Construction Law Update Cases and Statutes San Diego Chapter: Construction Management Association of America February 26, 2015 Presented By Laurence R. Phillips, Esq. Brian C. Fish, Esq.
TABLE OF CONTENTS Page I. CASES...1 A. Architect & Engineer Liability...1 1. Beacons Residential Cmty. Assoc. v. Skimore, Owings & Merrill (2014) 14 C.D.O.S. 7545...1 2. Zalewski v. Cicero Builder Dev., Inc. (2014) F.3d 95...1 B. Arbitration...1 3. Hyundai Amco America, Inc. v. S3H Inc. (Dec. 17, 2014) WL 7174606...1 4. Anderson Plant, LLC v. Batzer Constr., Inc. (E.D.Cal., Feb. 27, 2014, No. 2:13-cv-02109-KJM-CMK) 2014 WL 800293...1 5. Malone v. Superior Court (2014) 220 Cal.App.4th 1551...2 C. Attorney-Client Privilege...2 6. Seahaus La Jolla Owners Ass n v. Superior Court (2014) 224 Cal.App.4th 754...2 D. Bankruptcy...2 7. In re Modtech Holdings, Inc. (2013) 503 B.R. 737...2 E. Federal Contracting...3 8. Ramona Equip. Rental, Inc. ex rel. U.S. v. Carolina Cas. Ins. Co. (2014) 755 F.3d 1063...3 9. Technica LLC ex rel. U.S. v. Carolina Cas. Ins. Co. (2014) 749 F.3d 1149...3 10. JMR Constr. Corp. v. United States (2014) 117 Fed.Cl. 436...3 11. Metcalf Constr. Co., Inc. v. U.S. (2014) 742 F.3d 984...3 12. Kellogg Brown & Root Servs., Inc. v. U.S. (2014) 742 F.3d 967...3 13. Bell/Heery v. U.S. (2014) 739 F.3d 1324...4 14. Colonial Sur. Co. v. United States (2013) 108 Fed.Cl. 622...4 F. Insurance...4 15. Transport Ins. Co. v. Superior Court (2014) 222 Cal.App.4th 1216...4 16. Regional Steel Corp. v. Liberty Surplus Ins. Cos. (2014) 226 Cal.App.4th 1377...4 17. North Counties Eng g, Inc. v. State Farm Gen. Ins. Co. (2014) 224 Cal.App.4th 902...5 i
18. Mark Tanner Constr., Inc. v. HUB Int l Ins. Servs., Inc. (2014) 224 Cal.App.4th 574...5 G. Licensing...5 19. E.J. Franks Constr. Inc. v. Sahota (2014) 226 Cal.App.4th 1123...5 H. Mechanics Liens and Stop Payment Notices...5 20. Brewer Corp. v. Point Center Fin., Inc. (2014) 223 Cal.App.4th 831...5 21. Moorefield Constr., Inc. v. Intervest-Mortgage Inv. Co. (2014) 230 Cal.App.4th 146...6 22. Palomar Grading & Paving, Inc. v. Wells Fargo Bank, N.A. (2014) 230 Cal.App.4th 686...6 I. Public Contracting...6 23. Los Alamitos Unified School Dist. v. Howard Contracting, Inc. (2014) 223 Cal.App.4th 1527...6 24. Gilbane Bldg. Co. v. Superior Court (2014) 223 Cal.App.4th 1527...6 25. Golden State Boring & Pipe Jacking, Inc. v. Eastern Municipal Water Dist. (2014) 228 Cal.App.4th 273...6 26. Bay Cities Paving & Grading, Inc. v. City of San Leandro (2014) 223 Cal.App.4th 1181...7 27. R&R Pipeline, Inc. v. Bond Safeguard Ins. (2014) 223 Cal.App.4th 438...7 28. Sheet Metal Workers Internat. Assn., Local 104 v. Duncan (2014) 229 Cal.App.4th 192...7 J. Right to Repair Act...8 29. McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330...8 30. KB Home Greater Los Angeles, Inc. v. Superior Court (2014) 223 Cal.App.4th 1471...8 31. Burch v. Superior Court (2014) 223 Cal.App.4th 1411...8 K. Statute of Limitations...8 32. People v. Wetherell (2014) 223 Cal.App.4th Supp. 12...8 L. Tort Liability...9 33. Talega Maintenance Corp. v. Standard Pacific Corp. (2014) 225 Cal.App.4th 722...9 34. Kelly v. Beazer Homes USA Inc. (2014) 552 Fed.Appx. 666...9 ii
II. 35. Buckner v. Milwaukee Electric Tool Corp. (2013) 222 Cal.App.4th 522...9 36. Hernandez v. Amcord, Inc. (2014) 215 Cal.App.4th 659...9 37. CTS Corp. v. Waldburger (2014) 134 S.Ct. 2175...9 LEGISLATION...11 A. Design-Build Contracts...11 1. SB 785 (Wolk) Design-build. Chaptered 9/30/14...11 B. Green Building Standards...11 2. AB 1179 (Bocanegra) Recycling: waste tires: public works projects. Chaptered 9/26/14...11 C. Employer/Employee Relations...11 3. AB 1522 (Gonzalez) Employment: paid sick days. Chaptered 1/16/14...11 4. AB 1723 (Nazarian) Employees: wages. Chaptered 9/30/14...11 5. AB 1897 (Hernandez, Roger) Labor contracting: client liability. Chaptered 9/28/14...11 6. AB 2074 (Hernandez, Roger) Recovery of wages: liquidated damages. Chaptered 8/19/14...12 7. AB 2751 (Hernandez, Roger) Retaliation. Chaptered 6/28/14...12 8. SB 315 (Lieu) Contractors. Chaptered 9/17/14...12 9. SB 1360 (Padilla) Compensation: rest or recovery periods. Chaptered 6/28/14...12 10. AB 1650 (Jones-Sawyer) Public contracts: bidders: employment practices. Chaptered 9/30/14...12 D. Infrastructure...13 11. AB 1937 (Gordon) Natural Gas Pipeline Safety Act of 2011: school and hospital notification of nonemergency excavation or construction of pipelines. Chaptered 8/25/14...13 E. Labor & Wages...13 12. SB 854 (Committee on Budget and Fiscal Review) State and local government. Chaptered 6/20/14...13 13. AB 1939 (Daly) Public works: prevailing wages: contractor s costs. Chaptered 7/21/14....13 14. AB 2272 (Gray) Public works: prevailing wage. Chaptered 9/30/14...14 iii
