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California Legislative Update January 2019: Key Construction Laws

Stay informed about the latest California legislation impacting the construction industry. Learn about new laws on sexual harassment, contractor liability, apprenticeships, and workforce requirements. Keep up with emerging trends and crucial changes affecting your business.

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California Legislative Update January 2019: Key Construction Laws

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  1. WECA Legislative Update January 2019

  2. New Legislation • A whopping 684 measures were introduced in the Senate in 2018, while 1,531 were introduced in the Assembly this year. • Over his career, Brown signed nearly 20,000 bills, including 1,016 this year

  3. What We’ll Cover • General Construction • Sexual Harassment • General Business • Independent Contractor Status • Emerging Trends in California

  4. Construction Related

  5. AB 235 Apprenticeship and Pre-apprenticeship • Establishes a two-part process for the approval of apprenticeship programs, maintaining the current process for building trades and firefighter programs and establishing a separate process for newly emerging areas. Establishes pre-apprenticeship registration and record keeping.

  6. AB 2358 Apprenticeships: Discrimination • Prohibits discrimination in building and construction trades apprenticeship programs based on enumerated categories with regards to acceptance into or participation in the program.

  7. AB 1565 General Contractor Liability • This bill is a clean-up measure to AB 1701 from last year and responds to the Governor’s signing message asking for technical clarifications. • Last year, the Legislature passed and Governor Brown signed AB 1701 (Thurmond) Chapter 804, Statutes of 2017, which created joint liability provisions for construction contractors and subcontractors.   • AB 1701 holds general contractors and subcontractors jointly liable for unpaid wages, including fringe benefits.

  8. AB 1565 General Contractor Liability • Strikes the language stating that a direct contractor's liability for debts owed to a wage claimant, or to a third party on the wage claimant's behalf, for any unpaid wage, fringe, or other benefit payment or contribution, is in addition to any obligations and remedies otherwise provided by law. • Provides that, for any contract entered into on or after January 1, 2019, in order to withhold dispute payments, the direct contractor must specify, in its contract with the subcontractor, the specific documents and information that the direct contractor will require that the subcontractor must provide upon request.  Subcontractors may include the same requirements in their contracts with lower tiered subcontractors and may withhold as disputed all sums owed, as specified.

  9. AB 1654 Private Attorney General Act (PAGA) • Exempts from PAGA claims unionized employees in the construction industry. • Requires the CBA to include a grievance and binding arbitration procedure to redress violations that would have been remedied under PAGA. • Ignores other employment agreements that include the same provisions if not pursuant to a CBA.

  10. AB 1914 Underground installations: excavations • Authorizes an excavator to use power-operated or boring equipment, as determined by the California Underground Facilities Safe Excavation Board beginning July 1, 2020, prior to determining the exact location of a subsurface facility, as specified. • This bill requires the Board to adopt regulations to permit an excavator to use power-operated or boring equipment prior to determining the exact location of subsurface installations. The need for the bill is to address the use of hand tools under certain conditions in which the alternative is to use imprecise hand tools such as a pick shovel or digging bar.  The mechanical advantage of power equipment is that it eliminates a significant amount of human bending, lifting, twisting and thrusting of tools into soil, all of which are drivers of injury and fatigue.

  11. AB 2031 Prequalification • School Project Bidding Requirements. Removes the January 1, 2019 sunset date on the requirement of general contractors and specified subcontractors (electrical, mechanical and plumbing contractor) to complete and submit prequalification information prior to bidding on school construction projects.

  12. AB 2249 UPCCAA • Increases project cost limits specified in the UPCCAA by: • Increasing the dollar amount of projects that may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order from $45,000 to $60,000; • Increasing the informal bidding threshold from $175,000 to $200,000; and, • Increasing the formal bidding threshold from $175,000 to $200,000.

  13. AB 3018 Skilled and Trained Workforce Requirements • Increases reporting requirements and penalties for noncompliance with existing provisions related to skilled and trained workforce requirements on state public works projects. • Requires public agency to forward CPRs to DLSE if Skilled and Trained Workforce not met, • Allows public agency to withhold 150% of progress payments • Authorizes penalty of $5,000 per month for first violation • Authorizes $10,000 per month for second violation in 3 years • Debars contractor who violates

  14. AB 3231 Certified Payroll Records • Authorizes a joint labor- management committee to bring an action against an employer who fails to provide payroll records as required by state law.

