California Construction Law Updates 2025, Part 2

Top 3 Key Takeaways: (this is an updated version)

• Tougher rules for contractors: New costs, stricter license requirements, and delayed worker’s comp mandate to 2028 (SB 1455).
• More flexibility for public projects: Design-build and best-value contracting methods extended for schools and local agencies.
• Labor liability changes: General contractors face more wage liability; PAGA exemption for unionized workers extended to 2038.

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In Part 1 of this blog series, we discussed legal changes affecting building standards, inspections, housing development fees, and more. In Part 2, we will cover additional bills that may also affect contracting businesses in California.

Contractor Licensure

SB 1455 – Contractors: licensing – This bill extends the existence of the Contractors State License Board (CSLB) and its authority to appoint a registrar of contractors until January 1, 2029. Key Provisions of SB 1455 Include:

1. Public Works Project Licensing: Under SB 1455, awarding authorities must now ensure that public works project bidders hold the correct license classification for the work being performed.  This change is important toensure public works projects are performed by qualified professionals under the appropriate CSLB license classifications.
2. Shift in Investigatory Cost for Workmanship Complaints: SB 1455 now requires contractors who are subject to workmanship complaints resulting in a letter of admonishment or citation to reimburse CSLB for industry expert costs. This change shifts the cost burden in investigations related to contractor complaints back to the contractor, incentivizing higher-quality workmanship.
3. Licensing of Tribal Businesses: Under SB1455, CSLB will license tribal businesses, which must be organized under the jurisdiction of a federally recognized tribe. This change allows licensed tribal businesses to undertake construction projects off tribal lands, allowing potential economic growth in tribal communities.
4. Delay in Mandatory Workers’ Compensation Insurance Law:  The full implementation of mandatory workers’ compensation insurance for all licensees regardless of whether they have employees is delayed from January 1, 2026, to January 1, 2028.  This is key in that licensees in all trades (except C-39, C-8, C-20, C-22, and D-49) can continue to claim exemptions if they have no employees, until January 1, 2028. 

Design Professionals

SB 1048 – Changes to Site Plan Requirements. SB 1048 clarifies and modifies existing law defining the requirements for a “site plan” and removes the requirement that the document displays topographic lines, drainage, lighting, distance between buildings, and ground sign location. It also modifies the means by which local planning agencies can make plans that contain copyright-protected information available for public review while protecting such plans from unauthorized copying.

AB 1862 – Engineering, land surveying, and architecture: limited liability partnerships –Existing law authorized engineers, land surveyors, and architects to form limited liability partnerships until January 1, 2026; this bill extends those provisions until January 1, 2034.

SB 1452 – Architecture and landscape architecture – This bill extends the existence of the California Architects Board and Landscape Architects Technical Committee until January 1, 2029. This bill also requires applicants and licensees to provide a valid email address and notify the Board of any changes to their email address within 30 days, sets an expiration date of two years for any issued licenses or renewals, and requires the Board to publicly post licensees’ current mailing address and business entity name on the Board’s website.

Public School Districts

SB 956 – School facilities: Design-Build Contracts – Existing law authorized school districts to procure design-build contracts for projects over $1 million and award on the basis of low bid or “best value,” with a sunset clause that revoked this ability on January 1, 2025. This bill deletes the sunset provision, allowing school districts to continue to use alternative construction delivery methods.

AB 3116 – Housing Development: Density Bonuses: Student Housing Developments – Current law provides density bonus incentives for developers who include at least 20% of total units in a student housing development for lower income students. Such incentives can include relaxed construction standards, approval of additional floors for construction, waiver of fees, or modification of zoning restrictions. This bill requires that projects setting aside 23% or more of development for affordable student housing be provided two incentives or concessions.

California Public Projects: Alternative Construction Delivery Methods

AB 2235 – Public contracts: local agencies: wind infrastructure – Authorizes the City of Long Beach to procure contracts related Pier Wind, the terminal development project at the Port of Long Beach, and to enter into an alternative project delivery method contract for that purpose. The city must prepare, publicly advertise, and issue solicitation documents to procure and award any contract, subject to the requirements set out in the bill. Selected contractors will be required to provide payment bonds and meet skilled and trained workforce requirements for project work, among other provisions.

AB 1957 – Public contracts: best value construction contracting for counties – Expands the existing pilot program that allowed certain California counties to select contractors based on “best value” (that is, “the best combination of price and qualifications” per Section 20155.1 of the Public Contract Code) to all California counties. The statute will be in effect from January 1, 2025, to January 1, 2030.

Labor-Related Changes

AB 1034 – Private Attorneys General Act of 2004: exemption: construction industry employees – The Private Attorneys General Act (PAGA) authorizes aggrieved employees to bring civil actions to enforce violations of the Labor Code on behalf of the State of California, but existing law provides an exemption for employees of the construction industry who work under a valid collective bargaining agreement. This exemption was due to expire, but this bill extends it until January 1, 2038, for collective bargaining agreements that meet the requirements set out in the statute, including the provision that the agreement must expressly waive PAGA’s requirements and authorize an arbitrator to award any and all remedies available under the Labor Code.

AB 2696 – Labor-related liabilities: direct contractor and subcontractor – This bill allows a joint labor-management cooperation committee to bring a civil action against a direct contractor for unpaid wages and fringe benefits, penalties or liquidated damages, and interest owed by a subcontractor for workers’ or employees’ performance of work on a private project for contracts entered into after January 1, 2022. It also authorizes the court to award prevailing plaintiffs reasonable attorneys’ fees and costs.

Ongoing changes to California construction law can impose new compliance requirements, expose businesses to previously unforeseen liability, or open new opportunities. The construction law team at Ghassemian Law Group makes it our business to stay current on the latest legal changes to provide the best possible protection for our client’s interests. If you’re not certain what new legislation means for your business, we can provide answers. To schedule your consultation, contact us here today.

To review part 3 click HERE

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