15. AB 1870 (Alejo) Public works: prevailing wage: multiemployer apprenticeship grants. Chaptered 9/30/14...14 16. AB 2744 (No one named) Committee on Labor and Employment: Public works: apprenticeship program. Chaptered 08/25/14...14 17. SB 266 (Lieu) Prevailing wage. Chaptered 9/30/14...14 18. AB 26 (Bonilla) Construction: prevailing wage. Chaptered 9/30/14...14 F. Licensing...15 19. AB 186 (Maienschein) Professions and vocations: military spouses: temporary licenses. Chaptered 9/27/14...15 20. SB 1159 (Lara) Professions and vocations: license applicants: individual tax identification number. Chaptered 9/28/14...15 21. SB 2396 (Bonta) Convictions: expungement: licenses. Chaptered 9/28/14...15 G. Miscellaneous...15 22. AB 1581 (Buchanan) School facilities: construction contracts. Chaptered 9/18/14...15 23. AB 2355 (Levine) Local agencies: streets and highways: recycled materials. Chaptered 9/26/14...16 H. Public Agencies / Public Works...16 24. AB 1705 (Williams) Public contracts: payment. Chaptered 9/27/14...16 25. AB 2376 (Weber) State construction projects: insurance. Chaptered 7/10/14...16 I. Safety...16 26. AB 1634 (Skinner) Occupational safety and health: violations. Chaptered 10/20/14...16 iv
I. CASES A. Architect & Engineer Liability 1. Beacons Residential Cmty. Assoc. v. Skimore, Owings & Merrill (2014) 14 C.D.O.S. 7545 The California Supreme Court holds that an architect owes a duty of care to future homeowners in the design of a residential building were the architect is a principal architect on the project that is the architect is providing professional design services and is not subordinate to other design professionals. This duty of care extends to such architects even when they do not actually build the project or exercise ultimate control over the construction. 2. Zalewski v. Cicero Builder Dev., Inc. (2014) F.3d 95 B. Arbitration Creator of home designs filed suit against builders alleging violations of the Copyright Act. The Federal Appeals Court of the Second Circuit found that where a developer copied only unprotected elements of an architect s design, elements common to all colonial houses, there was no wrongful copying and no substantial similarity between the two designs as a matter of law. 3. Hyundai Amco America, Inc. v. S3H Inc. (Dec. 17, 2014) WL 7174606 Court of Appeal held that subcontractor s petition to compel arbitration of general contractor s complaint did not require proof of formal demand of arbitration. The lawsuit related to the parties performance under the agreement and despite the arbitration clause in the agreement, the Court of Appeal ruled that during the lower court proceedings it had been patently demonstrated that the plaintiff refused to arbitrate the controversy. 4. Anderson Plant, LLC v. Batzer Constr., Inc. (E.D.Cal., Feb. 27, 2014, No. 2:13-cv-02109-KJM-CMK) 2014 WL 800293 A dispute between owner and contractor arose on a power plant project. The contract provided that the dispute would be resolved by binding AAA arbitration and that California law would apply. After the arbitration commenced, the owner alleged it discovered that the contractor was not properly licensed at all times during the project. The owner sought to stay the arbitration and filed suit for the court to determine the preliminary issue of whether the contractor was properly licensed. At issue in the case was whether the licensure issue was to be decided by the arbitrator or court. After the action was removed to federal court, the district court found the 1
following: 1) the arbitrability of the licensing issue was to be decided under federal law (under the Federal Arbitration Act) in this instance; and 2) under the FAA the arbitrator should resolve the contractor license issue, not the court. Thus is was held that all claims were subject to arbitration. 5. Malone v. Superior Court (2014) 220 Cal.App.4th 1551 Former employee brought a wage and hour action against her former employer. Employer moved to compel arbitration pursuant to a clause in its employee handbook that broadly required binding arbitration of any claim arising out of employment. Further, the clause stated, the arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability or enforceability of this binding arbitration agreement. The court ruled that this clause is not unconscionable and is preempted by the Federal Arbitration Act. C. Attorney-Client Privilege 6. Seahaus La Jolla Owners Ass n v. Superior Court (2014) 224 Cal.App.4th 754 D. Bankruptcy Homeowner's association for common interest brought a construction defect action against developers and builders, and a subgroup of individual homeowner's filed their own action. The Court of Appeal in the Third District held that the attorney-client privilege applies to communications at a meeting of a homeowner s association with individual homeowners, conducted by homeowners association counsel, who discussed the association s construction defect lawsuit, which asserted claims that overlapped with a lawsuit brought by the individual owners. 7. In re Modtech Holdings, Inc. (2013) 503 B.R. 737 A debtor prime contractor s $75,000 progress payment to the creditor subcontractor, made approximately 20 days prior to prime contractor filing for Chapter 7 bankruptcy, was not a preferential transfer as the payment was made in the ordinary course of business and also made in exchange with providing the debtor with new value. 2