  15. Sexual Harassment

  16. SB 1300 Sexual Harassment Omnibus Bill • Prohibits an employer from requiring an employee to sign (in specified circumstances) a:  • Release of FEHA claims or rights, or   • Document prohibiting disclosure of information about unlawful acts in the workplace  • Prohibits a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so  • Expands an employer’s potential liability under the FEHA for acts of nonemployees to all harassment 

  17. SB 1343 Sexual Harassment Prevention Training • Requires employers with 5 or more employees to provide 2 hours of sexual harassment prevention training to all supervisory employees, and at least 1 hour of sexual harassment prevention training to all nonsupervisory employees by January 1, 2020. Requires • DFEH to develop online training courses that employers can utilize to satisfy these requirements. • Currently, only businesses with 50 or more employees must provide sexual-harassment-prevention training to supervisory employees.

  18. SB 820 Settlement of Harassment Claims • SB 820 prohibits provisions in settlement agreements preventing disclosure of factual information pertaining to claims of sexual assault, sexual harassment, gender discrimination or related retaliation that have been filed in court or before an administrative agency.   • Does not prohibit a provision that prevents parties from disclosing amount of settlement.  • Allows a plaintiff to request provisions in settlement agreements that shield their identity. 

  19. AB 1619 Sexual Assault Statute of Limitations • AB 1619 greatly enlarges the statute of limitations for filing a civil action for damages for sexual assault to:  • 10 years after the alleged assault or   • 3 years after the plaintiff discovered injury as a result of the assault, whichever is later.   

  20. AB 1976 Lactation Accommodation • Among other things, this bill will make California's lactation-accommodation law consistent with federal law on the requirement that a lactation space can't be a bathroom. • Provides for temporary lactation locations that meet certain conditions. • Allows an employer to request a hardship exemption under certain conditions.

  21. Misc Measures

  22. SB 1352 Payroll records • Existing law already requires that employees have a right to inspect or copy their payroll records and that they must be allowed to do so within 21 days of such a request.   • SB 1352 provides that when an employee asserts his or her right to inspect and copy payroll records, the employer is required to make the copies.

  23. Poster Updates • Notice to Employees:  EDD – UI, SDI, PFL (DE 1857A), 7/3/18  • Poster Change:  California Law Prohibits Workplace Discrimination and Harassment (DFEH-EO7P) 6/30/18  • For your Benefit:  California’s Programs for the Unemployed (DE 2320), 4/1/2018  • California Paid Family Leave (DE 2511), 1/1/18  • Minimum Wage increases 1/1/19:  • $11/hr for employers with 25 or fewer employees  • $12/hr for employers with more than 25 employees  

  24. National Origin Regulations ( 7/1/18) • New regulations prohibit recruiting based on national origin.  • “National Origin” is broadly defined and includes national origin of the person’s spouse or those with whom the individual is associated.  • Can’t consider accents when making employment decisions unless accent materially interferes with the individual’s ability to perform job duties.  • English proficiency/height and weight requirements must be justified by business necessity.  • Prohibit employers from discriminating against applicants because they trained or were educated outside the USA.  • Apply regardless of immigration status of applicant or employee.  • Can’t ask about immigration status or discriminate based on immigration status (except to comply with federal law). 

  25. Emergency Cal/OSHA Regulations • Employers must submit online the Form 300A by December 31, 2018:  • All employers with 250 or more employees, unless specifically exempted    • Employers with 20 to 249 employees in the specific industries listed in the emergency regulations (includes construction, agriculture, manufacturing, stores, nursing facilities).  • Current law provides “Your employees, former employees, their personal representatives, and their authorized employee representatives have the right to access the injury and illness records required by this article, with some limitations.”  (8 CCR § 14300.35 )

  26. OSHA Advice Re:  Air Quality Affected by Smoke • According to Cal/OSHA  • When employees are working outdoors where the air is affected by wildfire smoke, employers are required by Cal/OSHA's standards on Control of Harmful Exposure to Employees and Respiratory Protection to determine if the outdoor air is a ‘harmful exposure’ to employees.  • Exposure is harmful when the pollution or contaminants in the air cause (or are likely to cause) injury, illness, disease, impairment or loss of function. 

