This article summarizes changes in construction law taking effect in 2024.

Public Works

Assembly Bill 1433 – School District Public Projects

Section 20111.6 required the governing board of the school district, when using funds received pursuant to the Leroy F. Greene School Facilities Act of 1998 or projecting expenditures of over one million dollars, to adopt a uniform system of rating bidders based on completed questionnaires and financial statements. Assembly Bill 1433 amends Section 20111.6 to expand this requirement to all school districts using general funds. The California Department of Industrial Relations (“CDIR”) provides a standardized form for the minimum issues required by this statute, and each school district may adopt more complex forms. For those working with school districts, expect to prepare financial statements and complete CDIR questionnaires when bidding on public school projects.

Assembly Bill 334 – Conflicts of Interest for Public Works Project Contracts

Assembly Bill 334 eases existing conflict-of-interest laws by allowing a public agency to hire the same independent contractor for certain pre-construction activities and subsequent phases of the same project, under certain enumerated circumstances. As an example, a contractor who advised during the pre-construction phase on the conceptual or preliminary plans may now bid and enter into a public contract in a later phase, as long as all of the bidders have access to those same preliminary or conceptual plans. Assembly Bill 334 also narrows the definition of an "officer" of the public entity for conflict-of-interest purposes.

Assembly Bill 1649 – Change Orders in Santa Clara County and Los Angeles County

Assembly Bill 1649 amends Section 20142 and 20395 of the Public Contract Code governing the monetary cap on change orders that may be authorized by the county engineer or officer. Previously, county engineers and officers could authorize change orders of up to 5% of the original contract value where their contract exceeded $250,000. Assembly Bill 1649 creates two larger categories of caps and contracts for the counties of Los Angeles and Santa Clara. Both counties may now authorize change orders of up to $400,000 for original contracts over $25,000,000, and up to $750,000 for original contracts over $50,000,000. Both caps are adjusted annually to reflect inflation based on the California Consumer Price Index and apply to construction contracts for county highways. Both counties are limited to modification of no more than seven contracts pursuant to these new provisions.

Assembly Bill 587 – Public Project Payroll Records

California Labor Code Section 1776 requires contractors to keep accurate payroll records of trade workers on all public works projects and to submit copies of certified payroll records upon request. Assembly Bill 587 requires contractors on all public projects to maintain and provide payroll records on forms provided by the Division of Labor Standards Enforcement, or such forms that contain the same information. Electronic certified payroll records now no longer satisfy payroll records requests by an investigation committee or governing body.

Assembly Bill 1121 – Dept of Industrial Relations Registration

Current Section 1771.1 of the Labor Code requires a contractor or subcontractor to be registered with the Department of Industrial Relations as a prerequisite to bid on public works contracts. Assembly Bill 1121 now requires all awarding authorities to annually submit a list of ineligible contractors to the Department of Industrial Relations’ electronic project database, which will contain the contractor’s name, CSLB number, specific jurisdiction where the debarment or suspension applies, and effective period of such debarment or suspension. The Department will then make this list available to the public through its project registration database. A contractor may become ineligible, due to debarment or suspension, to work on public work projects.

Senate Bill 416 – Heightened LEED Certification Requirements for State Agencies

Starting January 1, 2024, Senate Bill 416 requires state agencies to obtain the Leadership in Energy and Environmental Design (“LEED”) Gold (or higher) certification for all new construction projects larger than 10,000 gross square feet. Exceptions will be made if the state agency shows that achieving LEED Gold conflicts with critical operational or security requirements, is demonstrably cost ineffective, or conflicts with California Building Code requirements.

All Works

Assembly Bill 1204 – Specialty Contractors

Assembly Bill 1204 added Section 7035 to the Business and Professions Code, requiring specialty contractors to only subcontract with those subcontractors with the same license classification who employ persons who are classified as employees. Violation of this new section constitutes a cause for disciplinary action. This change puts the burden on a specialty contractor to ensure that its subcontractors are properly licensed and the specialty work is actually performed by that subcontractor’s employees. A “specialty contractor” is defined as a “contractor whose operations involve the performance of construction work requiring special skill and whose principal contracting business involves the use of specialized building trades or crafts.”

Senate Bill 601 – Downpayments for Home Improvement Projects

Section 7159.5 of the Business and Professions Code prohibits contractors from requesting downpayment for a home improvement project that exceeds the lesser of $1,000 or 10% of the contract. Violation of this section is a misdemeanor punishable by a fine of not less than $100 nor more than $5,000, or by imprisonment in a county jail not exceeding one year, or both. Senate Bill 601 requires the maximum fine if this misdemeanor occurs at a property affected by a natural disaster.

Assembly Bill 43 – Development of an Embodied Carbon Trading System

Assembly Bill 43 amends the California Global Warming Solutions Act of 2006. Starting January 1, 2029, when sourcing materials for construction projects, construction professionals, including building materials providers and manufacturers, developers, architectural and engineering firms, and construction companies, will be required to utilize a market-based trading system which will aim to regulate the production of embodied carbon.

Embodied carbon describes the greenhouse gas emissions generated from the manufacturing, transport, installation, maintenance, disassembly and waste disposal of building materials. The embodied carbon trading system will be an online credit trading platform where construction professionals may conduct greenhouse gas emissions exchanges, banking, credits, and other transactions, which will be regulated and enforced by the State Air Resources Board.

Senate Bill 630 – CSLB Email Address Collection Requirements

Starting January 1, 2024, Senate Bill 630 requires all Contractors State License Board (“CSLB”) applicants and licensed contractors to provide a valid email address while applying or renewing a license.

Assembly Bill 336 – CSLB Workers Compensation Certification

Starting July 1, 2024, Assembly Bill 336 requires contractors who have certificates of workers' compensation insurance or certification of self-insurance on file with the CSLB, or who are required to provide those certificates, to provide the classification codes under which the insurance is effective on the license renewal form. Classification codes describe the nature of the 'work' insured. Assembly Bill 336 is designed to require contractors to ensure that their workers' compensation insurance properly covers the type and scope of work performed by its employees.