E. Federal Contracting 8. Ramona Equip. Rental, Inc. ex rel. U.S. v. Carolina Cas. Ins. Co. (2014) 755 F.3d 1063 Equipment rental company, which had an open account with a subcontractor, did not breach its duty to mitigate by failing to provide the general contractor with a Miller Act 90-day notice of numerous unpaid invoices until after the subcontractor was terminated. 9. Technica LLC ex rel. U.S. v. Carolina Cas. Ins. Co. (2014) 749 F.3d 1149 Federal construction project subcontractor sought recovery against the prime contractor and its payment surety under the Miller Act for amounts allegedly owed on the subcontract. The Court of Appeals for the Ninth Circuit ruled that as a matter of first impression, California law, barring an unlicensed contractor from receiving compensation for his work, does not apply to an unlicensed subcontractor s payment bond claim under the federal Miller Act. 10. JMR Constr. Corp. v. United States (2014) 117 Fed.Cl. 436 Government contractor contracting to build an aircraft maintenance facility could not recover home office overhead delay damages for the period between government possession and final completion under the Eichleay formula because it could not establish one element of the standby requirement: that it was required to resume construction activities at full speed and immediately. 11. Metcalf Constr. Co., Inc. v. U.S. (2014) 742 F.3d 984 In reversing the trial court, the Federal Circuit clarifies that the implied duty of good faith and fair dealing broadly encompasses the government s duty to cooperate and not hinder the contractor. In this instance, the requirement in the government s request for proposal that the contractor perform a soil investigation post-award does not negate the contractor s ability to rely on 1) representations in the soil report (even though designated for preliminary information only ), and 2) the government s response, to a pre-bid question, stating that unanticipated conditions would be resolved by change order. 12. Kellogg Brown & Root Servs., Inc. v. U.S. (2014) 742 F.3d 967 On a cost-plus-award-fee contract for construction in Iraq during the war, the prime contractor was denied reimbursement of a subcontractor s costs where it was found that the contractor was grossly negligent in reviewing whether the subcontractor s costs were reasonable. In this instance, given the finding of gross negligence, the court found there was no need to address the 3
contractor s proposed standard that the costs which are the result of negligent mistakes are reasonable and thus are reimbursable. 13. Bell/Heery v. U.S. (2014) 739 F.3d 1324 As the FAR s Permits and Responsibilities clause places on the contractor sole responsibility to comply with local permitting requirements, the federal government s failure to go to bat for the contractor against the state s environmental agency as a matter of law was not a breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the changes clause, or a construction change. 14. Colonial Sur. Co. v. United States (2013) 108 Fed.Cl. 622 F. Insurance On federal project, the absence of a formal declaration of default of contractor by government raises factual issues as to whether a surety s actions under the performance and payment bonds were voluntary, thereby defeating cross-motions for summary judgment on surety s equitable subrogation claim against government. 15. Transport Ins. Co. v. Superior Court (2014) 222 Cal.App.4th 1216 When an excess policy is deemed ambiguous (by use of the term underlying insurance ), that ambiguity must be resolved based on the reasonable expectations of the insured. However, the reasonable expectations of the named insured and additional insureds may be different and must be evaluated separately. Thus, an excess insurer may have a duty to defend the named insured but not an additional insured based on their different expectations regarding the meaning of the term underlying insurance in the policy. 16. Regional Steel Corp. v. Liberty Surplus Ins. Cos. (2014) 226 Cal.App.4th 1377 Insured subcontractor is barred from recovering under commercial property insurance policy because allegedly defective rebar tie hooks could not be classified as "property damage" within the insurance policy's coverage provision. The policy excluded coverage for "property damage" to "impaired property" or "property that has not been physically injured, arising out of defect, deficiency, inadequacy or dangerous condition in the insured's product or the insured's work." 4
