New Laws for 2012, Part 4

The following is the final segment of my series regarding new laws that may affect how you do business in California in 2012.  There were several laws passed impacting prevailing wage, public works, and Project Labor Agreements, which are summarized for you below.

Pursuant to AB 436, the method by which the Department of Industrial Relations sets reimbursement rates for its costs of performing prevailing wage monitoring and enforcement on specified public works projects (for school districts, community college districts, and other specified special districts) has been revised.  The rules exempt from the requirements those public works projects financed by any part of the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002.  Further, the reimbursement to the DIR may be waived when the public entity has entered into a collective bargaining agreement binding all the contractors performing work on the project (i.e., a Project Labor Agreement, or PLA).

For prevailing wage violations on public works, AB 551 increased the maximum penalty to contractors and subcontractors who are found to have failed to pay prevailing wage from $50 per day, to $200 per day.  The bill also increased the minimum penalty from not less than $10 per day, to not less than $40 per day, and excepts only certain mistakes found to be in good faith.

Presently, existing law requires prevailing wages be paid for the hauling of materials into a public works construction site, as well as the hauling of refuse off of the site.  Now, however, under AB 514, if refuse is hauled from the site and thereafter sold as a commodity, prevailing wage does not apply.  “Refuse” is further defined to include soil, sand, gravel, rocks, concrete, asphalt, excavation, materials and construction debris.

Existing law requires contractors and subcontractors on public works to keep payroll records regarding its employees, and requires these records contain specific information as dictated by the Division of Labor Standards Enforcement.  Certain personal identification information must be removed when certified payroll records are made available for inspection to the public, or to a public agency.  AB 766 however, now requires nonredacted copies of certified payroll records to be provided upon request to any agency included in the Joint Enforcement Strike Force on the Underground Economy (JESF), or to any law enforcement agency.  Disclosures to the public require redaction of individuals’ names, addresses, and social security numbers. 

SB 117 prohibits a state agency from entering into a contract for goods or services in excess of $100,000 if the contractor discriminates between employees with spouses or domestic partners of a different sex and employees with spouses or domestic partners of the same sex, or discriminates between same-sex and different-sex domestic partners of employees, or between same-sex and different-sex spouses of employees.

SB 136 expands the definition of “public works,” thereby extending prevailing wage requirements to include construction, alteration, demolition, installation, or repair work done under private contract that satisfies specified conditions related to energy.  Specifically, prevailing wages must now be paid under private contract when the following conditions exist:  (a) the work is performed in connection with the construction or maintenance of renewable energy generation capacity or energy efficiency improvements; AND (b) the work is performed on the property of the state or a political subdivision of the state; AND (c) either of the following conditions exists:  (1) more than 50% of the energy generated is purchased or will be purchased by the state or a political subdivision of the state; OR (2) the energy efficiency improvements are primarily intended to reduce energy costs that would otherwise be incurred by the state or a political subdivision of the state.  (See newly added Labor Code § 1720.6.)

SB 922, effective January 1, 2015, establishes the parameters for the use of Project Labor Agreements (PLAs) for publicly-funded construction projects.  State funding may not be used to support any project by a charter city that has in place charter provisions, initiatives or an ordinance prohibiting the governing board’s consideration of a PLA. 

Questions?  Concerns about how this may impact your business?  Comment, or send me an email, and let’s discuss.  Best wishes for a happy, fulfilling and successful new year!

Nothing in this blog is intended to create an attorney-client relationship.  This article is intended to provide a general overview of the current status of the law for informational purposes only, and is not intended to constitute, or serve as a substitute for, a professional legal consultation.  Laws change every day; please consult an attorney regarding the current status of the law, and how the law affects your specific circumstances. Thank you.

New California Laws for 2012, part 3

The following is part 3 of my series regarding new laws effective January 1, 2012 (unless otherwise indicated), that may affect how you do business in California.

Elimination of Type 1 Indemnity effective January 1, 2013

Type 1 indemnity provisions were eliminated in residential construction subcontracts in 2009 by statute.  SB 474, which amends Sections 2782 and 2783 of the Civil Code, and adds section 2782.05, now eliminates type 1 indemnity provisions in commercial construction subcontracts.

For construction contracts and amendments executed on or after January 1, 2013, a general contractor may no longer require a subcontractor to defend against, or provide insurance coverage to defend against, the active negligence or willful misconduct of the general contractor.  The general contractor may also no longer require a subcontractor to defend against claims for defects in design.  Lastly, the general contractor may not require a subcontractor to defend against claims that do not arise out of the scope of work of the subcontractor pursuant to the written subcontract. 

This new statute also provides that public agencies and private owners cannot shift liability for the agencies’ or owners’ active negligence to the contractor (the statute previously only provided so for public entities).  The new statute authorizes a general contractor to request that a subcontractor either provide a defense, or pay for the general contractor’s defense (under a type II or III indemnity provision), but the subcontractor who does so can request reallocation and reimbursement of defense costs under certain circumstances, for example, if costs were paid by the subcontractor that were ultimately deemed to be related to claims outside the scope of work of the subcontractor.

This is a major change to the law of indemnity, the contracting relationship between generals and subcontractors, and the handling and management of claims when they arise.    

