*PRIOR BILLS FROM PREVIOUS SESSIONS

AB 423 - FIRE RETARDANT ROOFING MATERIAL REQUIREMENT
 
AB 60 - 8 HOUR LAW
AB 633 - PRESUMED VALIDITY OF EMPLOYEES CLAIMED HOURS WORKED
AB 1268 - NEW LIMITATIONS ON CALIFORNIA COURTS' AUTHORITY TO ISSUE TEMPORARY RETRAINING ORDERS AND INJUNCTIONS IN LABOR DISPUTE CASES
AB 1127 - OBLIGATIONS UNDER CAL-OSHA INCREASED
AB 574 - PUBLIC BID PROSPECTIVE BIDDER QUESTIONNAIRE AB 279 - PENALTIES INCREASED FOR EMPLOYERS' FAILURE TO PROCURE WORKERS' COMPENSATION INSURANCE
EXECUTIVE ORDER D-8-99 AB 1314 - RESTRICTION OF LIABILITY ON PUBLIC BID DRAWINGS

Prior Bills:
                 This page is your reference to the bills which were signed by Governor Gray Davis within the last legislative term.  The bills represent changes to business practices which subcontractors should be aware of while conducting their daily business routine.  While looking through the following laws, and following the general description of the laws, one of ASAC's Legal Network team provides an interpretation of the law just enacted.  The interpretations, however, are not to be construed as specific legal advice or as a substitute for the need to seek competent legal advice on specific legal matters.


ASAC Government Relations Committee Supported the Passage of AB 2738.  Approved by Governor Schwarzenegger September 27, 2008, Effective January 1, 2009, brought NEW RULES FOR WRAP INSURANCE PROGRAMS

Article by Daniel McLennon, ASA California Government Relations Chair,
415/394-6688 New Civil Code section 2782.9 ANY Residential Construction Contract Entered after 1.1.09

New Civil Code section 2782.9
ANY Residential Construction Contract Entered after 1.1.09

  • Applies to wrap insurance programs involving residential works of improvement (not just new construction or construction of units for sale) for CONTRACTS ENTERED after 1.1.09. NOT clear if this includes apartments—arguably it does

  • Clauses requiring indemnity from one enrolled party to another are unenforceable:

    • If arise out of the project, and

    • If covered by the wrap,

    • Not clear if bar applies whether or not coverage is actually provided—arguably it does

  • Equitable indemnity claims are still permitted unless there is coverage for the claim under the wrap—NOT clear whether equitable indemnity is allowed if coverage is not actually provided—arguably it is

  • Builder or general may require subcontractor to contribute to SIR or deductible if:

    • If maximum amount and calculation method is disclosed in the parties’ contract,

    • If contribution amount is proportionately allocated to subcontractor’s scope of work relative to total claims,

    • Demand for contribution is set forth amount and basis for the contribution, and

    • Total amount of contributions does not exceed amount of obligation actually incurred by builder or general contractor,

  • Builder or contractor may include in contract for recovery of costs and fees incurred in pursuing contribution

  • Builder or general contractor may not require subcontractor to waive any of these provisions

New Civil Code section 2782.96
Public and Commercial Construction Put Out For Bid after 1.1.09

  • Applies to wrap insurance programs in projects PUT OUT FOR BID after 1.1.09 involving construction work

    • Done under contract and paid for in whole or in part out of public funds, and

    • Any other project not including “original construction intended to be sold as an individual dwelling unit". Including:

commercial projects     condominium conversions      apartment buildings      residential remodels

  • Owner, builder or general must disclose in the bid documents total amount or method of calculation of any credit or compensation for premium enrolled parties must contribute

  • Named insured must disclose in the contract documents to the extent known:

    • The policy limits,

    • Known exclusions, and

    • The length of time the policy is intended to stay in effect
  • Upon written request, named insured must provide copy of policy to all covered by the policy when available

  • Until the policy is available, the named insured may satisfy disclosure requirements by providing to covered persons a copy of the insurance binder or declarations page

  • Parties receiving the binder or declarations page may not share with anyone other than broker or attorney unless required by law

  • Disclosure requirements apply to base policy and to additional coverage's if sponsor requires premium contribution from enrolled parties

  • This section does NOT affect ability to require indemnity from one enrolled party to another (section 2782.9 does not apply), provide that it may not be waived, or state penalties for failure to comply

New Civil Code section 2782.95
PRIVATE Residential Construction First Commencing after 1.1.09

Applies to wrap insurance programs involving “original construction intended to be sold as an individual dwelling unit" when CONSTRUCTION STARTS after 1.1.09. Not included: condominium conversions; apartment buildings; residential remodels.