17. North Counties Eng g, Inc. v. State Farm Gen. Ins. Co. (2014) 224 Cal.App.4th 902 The professional services exclusion in an engineering company s general liability policy did not preclude the insurer s duty to defend under the completed operations coverage where the underlying complaint for breach of contract and negligence against the engineering company arose from both the engineering services and construction work. 18. Mark Tanner Constr., Inc. v. HUB Int l Ins. Servs., Inc. (2014) 224 Cal.App.4th 574 G. Licensing Contractors insured under a self-insured workers compensation program, which ultimately became insolvent, filed suit against the broker who marketed and sold the insurance program to contractors. The trial court granted broker s motion for summary judgment, which was upheld by appellate court, who concluded that broker did not breach its duty to use reasonable care and did not owe the contractors a fiduciary duty to investigate the financial soundness of the insurance program. 19. E.J. Franks Constr. Inc. v. Sahota (2014) 226 Cal.App.4th 1123 Homeowners filed cross-complaint alleging breach of contract and fraud when during the course of constructing a home, contractor's valid license was reissued to his newly formed corporation. Court of Appeal denied crosscomplaint and held that work was performed by a licensed contractor at all times and Contractors' State License Law did not preclude the contractor from foreclosing on a mechanic's lien. H. Mechanics Liens and Stop Payment Notices 20. Brewer Corp. v. Point Center Fin., Inc. (2014) 223 Cal.App.4th 831 Court of Appeal finds: 1) lender must make available to stop notice claimants those amounts the lender has already disbursed to itself as fees on the construction loan; 2) a stop notice claimant s failure to serve a preliminary 20-day notice under Civil Code 3097 on lender, absent contractor s ability to prove that it started work prior to lender recording its loan deed of trust, bars it from recovering under its bonded stop notice; and 3) the failure of a stop notice claimant to serve the lender with a notice of commencement of stop notice action under Civil Code 3172 did not bar claimant s rights absent a showing of prejudice by lender. 5
21. Moorefield Constr., Inc. v. Intervest-Mortgage Inv. Co. (2014) 230 Cal.App.4th 146 Construction lender's construction loan agreement required property owner to assign its rights and remedies under the construction contract to lender. The agreement further required consent by construction contractor (and contractor provided such consent). General contractor then sought foreclosure of a mechanic's lien on the property, and construction lender filed a crosscomplaint seeking a declaration of priority of the lien. The Court of Appeal held that the general contractor's mechanic's lien was subordinated to lender's deed of trust and that the mechanic's lien was extinguished when lender foreclosed on its deed of trust. 22. Palomar Grading & Paving, Inc. v. Wells Fargo Bank, N.A. (2014) 230 Cal.App.4th 686 I. Public Contracting In this matter of first impression, the appellate court reversed the lower court's decision to award prejudgment interest at a rate of 10% for breach of contract. Instead, subcontractors were limited to a default constitutional rate of seven percent on foreclosed mechanic s liens against non-contracting innocent land owners. 23. Los Alamitos Unified School Dist. v. Howard Contracting, Inc. (2014) 223 Cal.App.4th 1527 School districts are exempt from obtaining competitive bids from contractors when entering into "lease-leaseback" agreements to improve school property such as high school track and athletic fields. 24. Gilbane Bldg. Co. v. Superior Court (2014) 223 Cal.App.4th 1527 Citizen group association has standing to sue a contractor for entering into a corrupt school contract because at least one association member is a resident of that school district. Taxpayer suit alleging corrupt contracts entered into by a school district may be brought without first making a demand on the district to sue its corrupt officers or employees. 25. Golden State Boring & Pipe Jacking, Inc. v. Eastern Municipal Water Dist. (2014) 228 Cal.App.4th 273 Tunneling subcontractor of a general contractor constructing a pipeline for a municipal water district has standing to sue on a payment bond because on a public works project cessations of labor for more than 30 days constitute completion of the project and trigger the limitations period. 6