Prompt Payment Provisions, Payment Bonds and Retention

SB 293 amends and repeals several sections of the Business & Professions Code, Public Contracts Code and Civil Code, relating to the timing of payment of progress payments (and the trigger for prompt payment penalties which may attach), and retention. 

Under existing law, whether a private or public work of improvement, a contractor is required to pay its subcontractor a progress payment within ten days of the contractor’s receipt of payment from the owner, unless agreed to otherwise in writing.  These new laws now require that payment to be made within seven days.  See my earlier blogs related to prompt payment penalties, and how they are calculated for more information on prompt payment penalties specifically.

The statutory changes also now exempt laborers from the requirement to serve a preliminary 20 day notice to make a claim on a payment bond.

Lastly, these changes lower the retention withholdings allowed on public works, presently 10%, to no more than 5%.  The only exemption is if a general contractor required a subcontractor to post a bond, and the subcontractor was unable to comply.

Questions?  Concerns about how this may impact your business?  Comment, or send me an email, and let’s discuss.  Best wishes for a happy holiday season!

Nothing in this blog is intended to create an attorney-client relationship.  This article is intended to provide a general overview of the current status of the law for informational purposes only, and is not intended to constitute, or serve as a substitute for, a professional legal consultation.  Laws change every day; please consult an attorney regarding the current status of the law, and how the law affects your specific circumstances. Thank you.

New Laws Affecting Your Business in 2012, part 2

The following is part two of my series regarding new laws that may affect how you do business starting January 1, 2012.  Let’s take a look, and discuss how these laws may impact you.

Apprenticeship and Certification

AB 554 amends section 14230 of the Unemployment Insurance Code, and directs the state and local Workforce Investment Boards to ensure that programs and services funded by the federal Work Investment Act of 1998 (WIA) are conducted in coordination with apprenticeship programs, and encourage collaboration between community colleges and apprenticeship programs.  Existing law contains various programs for job training and employment investment, including work incentive programs, in which states may participate.   This bill requires the California Workforce Investment Board (WIB) and each local board to ensure that programs and services funded by the WIA are directed to apprenticeable occupations, including preapprenticeship training, and are conducted in coordination with apprenticeship programs approved by the Division of Apprenticeship Standards for the occupation and geographic area.  The California WIB and local boards are required to develop a policy of fostering collaboration between community colleges and approved apprenticeship programs in their geographic areas. 

AB 1346 amends sections 3099 and 3099.2 of the Labor Code, making some non-substantive clarifications to existing law.  The change relates to reporting by applicants for electrician certification.  Under the existing certification process, an applicant must demonstrate at least four years of experience in the class for which he or she is applying in order to qualify to take the electrical certification examination.  Now, applicants must submit with their application an employment history report from the Social Security Administration (SSA).  Because employers are required to withhold a percentage of an employee’s paycheck and remit that amount to the Social Security Administration, an accurate and complete job history can be confirmed by report from SSA.

Contractor State License Board (CLSB)

AB 397 adds section 7125.5 to the Business & Professions Code, relating to workers’ compensation insurance.  Existing law requires private employers to secure its employees’ payment of compensation by obtaining and maintaining workers’ compensation insurance or to self-insure.  The CSLB requires every licensed contractor to have on file with it at all times a current and valid Certificate of Workers’ Compensation Insurance or Certificate of Self-Insurance, or a statement establishing the contractor is exempt because he or she has no employees.  This bill requires any contractor claiming exemption to recertify the exemption or provide a Certificate upon renewal. 

AB 878 amends section 7125 of the Business & Professions Code .  Under existing law, workers’ compensation insurers are required to report to the CSLB registrar specified information regarding a contractor’s workers’ compensation policy.  This bill now requires workers’ compensation insurers to report to the CSLB when it cancels a policy as a consequence of a premium audit or investigation, a material misrepresentation by the contractor that resulted in financial harm to the insurer, and when no reimbursement has been made by the contractor to the insurer.  The information provided is not subject to the California Public Records Act.  Willful and deliberate disregard or violation of workers’ compensation laws provide a basis for discipline by the CSLB.

SB 543 amends a multitude of provisions contained within the Business & Professions Code, but most significantly, extends the authority of the CSLB through January 1, 2016.

SB 392, which was passed in 2010, but becomes effective January 1, 2012, allows for a limited liability company (LLC) to provide contracting services.  Under existing law, an LLC was precluded from rendering professional services.  By amending pertinent provisions of the Business & Professions Code, and Corporations Code, an LLC may now render services pursuant to a license, and authorizes the CSLB to issue licenses to an LLC, provided it designates a Responsible Managing Member, Responsible Managing Officer or Responsible Managing Employee to qualify for that license.  The law requires a $100,000 surety bond arising out of specified claims of employees.  The bill also has very specific insurance requirements, and violation of certain portions of contractors’ license law by an LLC constitutes a crime.  If you are a contractor and are considering changing the form of your business to an LLC, please consult with a professional.

Questions?  Concerns about how this may impact your business?  Comment, or send me an email, and let’s discuss. 

Nothing in this blog is intended to create an attorney-client relationship.  This article is intended to provide a general overview of the current status of the law for informational purposes only, and is not intended to constitute, or serve as a substitute for, a professional legal consultation.  Laws change every day; please consult an attorney regarding the current status of the law, and how the law affects your specific circumstances. Thank you.