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By James E. Acret
Only a relatively few bills of significance to construction industry professionals survived the governor's veto pen.
Employment: The most welcome was SB 1809, an urgency statute that became effective August 11, 2004, to roll back "sue your employer" statutes. An employee no longer has the right to sue for violation of technical and insignificant posting, notice, reporting and filing requirements. Employers are given an opportunity to cure violations and thus avoid liability.
Notice: A former requirement that county recorders notify property owners of the recording of a mechanic's lien is repealed, and the notification is made optional with the county recorders. AB 2853.
Engineer, Land Surveyor Reporting: Starting July 1, 2006, registered engineers and land surveyors must report in writing to the Board for Professional Engineers and Land Surveyors if they are convicted of a felony; if they are convicted of any crime substantially related to their profession; if they enter into a settlement for $50,000 or more in a civil action in which fraud, breach of contract or negligence was alleged; or if a judgment, arbitration award or administrative action for $50,000 or more is entered against them in an action for breach of contract, negligence or fraud. Failure to report is grounds for discipline. Reports must be made even if settlement agreements are confidential. Courts are required to report judgments. Professional liability insurers must report when they make payments on behalf of their insureds. However, registered professionals are exempted from reporting on other registered professionals. Implementation is contingent on sufficient budget funding. SB 1549.
Fingerprints: Effective January 1, 2007, the qualifying individual's contractor's license bond will increase from $7,500 to $12,500. SB 1914. The Contractors State License Board will require applicants to furnish a full set of fingerprints and must check criminal histories. SB 136; Business and Professions Code §144.
Small Jobs: Another welcome action was repeal of Subdivision (b) of Business and Professions Code §7048, which had purported to "strengthen" the contractor's license law by effectively doing away with the "small job" (less than $500) exemption. Under the repealed law, an unlicensed contractor undertaking a job worth less than $500 lost the exemption if he failed to deliver to the owner a lengthy notice admonishing against employing an unlicensed contractor. The legislation was ridiculed for its absurdity. SB 1914.
Home Improvement Contracts: SB 30 extensively rewrites the requirements for home improvement contracts effective July 1, 2005. A new category entitled service and repair contract for small jobs worth less than $750 is added. To qualify, the contract must have been initiated by buyer and the contractor must not oversell. A half dozen special notice requirements are imposed, including a notice that no payment can be made until after the work has been completed. The contractor must detail how its estimate was made, and the price may not exceed the estimate without written authorization. The amount of any service charge must be disclosed, and the contract must contain the appropriate notice of right to cancel. Violation of service and repair contract requirements is a crime. Because the contractor's license law does not apply to jobs worth less than $500, these complex requirements only go into effect if the price of a job happens to be somewhere between $500.01 and $749.99!
This same new statute enacts new requirements for home improvement contracts. These include high-value contracts for residential work.
Revised required notices cover the importance of employing licensed contractors; consumer-protection activities of the Contractors State License Board; changes to the contract and a sample change order form; worker's compensation and liability insurance coverage and contact information for carriers; a schedule of progress payments; approximate start and finish dates; a statement of the right to cancel; and disclosures about finance charges.
Building Inspections: Local agencies collect building permit fees for permits issued under the state housing law. If the agency fails to conduct an inspection of permitted work within 60 days after receiving notice of the completion of the work, the permit fee shall be refunded to the permittee. Health and Safety Code §17951; SB 1815.
Transit Design-Build: The authority of agencies that build transit projects to utilize design-build constructing is extended to January 1, 2007. Public Contract Code §§20209.12, 20209.13, 20209.14, SB 1130.
Dig Alert: Persons planning to make excavations must contact a dig alert center at least two working days before starting the excavation. The dig alert center will provide identification numbers that formerly were valid for 14 days but now will be valid for 28 days.
A new exclusion from the notification requirement is provided for excavation equipment renters (whether they provide equipment operators or not) when they rent to a licensed contractor, provided that the signed rental agreement includes the following provision:
It is the sole responsibility of the lessee or renter to follow the requirements of the regional notification center law pursuant to Article 2 (commencing with Section 4216) of Chapter 3.1 of Division 5 of Title 1 of the Government Code. By signing this contract, the lessee or renter accepts all liabilities and responsibilities contained in the regional notification center law.
Government Code §§4216 ff, AB 1264.
Landscape Architects: Under existing law, landscape architects must sign their plans and specifications. Business and Professions Code §5659 is amended to require that the documents not only be signed but sealed or stamped to show the renewal date of the licensee. Signing and sealing contract documents now is ".evidence of the person's responsibility for those documents...." SB 1914.
Self-Help Housing: Worker's compensation insurance coverage need not be provided to any person who is an owner-builder and is participating in a mutual self-help housing program, as defined in the statute and if sponsored by a non-profit corporation. Labor Code §3352, AB 2649.
Seismic Warning Signs, Notices: Warning sign requirements for unreinforced masonry buildings are revised. Owners of unreinforced masonry buildings must disclose their building's condition in leases. Provision also is made for signs noting that buildings have been retrofitted. The statute provides for criminal penalties and injunctive relief. AB 3032.
Common Interest Developments: Section 1368.3 is added to the Civil Code to provide that a homeowners' association has standing to arbitrate or litigate claims for damage to the common area. New §1368.4 provides that the amount of damage shall be reduced in proportion to the percentage of fault allocated to the association for the damage, based on principles of comparative fault. The comparative fault of the association may be raised by way of defense but shall not be the basis for a cross-action or a separate action against the association. Comparative fault must be pleaded as an affirmative defense rather than as a separate cause of action. The contractor or the developer is entitled to the setoff based on comparative fault even if the association is not a party to the action. AB 1836.
Seismic Improvements: Local agencies may not impose any additional requirements, including parking, fee or exactions, before issuing a building permit that is necessary for the owner of a potentially hazardous building to conduct seismic improvements. Government Code §8875.10, AB 3033.
Employment Discrimination: Existing law prohibits discrimination in employment by public contractors based on race, religion, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status or sex. Labor Code §1735 is amended to also prohibit discrimination based on age or sexual orientation. A contractor that violates a non-discrimination requirement can be penalized after an investigation by the labor commissioner. AB 2900.
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2005 Thelen Reid Brown Raysman & Steiner LLP
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