26. Bay Cities Paving & Grading, Inc. v. City of San Leandro (2014) 223 Cal.App.4th 1181 Plaintiff s petition for writ of mandate denied when plaintiff challenged the action of the public entity in awarding a public works contract to a competing contractor, the lowest bidder on the project. Plaintiff alleged that the City of San Leandro could not properly award the contract to the lowest bidder because the bidder had materially deviated from the contract specifications when it failed to include the first page of its bid bond. In denying the writ of mandate, the appellate court found that the defect in the bid was not a material deviation because the bond information that was submitted was enforceable. Thus, the successful bidder did not have a competitive advantage over other bidders. 27. R&R Pipeline, Inc. v. Bond Safeguard Ins. (2014) 223 Cal.App.4th 438 An action by a contractor hired by a developer against a labor and material bond that had been issued in connection with a subdivision project to develop a golf course, residences and various subdivision improvements. The trial court determined that the project constituted a public works project and found that the contractor had not complied with statutory notice requirement to perfect its right against the bond. Thus, the trial court dismissed the subcontractor s action against the bond. The appellate court reversed after determining that the project actually constituted a private works project and thus the statutory notice requirement relating to public works did not apply. Instead, a longer (four year) statute of limitations existed in bringing an action against the bond. 28. Sheet Metal Workers Internat. Assn., Local 104 v. Duncan (2014) 229 Cal.App.4th 192 Question of whether prevailing wage law applies to an employee of a subcontractor who fabricates materials at a permanent offsite manufacturing facility not exclusively dedicated to the project. The court noted a lack of clear and authoritative guidance under California prevailing wage law regarding this issue. The court rejected the union s argument that the analysis should focus on whether the fabricated items are standard or customized and whether the facility sells to the general public. The court held that offsite fabrication is not covered by the prevailing wage law if (i) it takes place at a permanent offsite manufacturing facility; and (ii) the location and existence of that 7
J. Right to Repair Act facility is determined wholly without regard to the particular public works project. 29. McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330 As a matter of first impression, single family homebuilder opting out of Cal. Civ. Code 895 et. seq.: SB 800 (Right to Repair Act) non-adversarial procedures and remedies in favor or its own alternative dispute resolution procedures, was not required to provide any deadlines for its resolution procedures. 30. KB Home Greater Los Angeles, Inc. v. Superior Court (2014) 223 Cal.App.4th 1471 A homeowner insurer s subrogation action against a builder, to recoup the repair cost of property damage caused by a leaking pipe, was barred by insurer s failure to give the builder pre-repair notice of defects, as well as the opportunity to inspect and cure, as required by the California Right to Repair Act. 31. Burch v. Superior Court (2014) 223 Cal.App.4th 1411 California Right to Repair Act governs claims for new residential construction defects that result in economic damages, but does not limit common law claims for defects which have caused property damages. Owner who purchased house from developer may sue the general contractor for negligence notwithstanding lack of privity; a duty of care exists because the owner is a foreseeable plaintiff and there is a close nexus between the contractor s conduct and the plaintiff s injury. K. Statute of Limitations 32. People v. Wetherell (2014) 223 Cal.App.4th Supp. 12 Contractor s violation of California s criminal trust fund statute (Penal Code 484b re diversion of construction funds), although a general intent crime, is subject to the four-year statute of limitations because fraud is a material element of the offense. 8
L. Tort Liability 33. Talega Maintenance Corp. v. Standard Pacific Corp. (2014) 225 Cal.App.4th 722 A developer of a 3500 unit master-planned community in San Clemente, CA was sued by the HOA of that master planned community when horse and hiking trails adjacent to the subdivision suffered damages as a result of two rainy seasons. The court held that the Anti-SLAPP statute does not apply to a homeowners association s claim that board members appointed by the developer misrepresented that the condominium, not the developer, was responsible for damage to trails built by the developer adjacent to the condominium; the Act did not apply to the association s fraud claim because the homeowners association board meetings are not official proceedings and the board of directors vote did not concern a matter of public significance. 34. Kelly v. Beazer Homes USA Inc. (2014) 552 Fed.Appx. 666 A subdivision developer has no duty to disclose to homeowners the financial condition of other purchasers of the homes because "an indebted neighbor" is not akin to "one who creates a noxious nuisance on his or her property." Subsequently, the court dismissed a fraud claim by some of the homeowners against the developer for marketing the home to investors rather than familybased purchasers, thus bringing down their property value. 