Garret Murai – January 6, 2013
More than 4,000 bills were introduced in the California State Legislature during the 2011-2012 legislative session. Of these bills, 996 made it to Governor Brown’s desk, of which 876 were signed into law, and 120 were vetoed.
Among the new laws impacting the construction industry are new licensing requirements for construction managers, extension of the authority of school districts and community college districts to enter into design-build contracts, and extension of the prohibition by the California Department of Transportation (“Caltrans”) to withhold retention.
INDEMNITY
SB 474
One of the most talked about new laws is not technically “new” at all, but rather, a bill that was signed into law in 2011 but with an effective date of January 1, 2013.
Beginning January 1, 2013, construction contracts that require a subcontractor to insure, indemnify, or defend a general contractor, construction manager, or other subcontractor from their: (1) active negligence or willful misconduct; (2) design defects; or (3) claims that do not arise out of the scope of work of the subcontractor, are void and unenforceable.
The new law effectively eliminates “Type I” indemnity clauses in construction contracts. Type I indemnity clauses were, prior to the enactment of the new legislation, already prohibited in residential construction contracts (except for homeowners performing home improvement projects on a single family dwelling).
Under the new law, Type I indemnity clauses are now prohibited in private commercial construction contracts, as well as public works projects. However, as it applies to owners and public agencies, it only restricts owners and public entities from requiring indemnity for their “active negligence” but applies broadly to contractors, subcontractors, and material suppliers.
The new law does have a number of exceptions, however. It does not apply to design professionals, has no effect on additional insured obligations, and does not apply to owner controlled insurance programs. The new law also does not affect “Type II” indemnity clauses in which a party is indemnified for their “passive,” as opposed to “active,” negligence.
LICENSING
AB 397
Requires proof of workers’ compensation coverage, or proof of exemption, at the time of license renewal with the California Contractors State License Board (CSLB).
AB 1794
Authorizes the California Employment Development Department (EDD) to share information with the Joint Enforcement Strike Force on the Underground Economy (JESF), the CSLB, and the California State Compensation Insurance Fund through January 1, 2019.
AB 2219
Existing law, which requires roofing contractors to have workers’ compensation insurance whether or not they have any employees, and which was set to expire on January 1, 2013, has been made permanent.
AB 2237
Requires construction managers to be licensed by the CSLB in order to provide services in connection with a home improvement contract.
SCHOOL PROJECTS
AB 1565
Requires school districts, except for districts with an average daily attendance under 2,500, to use a bidder prequalification process for projects receiving State School Facilities Program (SFP) funding on all projects through January 1, 2018.
AB 1598
Includes within the definition of “public works,” modular office systems such as portable classrooms, for purposes of prevailing wage and listing laws.
SB 1509
Existing law, which authorizes school districts and community college districts to enter into design-build contracts, and which was set to expire on January 1, 2014, has been extended to January 1, 2020.
CALTRANS
AB 1671
Existing law, which prohibits Caltrans from withholding retention, and which was set to expire on December 31, 2013, has been extended to January 1, 2020.
AB 2498
Establishes a pilot program authorizing Caltrans to designate six projects for a construction manager/general contractor project delivery method.
DISABILITY ACCESS
SB 1186
Reduction in minimum statutory damages in disability access litigation from $4,000 to $1,000 if property was certified by a Certified Access Specialist (“CASp”). Owners must disclose to tenants whether property has been certified by a CASp.
GREEN BUILDING
AB 930
Requires that at least one member of the California Building Standards Commission be experienced and knowledgeable in sustainable building, design, construction, and operation.
CONSTRUCTION VEHICLES
SB 341
Requires vehicles, which operate at or transport materials to a construction site, and with a gross vehicle weight rating in excess of 14,000, to have an automatic audible backup alarm.