  • Does NOT affect ability to require indemnity from one enrolled party to another (but prohibition in AB 2738.9 applies)

  • Owner, builder or general must disclose in the contract documents total amount or method of calculation of any credit or compensation for premium enrolled parties must contribute

    • Subcontractor not bound by bid if information not provided before bid, unless subcontractor is allowed to adjust bid to reflect required premium contribution

  • Owner, builder or general must disclose in the contract documents if and to the extent known:

    • The policy limits,

    • The scope of policy coverage,

    • The policy term,

    • The trigger for deductible or occurrence under the policy,

    • The total number of units stated in the policy application, if the policy covers more than one project (“rolling” wraps), and

    • A good faith estimate of available limits as of a date stated in the disclosure
  • The disclosure of the number of units is presumed to be in good faith if it reflects the number of units stated in the policy application

  • The disclosure of available limits is presumed to be in good faith if it was obtained from the wrapup insurer or broker

  • The presumption of good faith may be overcome only by proof of intentional misrepresentation

  • This section does not provide that it may not be waived, and no penalties are stated for failure to comply

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GOVERNOR DAVIS SIGNS LEGISLATION TO STRENGTHEN ROOFING REQUIREMENTS

AB 423 - FIRE RETARDANT ROOFING MATERIAL REQUIREMENT
Governor Gray Davis has signed legislation, AB 423 by Assemblyman John Dutra (D-Fremont), requiring retardant roofing materials be used on every new structure when repairing, altering, or replacing an existing structure.
For the bill's details, click here:
http://www.leginfo.ca.gov/pub/bill/asm/ab_0401-0450/ab_423_bill_19990915_chaptered.html

GOVERNOR DAVIS SIGNS PACKAGE OF LABOR PROTECTION BILLS AND BENEFITS BILLS
SACRAMENTO - Governor Gray Davis has signed a package of legislation starting with revisions to the 8 hour law and laws for additional protections to injured workers and wages earned.

AB 633 - PRESUMED VALIDITY OF EMPLOYEES CLAIMED HOURS WORKED
AB 633 makes changes to the garment manufacturing laws and amends the manufacturer registration and wage collection process by closing a number of loopholes allowing garment manufactures to escape responsibility for ensuring that garment workers receive the wages that they are legally due.  The legislation establishes the presumed validity of an employee's claim of hours worked and wages due unless a contractor produces written evidence and records to the contrary.
For the bill's details, click here:
http://www.leginfo.ca.gov/pub/bill/asm/ab_0601-0650/ab_633_bill_19990929_chaptered.html

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AB 60 - 8 HOUR LAW
AB 60 represents changes to the 8 hour law and the payment of overtime wages.  The changes are for most industries, but not all, which takes effect on January 1, 2000.  The highlights of the bill include:

Overtime:

  1. Time and a half for hours worked beyond eight in a workday

  2. Double time for hours worked beyond 12 in a workday

  3. Time and a half for the first eight hours worked on the seventh consecutive workday in a workweek

  4. Double time for hours worked beyond eight on any seventh day of a workweek (need not be the seventh consecutive day worked, as was required under pre-1998 law)

  5. Time and a half for hours worked beyond 40 in a workweek

NOTE: Employees covered by collective bargaining agreements that pay premium rates for overtime hours and at least 30% more than the state minimum wage are exempted from the new requirements.

Make-Up Time Will Be Available:

  1. Employees will be able to request time off for personal obligations and make up the time without the employer having to pay overtime

  2. Employee may work no more than 11 hours on another workday to make up the time off

  3. Time must be made up within the same workweek

  4. Employee must provide signed, written make-up time request for each occasion

  5. Employers may not "encourage" or "solicit" make-up time requests. EXAMPLE: Employee requests 2 hours off on Tuesday to go to a dentist's appointment.  Employee then works 10 hours on Wednesday (or an extra hour each day on Wednesday and Thursday) without the employer having to pay overtime.