35. Buckner v. Milwaukee Electric Tool Corp. (2013) 222 Cal.App.4th 522 In products liability action, maintenance worker was injured when using a power drill. He alleged the tool was defective due to manufacturer s failure to warn. The sophisticated user defense presented by manufacturer, which if established precludes need for warning, was not supported by the evidence at trial; thus, the appellate court upheld trial court s granting of new trial to plaintiff. 36. Hernandez v. Amcord, Inc. (2014) 215 Cal.App.4th 659 The estate of a deceased construction worker may be able to establish, without testimony of a medical doctor, that a manufacturer s asbestoscontaining cement was a substantial factor in the decedent s mesothelioma. 37. CTS Corp. v. Waldburger (2014) 134 S.Ct. 2175 CERCLA s discovery rule, under which statutes of limitations in actions brought under state law for personal injury or property damage arising from the release of a hazardous substance, pollutant or contaminant into the 9
environment begin to run when a plaintiff discovers, or reasonably should have discovered, that the harm in question was caused by the contaminant, did not impliedly preempt state statutes of repose; statutes of repose did not pose an unacceptable obstacle to the attainment of CERCLA purposes, which did not provide a complete remedial framework, but instead left untouched states judgments about causes of action, the scope of liability, the duration of the period provided by statues of limitations, burdens of proof, rules of evidence, and other important rules governing civil actions. 10
II. LEGISLATION A. Design-Build Contracts 1. SB 785 (Wolk) Design-build. Chaptered 9/30/14 Amends seven different design-build code sections affecting state and local agencies. Makes legislative findings and declarations as to the necessity of a special statute for the San Diego Unified Port District. (Government Code 14661.1; Health and Safety Code 32132.5; Public Contract Code 20209.14; San Diego Unified Port District Act 37.2 ) B. Green Building Standards 2. AB 1179 (Bocanegra) Recycling: waste tires: public works projects. Chaptered 9/26/14 Authorizes the Department of Resources Recycling and Recovery, when awarding grants pursuant to the tire recycling program, to award grants for public works projects that use tire-derived products, including recycled tire lumber to create parklets and greenways. Priority will be given to disadvantaged communities. (Public Resources Code 42872.6) C. Employer/Employee Relations 3. AB 1522 (Gonzalez) Employment: paid sick days. Chaptered 1/16/14 Bill enacting the Healthy Workplaces, Healthy Families Act of 2014 to provide that an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment, is entitled to paid sick days for prescribed purposes to be accrued at a rate of no less than one hour for every 30 hours worked. (Labor Code 2810.5) 4. AB 1723 (Nazarian) Employees: wages. Chaptered 9/30/14 Bill expanding the penalty, restitution and liquidated damages provision for Labor Commissioner citations and to also subject the employer to payment of any applicable penalties for the willful failure to timely pay wages of a resigned or discharged employee. (Labor Code 1197.1) 5. AB 1897 (Hernandez, Roger) Labor contracting: client liability. Chaptered 9/28/14 Bill requiring a client employer to share with a labor contractor all civic legal responsibility and civil liability for all workers supplied by that labor contractor for payment of wages and the failure to obtain valid workers 11
compensation coverage. Prohibits client employer from shifting to labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the labor contractor. Further, bill provides definitions of "client employer" and "labor contractor." (Labor Code 2810.3) 6. AB 2074 (Hernandez, Roger) Recovery of wages: liquidated damages. Chaptered 8/19/14 Bill providing that a suit for liquidated damages may be filed at any time before the expiration of the statute of limitations for bringing the underlying action alleging payment of less than the state minimum wage. (Labor Code 1194.2) 7. AB 2751 (Hernandez, Roger) Retaliation. Chaptered 6/28/14 Bill requiring $10,000 penalty to be awarded to employees who suffer violations related to discharging an employee or in any manner discriminating, retaliating, or taking any adverse action against any employee or applicant for employment because the employee has engaged in protected conduct, as specified. (Labor Code 98.6, 1019, and 1024.6) 8. SB 315 (Lieu) Contractors. Chaptered 9/17/14 Act makes it a misdemeanor for a person to advertise for construction or work of improvement or engage in the