  27. Protect Workers if the Outside Air is Harmful • When exposure to wildfire smoke is considered harmful, employers are required by Cal/OSHA's Control of Harmful Exposure standard to take the following measures to protect workers:  • Implement feasible modifications to the workplace to reduce exposure. Examples include providing enclosed structures or vehicles for employees to work in, where the air is filtered.  • Implement practicable changes to work procedures or schedules. Examples include changing the location where employees work or reducing the amount of time they work outdoors.  • Provide proper respiratory protection equipment, such as disposable filtering face piece respirators (dust masks) if the previous measures are not feasible or do not prevent harmful exposures.  

  28. Independent Contractor Classification

  29. Dynamex and the ABC Test A worker may be classified as an independent contractor if:  • The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;  • The worker performs work that is outside the usual course of the hiring entity’s business; and  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. 

  30. Misclassification: 1099 vs Employee • Pay fines between $5,000 and $15,000 per violation, in addition to any other fines allowed by law    • If employer is engaged in a pattern or practice of violating this law, the fines are increased to between $10,000 and $25,000 per violation  • Post notice of its violation in a prominent location on its website for 1 year  • Employer that doesn’t have a website, must post notice of violation in each location where the violation occurred, in a prominent area accessible to all employees and the public 

  31. Misclassification: 1099 vs Employee • $50 for each Form W-2 the employer failed to file for classifying workers as an IC  • For failing to withhold income taxes, employer faces penalties of 1.5% of the wages, plus 40% of the FICA taxes that were not withheld from the employee and 100% of the matching FICA taxes the employer should have paid  • Interest is also accrued on these penalties daily from the date they should have been deposited 

  32. Calculating Overtime Correctly • Calculating regular rate of pay (includes a flat sum)   • Divisor for calculating per-hour value of a bonus should be the number of non-overtime hours actually worked during the pay period   • Divisor should not include OT hours worked  • Would result in a lower regular rate of pay (and thus overtime pay) for employee   Alvarado v. Dart Container Corp. of California,  (2/5/18)  

  33. What Does the Regular Rate Include?  • Calculating the regular rate includes all items of remuneration paid to non-exempt employees, except for those items that are specifically excludable.   • Includes almost all payments, including non-discretionary bonuses:  • Attendance bonus for working unpopular shifts  • Attendance bonus for no sick days  • Safety bonus for no safety violations or injuries  • Flat rate bonus for hitting goals (e.g. loan officers)  • Court limited its decision to flat-sum bonuses and not typical production or piece rate bonuses  

  34. Steps for Regular Rate Calculations After DART • Review Wage Payments – determine if bonuses are “discretionary” or “nondiscretionary”   • If non-discretionary evaluate whether the bonus constitutes a “flat-sum” bonus (or some other bonus)  • Flat sum bonus calculation will require dividing total compensation by non-OT hours worked   • Seek guidance to avoid the potential for class action liability!  (This can get complex quick!!)  • Do not rely on payroll company to get it right!  

  35. Compensation for All Hours Worked • De Minimis Time: Calif. Supreme Court held that claims for unpaid wages under California  law ordinarily cannot be rejected as de minimis • Computer system required to clock out before initiating “close store” procedure on a separate terminal.   • Then had to activate alarm, exit store, lock door, and walk co-workers to their cars.  • Equaled 4-10 minutes per day for which he was not compensated.  Troester v. Starbuck’s (2018) 

  36. Lessons from Starbuck’s • Routine, predictable and measurable activity is compensable even if de minimis …unless activity is “so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them”  • Update policies   • Review where timekeeping mechanisms are located  • Create ways to document unrecorded time (e.g. email)  • Explore portable timekeeping applications (e.g. apps)  • Be sure payroll is truly paying off of accurate time records

  37. Salary History • Employers prohibited  from asking about or relying on prior salary information as a factor in determining whether to offer employment … or what salary to offer an applicant. (Labor Code 432.3)  • Must provide applicants with the “pay scale” upon a “reasonable request”  • Salary inquiries must be removed from applications and interviewing practices 

  38. Salary History Information, cont. AB 2282 provides “clean-up” language to address ambiguities in new law:  • Salary prohibition only applies to new employees  • Employers can inquire into an applicant’s “salary expectations”  • Defines “pay scale” as a salary or hourly wage range  • “Reasonable request” for salary information occurs only once an applicant has completed an initial interview 