Other Changes Include:

  1. Existence of special conditions for the election of alternative workweeks.

  2. During the second half of the year 2000, the monthly salary requirement for executive/managerial/administrative/professional exemptions will go up, and will be required to be equal to twice the minimum wage for full-time employment.

  3. New fines will be imposed on payroll clerks and other employees who perform payroll functions for miscalculating overtime under the new law.

  4. Fines may come out of employee's own pocket, not employer's.

It is highly recommended that you attend any programs in your area regarding the 8 hour law changes.  The details of the bill are currently under review by the Industry Welfare Commission (IWC) at which time the final changes regarding qualifications and exemptions to the new law will be made.

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AB 279 - PENALTIES INCREASED FOR EMPLOYERS' FAILURE TO PROCURE WORKERS' COMPENSATION INSURANCE
AB 279 increases the penalties for an employer who fails to provide workers' compensation to a misdemeanor punishable by up to one year in a county jail and/or a fine of up to $10,000.  By creating a stiffer penalty, the legislation will deter employers from violating this section of California's law protecting workers.
Between 1992 and 1996, there was an average 16,500 open cases per month involving the Uninsured Employers' Fund (UEF).  This fund was specifically created by the State in order to handle claims and pay injured workers the workers' compensation benefits which rightfully and legally should have been paid by their employers.  The Commission on Health and Safety and Workers' Compensation recently reported that UEF has paid out an average of $22.6 million annually over the last five years, while collecting only $3.4 million in penalties from illegally uninsured employers during that time.

LEGAL INTERPRETATION -

AB 279, signed by Governor Davis on September 29, 1999, amends section 3700.5 of the California Labor Code to increase penalties for employers who fail to secure the payment of workers' compensation either by procuring insurance or other statutorily-authorized means.

Section 3700.5 presently makes it a misdemeanor, punishable by imprisonment not to exceed 6 months, or by a fine of $1,000, or both, for an employer to fail to secure the payment of compensation when the employer knew or should have known of the obligation to secure the payment of compensation.  While leaving the definition of misdemeanor intact, AB 279 increased the maximum fine for misdemeanors to $10,000 and also increased the maximum imprisonment term to one year.
(Note: The interpretation provided is by David Chidlaw of Sheppard, Mullin, Richter & Hampton LLP, a member of the ASA San Diego Chapter.)

For the bill's details, click here: http://www.leginfo.ca.gov/pub/bill/asm/ab_0251-0300/ab_279_bill_19990929_chaptered.html

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AB 1268 -- NEW LIMITATIONS ON CALIFORNIA COURTS' AUTHORITY TO ISSUE TEMPORARY RESTRAINING ORDERS AND INJUNCTIONS IN LABOR DISPUTE CASES

AB 1268 by Assemblywoman Sheila Kuehl (D-Santa Monica) - This bill conforms state law to federal law by imposing specified conditions on the authority of California courts to issue temporary and permanent injunctions related to a labor dispute.  
AB 1268 adds the following sections to the California Labor Code:

Declares that no association or organization, or officer or member thereof, participating or interested in a labor dispute, shall be held responsible or liable in any court of California for the unlawful acts of individual officers, members or agents, except upon clear proof of actual participation in, or actual authorization of those acts.

Prohibits California courts from issuing a temporary or permanent injunction in any case involving or growing out of a labor dispute, except after the testimony of supporting and opposing witnesses in open court, as specified, and after specific findings of fact by the court.

Places numerous specified conditions on the hearing for and issuance of an injunction or temporary restraining order, including the posting of an undertaking by the complaint, as described.

Specifies the effective term of any issued injunction or temporary restraining order.

Places specified restrictions on the granting of the restraining order or injunctive relief provisions in this bill.

