CALTRANS TO PAY CALIFORNIA PROMPT PAY PENALTIES INCLUDING ATTORNEYS FEES

In a recently decided case, Caltrans has been ordered to pay not only the principle sought by the contractor but in additional sums representing California Prompt Payment Penalties including a penalty of 2% per month on the principle amount due until judgment is entered, and more importantly the payment of mandatory attorney fees to the prevailing contractor.

Andrade & Associates (A&A) represented a general contractor in a claim against the State of California Department of Transportation (Caltrans) seeking to recover among other things the wrongful retention withheld from the contractor by Caltrans and also the recovery of California's Prompt Payment Penalties since Caltrans withheld the Contractors money without a good faith dispute. Caltrans position was that the withheld money, $226,800.00 represented 40 days of liquidated damages based upon Caltrans refusal to stop the contract calendar days even though Caltrans had taken beneficial possession of the project and had opened the highway up for use by the public over 21 days before the extended contract completion date.

A&A was able to establish that the contractor was entitled to a 40 day contract extension due to delays caused by Caltrans. Despite the granting of the 40 contract extention days which worked to wipe out the liquidated damages assessed, Caltrans nonetheless took the position that since last minute change order work involving a sign already installed and accepted by Caltrans was not completed by their calculations until 40 days after the extended contract completion, that Caltrans was still entitled to charge liquidated against the contractor in the amount of $226,800.00 due to the change order work which was not part of the original contract scope.

A&A successfully argued that the change order work added at the end of the project and which involved making changes to work already performed and accepted by Caltrans could for the basis upon which Liquidated Damages could be assessed and in any event could not establish a good faith dispute still pending against the contractor. A&A successfully convinced the arbitrator to award a sum of approximately $700,000.00 based upon the return of the Liquidated Damages assessed, penalty interest of 2% per month for 40 months on the unpaid Liquidated Damages, and mandatory attorneys's fees and costs.

In my career spanning over 300 trials, this was the first case that I have been involved with that Caltrans was forced to pay the penalties, interest and mandatory attorney fees associated with California's Prompt Payments statutes. So in the future, litigation might not be Caltrans first choice now that they have been proven not to be beyond the reach of the Legislative Penalties. Caltrans long standing policy of withholding money due the contractor an inordinate amount of time without a good faith dispute that the contractor owes any money or further performance on the contract may finally come to an end.

ANDRADE & ASSOCIATES NAMED BOUTIQUE CONSTRUCTION LITIGATION LAW FIRM OF THE YEAR FOR CALIFORNIA

As part of the 2017 Corporate International Global Awards in the Boutique category, Andrade & Associates has been named the Construction Litigation Law Firm of the Year in California. Primarily based in Orange County with Satellite offices in San Diego and Los Angeles, Andrade & Associates' practice focuses exclusively on the construction industry which by necessity includes mechanics liens; stop payment notices; surety bond claims (payment, performance and Miller Act). claims for differing site conditions and resultant delay claims for items that are time related damages, claims for extra work and change order claims, all aspects of labor law including wage and hour law employee claims and General Business dealings including Business Litigation. Andrade & Associates has been serving the construction industry for over 35 years representing owners, general contractors, sub-contractors, suppliers and materialmen on private works of improvements, State public works of improvements as well as Federal Public Works projects. Andrade & Associates offers a no cost initial consultation should you wish to discuss a pending matter and get a second opinion or wish to discuss options available to you for a new matter that needs to be handled.

From those of us here at Andrade & Associates, we are thankful for the recognition from the Corporate Global Award individuals who bestowed the honor upon us and we look forward to hopefully working with your company in the future.

CONTRACTORS STATE LICENSE BOARD OUTLINES NEW 2017 LAWS AFFECTING CONSTRUCTION INDUSTRY

SACRAMENTO — The Contractors State License Board (CSLB) is providing a round-up of new state laws affecting California’s construction industry that take effect in the new year.

Assembly Bill (AB) 1793 modifies the criteria the courts use to determine if a contractor substantially complied with licensing law under Business and Professions Code (BPC) section 7031. This allows a client to not pay a contractor and to demand the return of compensation paid for work completed if the contractor was unlicensed at any time during the course of work. The new legislation provides the court a modified set of criteria to use when determining if a contractor “substantially complied” with licensure requirements and acted promptly and in good faith to remedy the lapse in licensure once known.   

