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Legislative Updates

Legislative Update
January 2018 Edition

 

As I write this article it is, coincidentally, Election Day, and I wonder how it will all turn out.  It seems that we have little to choose from and most feel a low confidence level no matter who wins.  Time will tell, but the day to day effort to enact legislation that is favorable to contractors and employers still happens in the trenches and we will do whatever is necessary to get our message heard.

STATE NEWS

Many of you may be aware that the LAP&FCA is a partner with the American Subcontractors Association of California Government Relations Committee (GRC).  The Committee meets regularly via conference call and this legislative session a total of 24 bills were of interest to subcontractors, and 15 of those were chaptered into law.  However, most of the issues were “borderline” in their effect to contractors and 11 such new bills the GRC had taken a “pending further information” position.  Three bills that the committee fully supported were enacted into law, although all three had a minimal effect on contractors.  AB 1963 (Calderon) has the greatest impact as it extended the construction defect provisions of the Davis-Stirling Common Interest Development Act, set to expire on July 01, 2017 until July 01, 2024, with repeal on January 01, 2025.  AB 326 (Frazier) expedites the release of held surety deposits (including interest) following resolution or settlement of disputed issues. The final support bill passed by the legislature only was of interest to contractors that commence excavation on a work site, and therefore was of little interest to painting contractors.

One California bill, AB 626 (authored by Chiu and sponsored by United Contractors) may be of some concern to subcontractors. The GRC held a “pending” position on this bill hoping to see some amendments that could change our stance to support.  AB 626 creates new claims resolution procedures in addition to those already found in Public Contract Code. The intent of the bill was to close a loop-hole in prompt payment by public entities, however legal counsel for the GRC, Dan MeLennon, warns that the new provisions may actually create an additional layer of expensive hoops for contractors to jump through, prior to arbitration or litigation.  Mr. McLennon foresees public agencies using the new procedures as delaying tactics that may actually retard the prompt pay of services rendered.  The bill does have an expiration date of December 31, 2019, and thus if it does prove to be problematic, contractors can comment against renewal at that time.

FEDERAL

At the national level our main focus is to gain support for the final portion of pension reform.  With the backing of the Finishing Contractors Association and other contractor groups we were able to achieve some reform in 2014, but we still are seeking congressional approval to establish composite defined contribution/benefit plans that will stabilize multi-employer pension plans.  We have not given up all hope for the lame duck session, but also don’t see much reason for optimism, especially as labor seems reluctant to accept the proposal as well as minimal interest among legislators.

While pension reform is the number one issue on the national horizon, it is by no means the only topic we have been discussing.  Misclassification of workers is also a key correction we see that needs to be addressed.  Many contractors continue to hire employees as “contractors” and thereby avoid taxes, insurance and other benefit payments.  Also, every congressional session we need to fight back challenges to prevailing wages provisions, and this year has been no different.  Fortunately, we have friends on both sides of the political spectrum, but it remains a re-occurring battle.  Along these same lines is the increasing use of Public/Private Partnerships that have opened the door to public works projects being partly fund with private investments and thus a loophole to sidestep prevailing wage. 

In the New Year, we will continue to have our voices heard and our faces seen in the halls of congress as we, along with other industry partners, continue to represent the interests of employers in very difficult times.

 

 

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