LEGAL INTERPRETATION -

On October 6, 1999, Governor Gray Davis signed AB 1268 which significantly limits the authority of California courts to issue temporary restraining orders and injunctions in respecting labor disputes.  Specifically, California courts may only issue a temporary restraining order ("TRO") or injunction in any case involving or growing out of a labor dispute after:

  1. conducting a hearing with testimony of supporting and opposing witnesses in open court under oath and with opportunity for cross-examination, and

  2. making the following findings of fact:

  1. that unlawful acts have been threatened and will be committed unless restrained,

  2. substantial irreparable harm to complainant's property will follow,

  3. that the injury to complainant that would result from the denial of the relief outweighs the injury that will be inflicted upon defendants by the granting of the relief,

  4. that the complainant has no adequate remedy at law, and

  5. the public officers charged with the duty to protect complainant's property are unwilling or unable to furnish adequate protection.

In addition, AB 1268 provides that a court may not issue a TRO without personal notice unless (1) the complainant alleges that substantial and irreparable injury to complainant's property will be unavoidable if the TRO is not issued without notice, and (2) the court receives sufficient testimony under oath to justify the court issuing a temporary injunction upon hearing without notice.  AB 1268 further provides that a court may not issue a TRO or injunction to any complainant who has failed to "make every reasonable effort" to settle the labor dispute by negotiation or with the aid of available government mediation or arbitration.

Finally, AB 1268 limits the liability of officers or members of associations or organizations and the associations or organizations themselves participating or interested in a labor dispute by providing that the foregoing may not be held responsible or liable in any California court for the unlawful acts of individual officers, members, or agents, except upon clear proof actual participation in or actual authorization of those acts by the officer or member or the association or organization itself.
(Note: The interpretation provided is by David Chidlaw of Sheppard, Mullin, Richter & Hampton LLP, a member of the ASA San Diego Chapter.)

For the bill's details, click here: http://www.leginfo.ca.gov/pub/bill/asm/ab_1251-1300/ab_1268_bill_19991010_chaptered.html


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AB 1127 - OBLIGATIONS UNDER CAL-OSHA INCREASED
AB 1127 Assemblyman Darrell Steinberg (D-Sacramento).  This bill increases civil and criminal penalties for willful, serious, and repeat violations of occupational safety and health standards.  AB 1127 provides that willful violation of such standards leading to death or permanent or prolonged injury of an employee may be prosecuted as a misdemeanor or felony.   This bill also revises civil penalty enforcement procedures under the California Occupational Safety and Health Act (Cal-OSHA) and repeals the provision that civil penalties for a violation of a safety standard shall not be assessed against employers that are governmental entities.

LEGAL INTERPRETATION -

On October 5, 1999, Governor Davis signed into law AB 1127 which makes fundamental changes to the Cal-OSHA statutory scheme.  As a result of the passage of AB 1127, eleven separate sections of the California Labor Code have been amended.  Of particular significance, are the new penalty provisions.

With respect to penalties, AB 1127 increased the fine which may be imposed for misdemeanor violations from $5,000 to $15,000.  If the defendant is a corporation or limited liability company, the fine may not exceed $150,000.  AB 1127 also increased monetary and criminal penalties for willful or repeated violations of certain Cal-OSHA provisions.  For example, for willful violations of employee safety standards that cause death to any employee or cause permanent or prolonged impairment to the body of any employee, the maximum monetary penalty increased from $70,000 to $250,000.  If the defendant is a corporation or limited liability company, the fine may not exceed $1,500,000.

While AB 1127 did not alter the amount of the penalty for non-serious safety violations, it did increase the penalty for serious safety violations from $7,000 to $25,000.  AB 1127 also includes a new definition of "serious violation" which may benefit employers.  Specifically, the new statutory definition provides that a serious violation shall not be deemed to exist if the employer can demonstrate that it did not, and could not with the exercise of reasonable diligence, know of the presence of the violation.

In a new provision respecting admissibility of citations by the Division of Occupational Safety and Health, AB 1127 provides that "neither the issuance of, or failure to issue, a citation" by the Division of Occupational Safety and Health is admissible in a personal injury or wrongful death action, except as between an employee and his or her employer.  Previously, the pertinent Cal-OSHA section provided that the "provisions" of Cal-OSHA were inapplicable to such actions.