  39. Expense Reimbursements • Class action against Red Robin by “team members” (essentially all non-exempt employees) alleging among other things, failure to reimburse for uniforms, pens and paper.  • Red Robin argued it had a “come as you are” policy and no requirement to wear Red Robin clothing or to use pen and paper to write down customer orders.  • Red Robin had no formal policy for reimbursement of expenses.  • Court granted the employees’ motion for class certification finding a common question as to whether:   “Red Robin’s lack of any written policy or procedure regarding reimbursement constitutes a system wide failure to reimburse employees for necessary expenses incurred as required under California law.” 

  40. CalSavers In 2016, Governor Brown signed Senate Bill 1234, by Senator Kevin de León. The CalSavers program offers employees a voluntary, low cost, portable retirement savings vehicle with professionally managed investments and oversight from a public, transparent board of directors. Any employer with at least five employees that doesn’t already offer a workplace retirement savings vehicle will be required to either begin offering one via the private market or provide their employees access to CalSavers. After CalSavers opens for enrollment, covered employers can register for CalSavers at any time and will be required to comply by the following deadlines:

  41. CalSavershttps://www.treasurer.ca.gov/scib/

  42. Trending Cases… • Final Payment of Wages  • BOFE Audits – Citations   • Fishing Expeditions: Personnel File Requests  • PAGA Claims (Rest Periods, 7 Day Workweek  • Background Checks 

  43. Final Payment of Wages • $80 clerical mistake became a $2,250 waiting time penalty +$86,000 attorneys fees!!!  • Paralegal was to be paid all wages within 72 hours of her resignation. Defendant law firm timely wrote a check with correct numerical amount but incorrect spelled out amount… $80 less (bank did not accept check)   • Law firm reissued corrected check but process took 9 days   • Court found paralegal was entitled to waiting time penalties for the period of the delay  • Because firm appealed the decision to the Superior Court and Court of Appeal – on the hook for paralegal’s attorney ’s fees    Some claims may not be worth the fight!

  44. Bureau of Field Enforcement Audits • BOFE has right to collect wage information, interview employees and issue citations  • Recent Cheesecake Factory case-   • Auditors found the restaurant shares responsibility for janitorial subcontractor’s wage violations   • Janitorial firm failed to pay 4.57 million in OT wages according to BOFE  • Citations assessed against Cheesecake Factory for janitorial firm’s liability under 2015 law LC 2810.3 (employers obtaining labor from subcontractor are liable for contractor’s wage violations)   

  45. Fishing Expeditions: Personnel File Requests • Personnel file requests  • 226 Wage Statement Requests   • Injury Illness Prevention Policy (IIPP) requests from a current employee must be provided free of charge no later than 10 business days from the date the employer receives the request.  

  46. PAGA TREND:  7-Day Workweek • Day of rest is guaranteed for each workweek, not for any consecutive 7-day period;  • Employer may not induce an employee to forgo rest to which he or she is entitled, but the employer may permit or allow the employee to do so.  • Employer take-away: implement Day of Rest Acknowledgement and Waiver

  47. PAGA TREND:  Rest Periods • DLSE FAQ advising you cannot require employees to stay on work premise during the ten minute paid rest break  • Following Augustus v. ABM Security more litigation related to interrupted rest breaks.   • Employer take-away: update rest period policies and practices 

  48. What’s Up in 2019? • AB 177 (Low) makes election day a holiday with pay for state employees and schools (which will close) • AB 178 (Dahle) waives any PV requirement to replace a destroyed home • AB 186 (Cervantes) creates a $1,000 tax credit for apprentices who meet one of the following requirements: • Has not obtained a high school diploma and is enrolled in high school or a GED preparation program. • Has obtained a high school diploma or passed the GED while participating in the apprenticeship

  49. What’s Up in 2019? • AB 191 (Patterson) exempt homes being rebuilt after wildfires or specified emergency events that occurred on or after January 1, 2017, from meeting certain current building standards • AB 196 (Gonzalez-Fletcher) would expand the paid family leave program in order to provide a 100% wage replacement benefit for workers earning $100,000 or less annually

  50. Questions, comments, complaints

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