Senate Bill (SB) 1209 provides for enhanced complaint disclosure of legal actions taken against licensees. Under the provisions of this legislation, citations issued against a licensed contractor follow that contractor if he or she is issued another license and allows for the public disclosure of these citations.

AB 2486 requires that by January 1, 2019, CLSB create a system that allows consumers to search CSLB’s website for a licensed contractor either by zip code or geographic area, which should make it easier for consumers to identify and hire properly licensed contractors.

In an effort to establish further safety measures around underground excavation, SB 661enacts the Dig Safe Act of 2016, and makes several changes to existing requirements for excavation procedures. These include requiring that excavators delineate an area to be excavated prior to notifying an appropriate regional notification center and establishing the California Underground Facilities Safe Excavation Advisory Board within the Office of the State Fire Marshall. 

AB 2286 authorizes CSLB to raise its various fees, resulting in what will be the first fee increase since 2011, and only the second fee increase since 1993. The 10 percent fee increase will ensure that CSLB has enough funds to operate in the coming years. Increases that take effect July 1, 2017 include: The application fee for an original license in a single classification will increase from $300 to $330; the renewal fee for an active license will increase from $360 to $400; and the registration and renewal fee for a Home Improvement Salesperson will increase from $75 to $83.

CSLB will provide the industry more information on the upcoming fee increase in the spring.

PUBLISHED BY CONTRACTORS STATE LICENSE BOARD

DOL OVERTIME RULE STOPPED BY JUDGE

A federal judge has blocked an Obama administration rule to extend mandatory overtime pay to more than 4 million salaried workers from taking effect, which was supposed to go into effect tomorrow, December 1, 2016.

U.S. District Judge Amos Mazzant, in Sherman, Texas, agreed with 21 states and a coalition of business groups, including the U.S. Chamber of Commerce, that the rule is unlawful and granted their motion for a nationwide injunction. The case is Nevada v. U.S. Department of Labor, U.S. District Court for the Eastern District of Texas, No. 16-cv-731.

The rule, issued by the Labor Department, was to take effect Dec. 1 and would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. 

The decision, while welcomed by many business groups, throws the issue into a state of confusion. 

The answer for many businesses is more complicated than simply not implementing the provisions of the federal regulation, particularly for California employers who have to contend with state law on the issue.

Employers considering changing their plans to adapt to the new rules should consult with experienced management labor relations counsel before doing so, especially if classification changes were contemplated.

California Increases Pay Requirements and Expands Certain Protections

Not all of the increased pay requirements of the expanded protections will apply to your company.  I suggest you review them to make sure which do and which do not apply.

California recently increased pay requirements and expanded certain protections.   Many of these provisions will not apply to your business but you should review them just in case.

Effective January 1, 2017, California increases the minimum pay rates for certain exemptions and expands protections under certain nondiscrimination laws. Read on to learn more.

California Raises Minimum Pay Requirements for Certain Exemptions

The California Department of Industrial Relations has announced an increase to the pay rates computer software employees and physicians must receive in order to be exempt from overtime. The new rates are effective January 1, 2017. Additionally, the minimum salary required for the administrative, professional, and executive exemptions will increase for some employers at the start of the year.

Background:

Under California Labor Code Sections 515.5 and 515.6, computer software employees and physicians are exempt from the state's overtime requirements if they meet specific duties requirements and earn a certain rate of pay. The pay thresholds are adjusted annually for inflation.

California also has exemptions for bona fide administrative, professional, and executive employees. To be exempt from overtime, these employees must meet certain state salary and duties tests. In California, these exempt employees must be paid a salary of at least twice the state minimum hourly wage based on full-time employment of 40 hours per workweek. The state's minimum wage will increase on January 1, 2017 for some employers.

Computer Software Employees:

Computer software employees may be paid on an hourly or a salary basis to qualify for exemption from California's overtime requirements. Beginning January 1, 2017, to qualify for exemption computer software employees must earn at least:

  • $42.39 per hour (for all hours worked);
  • A monthly salary of $7,359.88; or
  • An annual salary of $88,318.55.

Physicians:

To qualify for exemption from the state's overtime requirements in 2017, licensed physicians and surgeons are required to earn an hourly wage of at least $77.23.

Administrative, Professional, and Executive Employees:

For employers with 26 or more employees, the minimum salary required under state lawfor the administrative, professional, and executive exemptions from overtime will increase to $840 per week on January 1, 2017, as a result of a new state minimum wage of $10.50 per hour. For employers with fewer than 26 employees, the state's minimum salary for these exemptions will remain at $800 in 2017.

