LEGAL ISSUES
and duties of a licensed contractor.” Te legislation is unclear on the subject of its retroactive application. However, instead of stopping with this new reporting obligation, SB 465 further expanded this enforcement information tool in two important ways. First, the new law requires
California’s Department of Industrial Relations’ Division of Occupational Safety and Health (Cal/OSHA) to transmit to CSLB (and potentially other agencies) copies of any citations or other actions taken against any persons, licensed or not, working in the capacity of a contractor as defined in the Contractors’ State License Law. Prior to the new law, Cal/OSHA
was only required to transmit to CSLB copies of “reports made in any investi- gation” involving a licensed contractor. Under the new law, Cal/OSHA will do more than transmit investigation reports. Cal/OSHA will also transmit to CSLB citations, regardless of whether the contractor is guilty of a violation, and other actions taken by Cal/OSHA against a contractor. Second, the law reaches out to
other agencies by authorizing CSLB to enter into interagency agreements with other state or local agencies to receive “any information relevant to its priority to protect the public.” Te new law is designed to provide CSLB with a comprehensive collection of data about contractors’ work in general as well as specific regulatory and legal actions taken against contractors by other agencies. Te law imposes increased
accountability regarding disciplinary information on contractors and empowers CSLB to gather information about licensee behavior that it deems necessary to utilize in deciding when action must be taken. It is critical for contractors to know exactly what infor- mation is available – from all relevant agencies – to CSLB and to conduct their business in a way that is consistent with its professional license standards.
Impact #2: Working Group Studies and Recommendations for Building Code Changes
18 May/June 2017 One key aspect of the law is
designed to have a powerful impact by helping CSLB identify and take action against bad actors and bad behavior. However, another component could have even greater impact because it could lead to changes in state building standards and codes. Te legislation directs a working group formed by the California Building Standards Commission to study recent failures of elevated elements on the exterior of buildings, such as balconies, to determine whether statutory changes or changes to the California Building Standards Code are necessary. Te working group must submit its report on findings and recommendations by January 1, 2018. Te working group may solicit
input from a wide range of public and private entity stakeholders, including “the building industry, the wood, steel and concrete industries, and any other interested parties.” It is important that all members of the construction industry participate immediately because the law states that the working group may “at any time” (prior to January 1, 2018) determine that changes to the California Building Standards Code “are needed as soon as possible in order to protect the public.” All members of the construction
industry should understand that the new law closes the door to the working group’s activity on January 1, 2018, but it encourages the working group to act as fast as possible prior to that date.
Impact #3: Potential Self- Reporting of Judgments, Arbitration Awards and Settlements of Claims
When initially proposed, the
part of the law that generated the most controversy was mandating that contractors report judgments, arbitration awards and settle- ments. Opponents of the reporting requirement, including the California Building Industry Association, noted that settlements are often a means of avoiding even costlier litigation and provide no information on the merit of claims. Other opponents described
the litigious nature of construction and how construction defects may result from one of the many causes or actors in the chain of design and construction of the work shown on the plans and specifications. Supporters, including Senator
Hill, countered that “it is routine for other professional such as architects, accountants, and engineers to report settlements and judgments to their appropriate regulator.” Senator Hill described the contractor that built the failed Berkeley balcony as having “in previous years paid out $26.5 million dollars in construction defect settle- ments.” However, without a reporting requirement in the current law, the CSLB had no opportunity to perform due diligence to ascertain the reason for the settlements. As passed, the new law directs the
CSLB to study judgments, arbitration awards, and settlements of construction defect claims on rental residential units and, by January 1, 2018, report its recommendation to the Legislature on the merits of requiring contractors to report such information.
Get involved Te photographs of the torn water-
proofing membrane and dry rotted joist ends protruding from the exterior building face following the Berkeley balcony tragedy are compelling, and the personal losses are horrific. Regulatory changes are frequently generated by catastrophes, and SB 465 is a first step toward new regulations of the construction industry. Te SB 465 working group studies
regarding further reporting require- ments and potential building code changes will be completed this year, and additional legislation is likely to follow. All representatives of the construction industry should make their voices heard regarding the expected new regulations.
Eric Firstman is a Principal with Meyers Nave and the Chair of the Construction and Facilities Practice Group.
California Constructor
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