In January 2016, two new laws will go into effect in California that increases the obligations on contractors in California. The first imposes obligations typically enforced on public works projects on private construction of hospitals, and the second, strictly regulates the workforce employed by contractors on school facility design-build projects.

Assembly Bill 852

Assembly Bill 852 expands the definition of “public works” to include the construction, alteration, demolition, installation or repair work done under a private contract for a general acute care hospital when the project is paid for, in whole or in part, by the proceeds of conduit revenue bonds, as defined in California Government Code § 5870(c). The statute, however, provides an exception for small, rural general acute care hospitals with a maximum of 76 beds.

This expanded definition of public works will impose additional obligations that generally are only imposed on public projects. For example, the new law will require the contractors on these private projects to pay the prevailing wage rate to workers, increasing costs on these private contracts.

Assembly Bill 1358

The second law, Assembly Bill 1358, implements requirements for school facility design-build contracts and lays out specific provisions for bidding on such projects. Most notably, the new law requires bidding contractors to make a commitment that it, and its subcontractors, will used a “skilled and trained workforce” to perform all the work on the project. A “skilled and trained workforce” means the workers must be either “skilled journeypersons” or apprentices registered in an approved apprenticeship program. A “skilled journeyperson” is a worker who either (1) graduated from either a California or federal approved apprenticeship program; or (2) has at least as many hours of on-the-job experience in the application as required to graduate from the applicable apprenticeship program. Further regulating the workforce, the law requires that, as of July 1, 2016, at least 20% of the skilled journeypersons employed must be graduates of a state or federal apprenticeship program for the applicable occupation, and increases this percentage to 30% by July 1, 2017, 40% by July 1, 2018, 50% by July 1, 2019, and 60% by July 1, 2020, partially phasing out the number of non-apprenticeship graduates.

A contractor can establish its commitment to provide the required workforce by: (1) supplying its compliance to the school district on a monthly basis throughout the project; (2) agreeing to become a party to a project labor agreement that the school district entered into that binds all contractors and subcontractors to the requirements of this law; or (3) entering into a project labor agreement that binds all contractors and subcontractors on the project to these requirements.

These regulations limit who contractors can employ for school districts’ public projects, creating an additional burden on contractors and making it much more difficult for non-unionized contractors to bid on these types of projects.