Finally, AB 1127 extends the time within which an individual may file a complaint with the Division of Labor Standards Enforcement ("DLSE") from 30 days to six months, which may be further extended for "good cause">  AB 1127 also expands the definition of "persons" who can initiate a complaint with the DLSE to include an employee's "representative", such as an attorney, health or safety profession or union representative.
(Note: The interpretation provided is by David Chidlaw of Sheppard, Mullin, Richter & Hampton LLP, a member of the ASA San Diego Chapter)

For the bill's details, click here: http://www.leginfo.ca.gov/pub/bill/asm/ab_1101-1150/ab_1127_bill_19991010_chaptered.html

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GOVERNOR SIGNS CONSTRUCTION BIDDING BILLS

AB 574 - PUBLIC BID PROSPECTIVE BIDDER QUESTIONNAIRE
B 574 by Assemblyman Robert Hertzberg (D-Sherman Oaks) - This bill authorizes public entities to require prospective bidders on a public works contract to complete a standardized questionnaire and financial statement, as specified.  AB 574 also imposes various duties on the Department of Industrial Relations and public entities related to these questionnaires and their use.

For the bill's details, click here: http://www.leginfo.ca.gov/pub/bill/asm/ab_0551-0600/ab_574_bill_19991010_chaptered.html

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AB 1314 - RESTRICTION ON LIABILITY ON PUBLIC BID DRAWINGS
AB 1314 by Assemblyman Anthony Pescetti (R-Rancho Cordova) - This bill prohibits a bidder from being required to assume responsibility for the completeness and accuracy of architectural plans and specifications on local public works projects, except for particular contracts.

For the bill's details, click here: http://www.leginfo.ca.gov/pub/bill/asm/ab_1301-1350/ab_1314_bill_19991010_chaptered.html

The following is an Executive Order signed by Governor Davis regarding the quality of construction materials going into public works jobs.

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EXECUTIVE ORDER D-8-99

by the Governor of the State of California

WHEREAS, the State of California has the 8th largest economy in the world, importing and exporting over $295 billion per year; and

WHEREAS, each year California spends several billion dollars on government procurements, including imported domestic and California-made products and services; and

WHEREAS, California has a responsibility to guarantee the safety of the public and those who use its public roads, bridges, buildings and other facilities by ensuring that the integrity of the materials used in those products meets all necessary safety and quality standards; and

WHEREAS, in order to guarantee public safety, the integrity of the steel, concrete, petroleum products, asphalt, rubber products aluminum, electrical components and other construction material must meet the highest letter of specifications and provisions of federal and state public work requirements; and

WHEREAS, in some instances, non-domestic produced construction materials have been rejected on State construction contracts for failure to satisfy material specifications designed to ensure the highest quality of public works projects which, in turn, ensure public safety; and

WHEREAS, California's state and local agencies have an interest in encouraging the use of California companies as a source of materials and labor to build roads, buildings and other government facilities in this state;

NOW, THEREFORE, I GRAY DAVIS, Governor of the State of California, by the virtue of the power vested in me by the Constitution and statute of the State of California, do hereby issue this order to become effective immediately:

All state agencies conducting solicitations for public works projects shall pre-qualify bidders using the highest quality standards or criteria permissible under law.  These standards must ensure that contractors bidding on state projects can deliver projects that provide for the structural integrity and safety of California's roads, bridges and government buildings.

The Department of General Services and all contracting agencies are directed to adhere to the quality control provisions contained in existing contracts and further, to ensure that appropriate quality control provisions are included in all future contracts.  These quality control provisions must provide for the integrity and safety of the work under construction and that adequate inspection procedures are in place to ensure that contractors use appropriate and specified materials.  All state agencies may consult with the United States National Institute for Standards and Technology when examining current contracting practices and specifications for public works projects.

The Department of General Services is further directed to evaluate and make a recommendation to the Governor no later than December 31, 1999, as to whether it is necessary to expand "best value" selection practices beyond current statutory authority for greater use in state public works contracting in order to further ensure public safety.

The Department of General Services is directed to evaluate and make a recommendation to the Governor as to whether to consider legislation that would grant California-based bidders the same preference over bidders from other states to the extent that such states award preferences to persons or companies from their states over California-based bidders.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 29th day of September 1999.

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American Subcontractors Association of California
American Subcontractors Association California Inc. 
 P.O. Box 292867, Sacramento, CA. 95829-2867
Phone: 888-310-2722   Fax: 530-662-2865  Email
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