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Construction Law Legislation In the Time of COVID

January 7, 2021

By: Kathlynn Smith

This time of year often carries with it an air of reflection on the past and optimism for the year to come. In the legal industry that feeling is often enhanced by the roll-out of the new laws impacting our clients and our practices. And, as in other years, we enter 2021 with a fresh crop of new laws impacting the construction industry. While COVID-19 played a starring role in many of the new laws passed last year, there are a number of important statutes enacted in 2020 that deserve recognition as we look to the future of our industry. So, without further ado, here it is… the first installment of the 2021 legislative round up on the new laws impacting the construction industry.

Contractor Licensing

SB 1189: SB 1189 creates a new B-2 license classification for residential remodeling contracting. A B-2 licensee is one whose principal contracting business is in renovations to existing wood frame structures that require the use of at least three unrelated building trades or crafts for a single contract. The new B-2 license is limited restricts the types of contracts that a B-2 licensee may not take (i.e., residential renovation with three unrelated trades) and the scopes of work that may properly be performed under the contract (i.e., minor electrical, mechanical, or plumbing work only, but no structural changes to load bearing portions of the existing structure). This bill also expands the scope of the penalties associated with performing work without proper licensing following a natural disaster by including improvements to property as well as structures within its coverage and expanding the definition of “home improvement” to include reconstruction, restoration, or rebuilding of residential property damaged by a natural disaster.

AB 2210: AB 2210 expands the authority of the Contractors State License Board (CSLB) to initiate enforcement actions against tree-service contractors.

SB 1474: SB 1474 amends the process for a contractor to renew its license by requiring the CSLB to retroactively renew a contractor’s license within 90 days of its expiration if all information, appropriate fees, workers’ compensation, and bonds have been properly submitted within the 90-day window. A contractor is no longer required to show that its failure to renew was due to circumstances beyond its control. SB 1474 also prohibits the release of a deposit of money in lieu of a bond to be released if the CSLB is notified of a civil action against the deposit and if the amount of the deposit is insufficient to pay all claims.

SB 878: SB 878 is more procedural and requires that the CSLB display application processing timeframes on their website.

Public Works Contracting

AB 2311: AB 2311 requires that all parties to a public works construction contract, including subcontractors, are provided notice of whether there is a skilled and trained workforce requirement for the project prior to bid. To this end, AB 2311 provides that public agencies must advise of this requirement in the bid documents and contracts for the project.

AB 2231: AB 2231 provides clarification on what constitutes “de minimus” for purposes of determining whether a “public subsidy” has been provided thus triggering the payment of prevailing wage. AB 2231 provides that a public subsidy is de minimis only if it is both less than $600,000 and less than 2 percent of the total project cost or, for a residential project that consists entirely of single-family dwellings, is less than 2 percent of the total project cost.

AB 2765: AB 2765 also deals with prevailing wage requirements by expanding the definition of “public works” to include any construction, alteration, demolition, installation, or repair work done under private contract on a charter school project when the project is paid for in whole or in part with money from a conduit revenue bond.

And finally, enabling statutes were enacted for Los Angeles Unified School District (LAUSD) under AB 1981 and for the City of Long Beach under AB 2932. Under AB 1981, LAUSD may enter into best value construction contracts until January 1, 2025 and under AB 2932 the City of Long Beach may use design-build contracting for curb ramps. Both Assembly Bills require the use of a skilled and trained workforce on those projects

Home Improvement Contracting

AB 2471: AB 2471 provides additional protections to senior citizens in home improvement contracts by extending the right to cancel the contract from three to five business days for anyone 65 or older.  

Diversity and Inclusion

SB 588: SB 588 provides that for any contract entered on or after January 1, 2021, a public agency may withhold up to $10,000 from the final payment on a contract until a contractor establishes that it met the established inclusivity goals for Disabled Veteran Business Enterprises (DVBE). A contractor’s failure to cure a defect or provide the necessary proof of inclusion and payment within 15 to 30 days may result in a forfeiture of up to $10,000.

AB 979: AB 979 requires any publicly held domestic or foreign corporation with its principal executive office in California to have a minimum of one director from an underrepresented community on its board by the end of 2021. By the end of 2022, the corporations with nine or more members must have a minimum of three directors from underrepresented communities, corporations with five to eight directors shall have a minimum of two directors from underrepresented communities, and corporations with four or fewer directors, must have a minimum of one director from an underrepresented community.

Energy and the Environment

AB 841: AB 841 provides for expedited deployment of electric vehicle (EV) charging infrastructure investments in those areas under the jurisdiction of the California Public Utilities Commission, with at least 35 percent of the investments going to areas defined as underserved communities. This bill specifically addresses the time frame and requirements for two pending transportation electrification infrastructure applications, which would authorize the design and deployment of electrical distribution infrastructure on the utility side of customer meters for all customers installing a EV charging infrastructure. AB 841 also requires that all infrastructure and equipment be installed by a properly licensed contractor with at least one electrician on each crew who holds an Electric Vehicle Infrastructure Training Program certification. This bill also establishes a new program to fund upgrades to appliances, plumbing, heating, ventilation, and air conditioning for schools.

SB 895: SB 895 authorized the California Energy Commission to provide financial support to research and development of zero-emission fuels, infrastructure, and technologies from available funds in the Diesel Emissions Reduction Fund, which was created for the development of clean diesel fuels, infrastructure, and technologies, since there are currently no existing diesel research programs to invest such funds.

As you can see, the legislature was quite busy in 2020. But this is just a taste of the new laws impacting the construction industry. Please tune in for our second installment of the 2020 legislative round-up where we discuss new labor and employment laws impacting the construction industry. We at Hunt Ortmann want to thank Bret Barrow and Politico Group for providing a preview of these upcoming new laws. 

Kathlynn Smith is a shareholder at Hunt Ortmann with extensive experience representing the construction industry in complex construction litigation and transactional matters. Kathlynn’s practice is devoted to representing owners, developers, contractors, subcontractors, and suppliers on both public and private works of improvement from project inception through trial. For more information or for legal counsel on your contract provisions, please contact Kathlynn at smith@huntortmann.com

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