construction Manager/General Contractor (CM/GC) – AB 2126 (Mullin) & AB 2374 (Chiu) – Authorizes Construction Manager/General Contractor method of procurement for additional transportation projects. AB 2126 expands this authorization for Caltrans to contract for 12 projects and would require 8 out of the 12 projects to use department employees or consultants under contract with the department to perform all project design and engineering services. AB 2374 authorizes the use of the CM/GC method for the construction of 2 specified bridges that are not on the state highway system.

University of California: Best Value Construction Contracting Pilot Program – SB 1214 (Allen) – Extends authorization for the University of California to use Best Value Construction Contracting until January 1, 2018, for all campuses in the UC system.

Water Reservoir Construction – AB 2551 (Gallagher) – Authorizes the use of construction manager at-risk, design-build, or design-build-operate (DBO), project delivery methods for Proposition 1 funded surface storage water projects.

Design-Build for Health Care Districts – SB 957 (Hueso) – Authorizes, until January 1, 2025, any health care district to use the design-build process when contracting for the construction of a hospital or health facility building.

Public Works/Public Contracts

Prompt Payment on Change Orders – AB 626 (Chiu) – Establishes a process to provide prompt payment to contractors for change order work. AB 626 puts a process in place that requires agencies to respond to a contractor’s claim, requires the agency to pay out portions of the work not in dispute they acknowledge/agree they owe the contractor, and implements a fair process for resolving any disputed portions of payment.

Skilled Workforce Requirements – SB 693 (Hueso) – SB 693 makes the skilled and trained workforce requirements in several statutes uniform and addresses compliance and enforcement issues. The bill also requires that in the event a new project labor agreement (PLA) applies to a project, the skilled workforce requirements must be incorporated into the PLA.

Prevailing Wage for Ready-Mix Drivers – SB 836 – Implementation of AB 219 (Daly) – AB 219 was signed into law last year and, effective July 1, 2016, extends the application of prevailing wage to the delivery of ready-mix concrete to public works construction sites. SB 836 makes clarifying corrections to AB 219 that were effective as of July 1 this year. However, the final status of AB 219 is in doubt due to the issuance of a temporary restraining order halting the enforcement of the legislation.

Contractors’ State License Board

Contractors: License Requirements: Recovery Actions – AB 1793 (Holden) – Revises certain of the criteria for a court to find that a contractor is in substantial compliance with the licensure requirements, including removing the condition that the contractor did not know or should not have reasonably have known, that he or she was unlicensed during performance of the contract.

Building Construction: Contractors: Discipline: Reporting: Building Standards – SB 465 (Hill) – Requires contractors to report to CSLB within 90 days of the occurrence of a conviction of any felony or a conviction of any crime that is substantially related to the qualifications of their license. Also, requires CSLB to prepare a study of judgments, arbitration awards and settlements that were a result of construction defect claims for rental residential units by January 1, 2018, and to evaluate whether or not this information enhances their ability to protect the public.

Contractors: Discipline – SB 1209 (Morrell) – Requires the disclosure of citations to appear on the license record of any other license identified as a qualifier who is listed in the members of the personnel of record of the license that was issued the citation.

Liability, Claims and Contracts

Prevailing Wage Claims – AB 326 (Frazier) – AB 326 addresses the issue of contractors having to post a cash deposit with the Department of Industrial Relations (DIR) to avoid liquidated damages from prevailing wage claims. This bill will require DIR, following a settlement or dismissal, to refund the cash deposit to the contractor within 30 days. Currently there is no deadline and it has taken, in many cases, months to return monies rightfully owed to contractors.

Digital signatures – AB 2296 (Low) – Expresses the intent of the Legislature to clarify that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act and is a type specified under the Government Code.


Los Angeles County Metropolitan Transportation Authority: contracting – AB 2690 (Ridley-Thomas) – Authorizes the LACMTA to establish disabled veteran business enterprise participation goals, and would define “disabled veteran business enterprise” for these purposes.

Labor and Employment

Employment: Wages: Itemized Statements – AB 2535 (Ridley-Thomas) – Exempts the requirement to provide itemized statements on total work hours for an employee who is exempt from payment of minimum wage and overtime under specified statues.

Employment Unfair Practices – SB 1001 (Mitchell) – Makes it unlawful for an employer to request more or different immigration-related documents than are required under federal law.

Conditions of Employment: Wage Differential: Race or Ethnicity – SB 1063 (Hall) – Prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work, as specified.

Wages: Investigations: Subpoenas – SB 1342 (Mendoza) – Specifies that a legislative body of a city or county is authorized to issue subpoenas and to report noncompliance thereof to the judge of the superior court of the county, to enforce any local law or ordinance, including local wage laws.


California Global Warming Solutions Act of 2006: Emissions Limit – SB 32 (Pavley) – Requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to 40% below the 1990 level by 2030. This bill contains other related provisions.

California Environmental Quality Act: Record of Proceedings – SB 122 (Jackson) – Requires the lead agency, at the request of a project applicant and consent of the lead agency, to prepare a record of proceedings concurrently with the preparation of a negative declaration, mitigated negative declaration, EIR, or other environmental document for projects.

Other Legislation

Career Technical Education – SB 66 (Leyva) – Requires the Department of Consumer Affairs to make available, upon request by the Office of the Chancellor of the California Community Colleges, specified information with respect to every licensee for the sole purpose of enabling the office of the chancellor to measure employment outcomes of students who participate in career technical education programs offered by the California Community Colleges.

Protection of Subsurface Installations – SB 661 (Hill) – Creates the Dig Safe Act of 2016 to modify laws governing excavation near subsurface installations and establishes the Underground Facilities Safe Excavation Advisory Board within the office of the State Fire Marshall to investigate violations of the act as well as to coordinate education and outreach and to develop standards. Any disciplinary actions involving contractors will be brought before the CSLB.

Public Works: Prevailing Wage: Per Diem Wages – SB 954 (Hertzberg) – Requires per diem wages to include industry advancement and collective bargaining agreements administrative fees if the payments are made pursuant to a collective bargaining agreement to which the employer is obligated.

Water: Pollution: Fines – AB 1842 (Levine) – Imposes an additional civil penalty of up to $10 per gallon or pound of material illegally discharged into state waterways and requires the penalty to be reduced by every gallon or pound of the illegally discharged material recovered and properly disposed of by the responsible party.

Surface Mining: Financial Assurances: Reclamation Plans – SB 209 (Pavley) – Establishes the Division of Mine Reclamation within the Department of Conservation and raises the maximum amount of the annual reporting fee to $10,000 per mining operation.