business of, or act in the capacity of, a contractor within the State of California without having a license, unless particularly exempted. (Bus. and Prof. Code 7011.4, 7027.2, 7028, and 7110.5) 9. SB 1360 (Padilla) Compensation: rest or recovery periods. Chaptered 6/28/14 Bill providing that a rest and recovery period mandated pursuant to a state law, including, but not limited to, an applicable statute, or applicable regulation, standard, or order of the IWC, the board, or the division shall be counted as hours worked, for which there shall be no deduction from wages. (Labor Code 226.7) 10. AB 1650 (Jones-Sawyer) Public contracts: bidders: employment practices. Chaptered 9/30/14 Bill enacting Fair Chance Employment Act, requiring any person submitting a bid for a state contract involving onsite construction-related services to certify that the person will not ask an applicant to disclose information 12
D. Infrastructure concerning his or her conviction history on or at the time of an initial employment application. (Public Contract Code 10186) 11. AB 1937 (Gordon) Natural Gas Pipeline Safety Act of 2011: school and hospital notification of nonemergency excavation or construction of pipelines. Chaptered 8/25/14 E. Labor & Wages Bill requiring gas corporation to provide not less than 3 working days notice, as specified, to the administration of a school or hospital prior to undertaking nonemergency excavation or construction of a gas pipeline when the work is located within 500 feet of the school or hospital. (Public Utilities Code 955.5) 12. SB 854 (Committee on Budget and Fiscal Review) State and local government. Chaptered 6/20/14 A budget trailer bill, effective immediately, making significant changes to laws pertaining to the administration and enforcement of prevailing wage requirements by the Department of Industrial Relations (DIR). Among other things, established a new public works contractor registration program to replace prior Compliance Monitoring Unit (CMU) and Labor Compliance Program (LCP) requirements for bond-funded and other specified public works projects. (Education Code 17224, 17250.30 and 81704 as well as various sections from the Government Code, Health and Safety Code, Labor Code, Public Contract Code, Public Utilities Code and Unemployment Insurance Code) 13. AB 1939 (Daly) Public works: prevailing wages: contractor s costs. Chaptered 7/21/14. Bill authorizing a contractor to bring an action to recover from a hiring party that the contractor directly contracts with any increased costs, including labor costs, penalties and legal fees incurred as a result of any decision by the Department of Industrial Relations, or the Labor and Workforce Development Agency after the time at which the hiring party accepts the contractor s bid, awarding the contractor a bid where no bid is solicited, or otherwise allowing construction to proceed with the work covered by the project, or any portion thereof, as a public work, except under the circumstances specified. (Labor Code 1784) 13
14. AB 2272 (Gray) Public works: prevailing wage. Chaptered 9/30/14 As of January 1, 2015, the definition of public works to also include infrastructure project grants from the California Advanced Services Fund. Additionally, this bill incorporates changes to the Labor Code, proposed by AB 26. (Labor Code 1720) 15. AB 1870 (Alejo) Public works: prevailing wage: multiemployer apprenticeship grants. Chaptered 9/30/14 If there are two or more approved multiemployer apprenticeship programs serving the same craft or trade and county for which the training contributions were made to the council, this bill would require the grant to be divided among those programs based on the number of apprentices from that county registered in each program. (Labor Code 1777.5) 16. AB 2744 (No one named) Committee on Labor and Employment: Public works: apprenticeship program. Chaptered 08/25/14 Revises existing law that imposes a civil penalty on contractors and subcontractors who are determined to have knowingly violated specified provisions regulating the employment of apprentices on public works projects by requiring the Labor Commissioner or his/her designee to issue a civil wage and penalty assessment in accordance with a specified provision, and providing for notice by the Division of Labor and Standards Enforcement to the contractor within 15 days of receipt of a complaint that their subcontractor knowingly violated the apprenticeship provisions. (Labor Code 1777.1 and 1777.7 ) 17. SB 266 (Lieu) Prevailing wage. Chaptered 9/30/14 Bill amending existing law by requiring the body awarding a contract for public work to furnish, within 10 days after receipt of written request from the Labor Commissioner, a copy of the valid notice of completion for the public work, or a document evidencing the awarding body s acceptance of the public work on a particular date, whichever occurs later, in accordance with the specified provisions. (Labor Code 1741.1) 18. AB 26 (Bonilla) Construction: prevailing wage. Chaptered 9/30/14 Bill revising the definition of construction to also include work performed during the postconstruction phases of construction, including, but not limited to, all cleanup of work on the jobsite. Additionally, bill incorporates changes to Labor Code provided by AB 2272. (Labor Code 1720) 14
