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Construction and Public Contracts

  • On all subcontracts entered into after January 1, 2018, direct contractors (such as general contractors, home-builders, and builders/developers) could become liable for unpaid wages of employees of subcontractors on private projects under the new California Labor Code § 218.7 (AB1701). This could also impact subcontractors who are liable to direct contractors for sub-subcontractors who fail to pay their employees. Although the new law allows direct contractors to request payroll information from subcontractors, direct contractors could get stuck paying twice for work if the subcontractor’s information is inaccurate, false, or incomplete. Therefore, the only certain way for direct contractors to avoid […]

  • If you are a specialty trade contractor, material supplier or other potential lien or bond claimant, you’ve undoubtedly faced this dilemma: “The customer will only release payment if we give them an unconditional waiver and release. Everyone does it!” From a purely legal perspective and without taking into account business considerations, giving an unconditional waiver until you verify clearance of the payment is a very bad idea. There is a reason that most states (including California) offer an alternative: the conditional waiver. The conditional waiver and release upon final payment is the most underutilized of the 4 statutory release forms in California. It exists, however, […]

  • This focuses on Public Contract Code § 9204, the new law requiring a minimum claims resolution procedure for claims arising in public contracts (“Section 9204”). Below is a listing of the key aspects of Section 9204, some analysis and practical advice, along with a timeline sequence of how the new statute works. Further below is the full text of the new statute. New Claims Procedure for Public Works Contracts What contracts do Section 9204 apply to?—All public works projects everywhere in California entered into on or after January 1, 2017, except when the public entity involved is (a) Dept. of […]

  • Last week, I came back from the American Bar Association Forum on Construction Law Annual Meeting in Nashville, Tennessee. On my last night there, my wife and I went to the Grand Ole Opry. One of the featured country artists that night asked the audience, “You know what happens when you play a country music record backwards? You get your truck back, you get your dog back, you get your wife back…” Well, after discussing California’s new Labor Code section 1720.9 (which goes into effect on July 1, 2016) with some of my colleagues from around the country, I couldn’t help […]

  • On January 1, 2016, in accordance with Senate Bill 561, certain changes in home improvement salesperson registration requirements took effect. Under previous law, home improvement salespersons employed by one or more home improvement contractors were required to have a registration for each home improvement contractor by whom they were employed. See Cal. Bus. & Prof. Code former § 7153(a).  The current law is less cumbersome and now requires that a home improvement salesperson working for one or more home improvement contractors have only one current and valid home improvement salesperson registration at the time of a sales transaction. See Cal. […]

  • While the facts are interesting, there is nothing particularly groundbreaking in a new appellate case about California preliminary notices (Hub Construction Specialties, Inc. v. Esperanza Charities, Inc. – filed February 8, 2016, Second District, Div. Eight). The case, however, serves as a good reminder of the pervasive push and pull between “strict compliance” and “substantial compliance” when interpreting mechanics lien law statutes. In doing so, the case revisits many of the seminal cases that interpret California’s preliminary notice requirement as a prerequisite to the enforcement of a mechanics lien, stop payment notice or payment bond claim.  In Hub Construction, the Court […]

  • In Hernandezcueva v. E.F. Brady Company, Inc. (2015) 243 Cal.App.4th 249, the California Second District Court reversed a jury finding that a drywall subcontractor was not negligent, and held for the first time that under the “stream-of-commerce theory,” a contractor who uses, installs or furnishes defective products is subject to “strict products liability” even if the product is merely incidental to its work. E.F. Brady was a drywall subcontractor who bid to install drywall. Only 25% of its bid was allocated to materials and 75% was allocated to labor. Unknown to the subcontractor, the joint compound contained asbestos. The subcontractor was held […]

  • In the wake of last month’s tragic apartment balcony collapse in Berkeley that killed 6 and seriously injured 7 others, two Northern California state senators have introduced new legislation with the stated goal of improving “construction industry disclosure.” Senate Bill 465 would require contractors to report to the Contractors State License Board (CSLB) if and when they are convicted of a felony “or any other crime substantially related to the qualifications, functions, and duties of a licensed contractor.” The proposed law would also require that every licensed contractor report “any civil action settlement…resulting in a settlement worth $50,000 or more, or a binding arbitration…worth $25,000 […]