Big dig-liability fines, shorter construction-defect period and other proposed California laws contractors should watch

Several pieces of litigation working their way through the Legislature in Sacramento could have significant impacts on the construction industry if they pass and are signed into law, according to a leading industry attorney.

“Our Legislature cannot help itself, in terms of meddling in business, and I don't see that changing at all in the foreseeable future,” said Dan McLennon at the Business Journal’s Building the North Bay virtual conference on Wednesday. He’s a San Francisco-based partner in construction law firm Smith Currie & Hancock and a former president of the Marin Builders Association.

State lawmakers have until early next month to get bills out of committees and their houses of origin, else the legislation dies in the current session, he noted.

Senate Bill 297: Bigger call-before-you-dig penalties

Called the Wade Kilpatrick Gas Safety and Workforce Adequacy Act of 2021, this bill would add a strict liability civil penalty of up to $100,000 for excavating before calling the 811 line to request that utilities check the project site and marking any fuel or other dangerous lines ahead of time.

“If you fail to call 811, you will be found ‘knowingly and willfully’ to have violated the law,” McLennon said.

The bill passed the Assembly on May 4 and is currently awaiting a committee assignment.

Assembly Bill 919: Construction-defect statute of limitations for nonprofits

Builders are on the hook for the quality of their construction for 10 years after a project wraps, according to current California law. This bill would cut the statute of limitations for nonprofit homebuilders in half.

“I think the intent is good, but it's a bad bill,” McLennon said. “Because why should nonprofit housing be encouraged to have lousy instruction?”

The bill is currently in review by the Judiciary Committee.

Assembly Bill 1365: Climate-conscious concrete

This legislation would call for the state Department of General Services to by Jan. 1, 2024, publish a standard for the maximum level of greenhouse gas emissions from concrete used for state public jobs. And it would require that winning bidders for public jobs as of the beginning of next year submit an environmental product declaration before the concrete is poured.

“It's going to add a lot of red tape and burden and cost to state contracting,” McLennon said.

The bill is pending in the Committee on Natural Resources.

Assembly Bill 1023: Timing for submission of payroll records

Current law requires contractors to submit payroll records to the California labor commissioner’s office. If signed as currently written, this legislation would set that timeframe for filing to be the final day of work performed on a project. The penalty for not filing at that time is $100 a day, up to $5,000 for a project, paid into the state public works enforcement fund.

“What you're gonna see if this bill were to be passed today is that employers will build the $5,000 per project into the price of their construction and just expect to be dinged for it,” McLennon said.

The Appropriations Committee put the bill into the suspense file on May 1, meaning it’s on hold.

Senate Bill 727: Contractor liability for subcontractor labor

As of January 2018, prime contractors were only liable for subcontractors’ unpaid wages and benefit payments or contributions, including interest. But that liability didn’t extend to penalties and liquidated damages.

If adopted as currently written, prime contractors would be liable for that too.

“Remember, the prime has already paid the subcontractor, but the sub hasn't paid its employees,” McLennon said. “And now they're piling on to the primes to pay these extra costs.”

The bill went into the Appropriations Committee suspense file on May 10.

Senate Bill 335: Workers’ compensation liability

As currently drafted, this bill would halve the timeframe for employers to determine whether an employee injury happened on the job, else after 45 days the claim would become undisputable and presumed compensable.

The bill also is in the Appropriations Committee suspense file as of May 10.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.