F. Licensing 19. AB 186 (Maienschein) Professions and vocations: military spouses: temporary licenses. Chaptered 9/27/14 Expands upon expedited reciprocal licensure provisions by establishing a temporary licensure process for specified licensed professions for an applicant who holds a current, active and unrestricted license in another jurisdiction and who supplies satisfactory evidence of being married to, or in a domestic partnership or other legal union with, an active member of the Armed Forces of the United States who is assigned to a duty station in California under active duty military orders. (Bus. & Prof. Code 115.6) 20. SB 1159 (Lara) Professions and vocations: license applicants: individual tax identification number. Chaptered 9/28/14 Requiring, no later than January 1, 2016, that the State Contractors Licensing Board require an applicant to provide either an individual tax identification number or social security number if the applicant is an individual. Additionally, licensees will be subject to a penalty for failure to provide such information. (Bus. & Prof. Code 30, 135.5, 2103,2111, 2112, 2113, 2115, 3624 and 6533; Family Code 17520; Revenue & Taxation Code 19528) 21. SB 2396 (Bonta) Convictions: expungement: licenses. Chaptered 9/28/14 G. Miscellaneous Prohibits a board within the Department of Consumer Affairs from denying a license based solely on a conviction that has been dismissed pursuant to existing provisions of existing law. Further, applicants need to provide proof of dismissal. (Bus. & Prof. Code 480) 22. AB 1581 (Buchanan) School facilities: construction contracts. Chaptered 9/18/14 Until January 1, 2019, requires a lease instrument and the agreement with the lowest responsible bidder to include a requirement for the person, the firm or corporation that constructs a building to be leased and used by the school district upon a designed site, including, but not limited to, the prime contractor and, if used, electrical, mechanical and plumbing subcontractors, to comply with a state-mandated program involving a questionnaire and financial statement requirements. (Education Code 17406,17407; Public Contr. Code 20111.6) 15
23. AB 2355 (Levine) Local agencies: streets and highways: recycled materials. Chaptered 9/26/14 Bill imposing a state-mandated local program by January 1, 2017, wherein a local agency that has jurisdiction over a street or highway is required to either adopt the standards developed by the Department of Transportation for recycled paving materials and for recycled base, subbase and pervious backfill materials, or discuss at a regularly scheduled public hearing of the local agency s legislative or other governing body why the standards have not been adopted. (Public Resources Code 42704.5) H. Public Agencies / Public Works I. Safety 24. AB 1705 (Williams) Public contracts: payment. Chaptered 9/27/14 Extends the law, until January 1, 2018, authorizing retention proceeds to exceed 5% on specified projects where the director of the applicable department has made, or the governing body of the public entity or designated official of the public entity has approved, a finding prior to the bid that the project is substantially complex and requires a higher retention, and the department or the public entity includes both this finding and the actual retention amount in the bid documents. (Public Contr. Code 7201, 10261) 25. AB 2376 (Weber) State construction projects: insurance. Chaptered 7/10/14 Requires the contractor s deductible under a master policy to be outlined in the request for bids or proposals for all state construction projects. (Government Code 11007) 26. AB 1634 (Skinner) Occupational safety and health: violations. Chaptered 10/20/14 Prohibits the Division of Occupational Safety and Health in the Department of Industrial Relations from granting, for serious violations, a proposed modification to civil penalties for abatement or credit for abatement unless the employer has abated the violation, as specified, or has submitted a statement to the division in accordance with existing law, and would additionally require supporting evidence with the statement, where necessary. Further, the bill would authorize the division to grant such a modification only if the violation has been abated or the signed statement and supporting evidence is received within 10 working days after the end of the period fixed for abatement. (Labor Code 6319, 6320, 6625) 16