Note: These amounts will be lower than the minimum salary required for exemption under federal law, which will increase to $913 per week on December 1, 2016. Any exempt employee in California who earns equal to or more than the state minimum salary but less than the federal minimum salary will be entitled to overtime for work performed in excess of 40 hours in a workweek (but not when overtime is required by state law but not federal law, such as hours worked in excess of eight in one workday). In these circumstances, California employers may want to consider increasing these employees' salaries to meet the federal minimum (as long as the employee still meets the duties test for the exemption). 

Compliance Recommendations:

California employers that intend to classify employees as exempt from overtime under one of these exemptions should ensure employees meet the applicable salary and duties tests by January 1, 2017. Otherwise, these employees must be classified as non-exempt and are entitled to overtime.

California Expands Equal Pay Protections

California has enacted two pieces of legislation that expand the state's Equal Pay Act.

Background:

California's Equal Pay Act prohibits an employer from paying any of its employees less than employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. There are exceptions to this rule if the wage differential is based upon a:

  • Seniority or merit system;
  • System that measures earnings by quantity or quality of production; or
  • Bona fide factor other than sex, such as education, training, or experience. The employer must demonstrate that the factor is not based on sex, is job related and is consistent with a business necessity.

To be covered by an exception, employers must apply each factor on which it relies reasonably. Additionally, the factors relied upon must account for the entire wage differential.

Senate Bill 1063:

Effective January 1, 2017. Senate Bill 1063 amends the Equal Pay Act to also prohibit employers from paying their employees less than employees of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. The exceptions outlined above apply to wage differentials related to race and ethnicity as well.

Assembly Bill 1676:

Effective January 1, 2017, Assembly Bill 1676 specifies that prior salary cannot, by itself, justify any disparity in compensation.

Compliance Recommendations:

California employers should review their policies and practices to ensure compliance with Assembly Bill 1676 and Senate Bill 1063.

California Expands Protections Related to I-9 Documentation

California has enacted legislation (Senate Bill 1001) that prohibits employers from taking certain actions when verifying a new hire's identity and work authorization. Senate Bill 1001 is effective January 1, 2017.

Background:

Federal law requires employers to verify the identity and work authorization of all new hires by completing and retaining the I-9 Form. The form includes a list of documents that are accepted to verify a worker's identity and/or work authorization.

Senate Bill 1001:

Senate Bill 1001 amends California law to expressly prohibit employers from:

  • Requesting more or different documents than are required by federal law.
  • Refusing to honor documents that on their face reasonably appear to be genuine.
  • Refusing to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work.
  • Attempting to reinvestigate or re-verify an employee's authorization to work using an unfair immigration-related practice.

Compliance Recommendations:

California employers should review their new hire procedures to ensure compliance with Senate Bill 1001. Anyone involved in completing the I-9 on behalf of the employer should be trained on the law.

NEWLY SIGNED BILL WOULD ALLOW EMPLOYERS TO INQUIRE ABOUT POST-JUVENILE CRIMINAL ACTIVITY

In today's hiring market it is more important than ever to get as much information about a job applicant before making a decision to hire or not. The applicant's background concerning prior arrests, convictions etc. are important factors that an employer should be able to reach prior to a decision on hiring or not hiring an applicant is made. Existing law generally, with some exceptions, prohibits an employer from asking for this kind of information or using this kind of information as a basis for not hiring an applicant. This bill I believe now allows employers when obtaining background information about an applicant seeking employment, to now ask for this information that occurred after the individual reached the age of maturity of 18 years old, or in other words occurred after the individual was no longer a juvenile. If this sort of information is important in your hiring practice, (and it should be as basic honesty and the ability to obey the law are important elements of a good employee), you should update your application to ask about prior arrests, convictions etc. that occurred after the age of 18. The easiest way to achieve this is to simply add the exact wording of the statute (or wording that basically says the same thing as the statute) to your Application for Employment documents. I would caution you from straying too far from the literal wording of the statute as what you ask maybe the same thing allowed by the statute in your opinion, but in the legal world it might mean something else entirely.

. As always if anyone has any legal question about this newly enacted statute or any other legal issues please feel free to call me or e-mail me for a no cost consultation. rba@aalaws.com; 949.553.1951.

  • AB 1843 by Assemblymember Mark Stone (D-Scotts Valley) - Applicants for employment: criminal history

Existing law prohibits an employer, whether a public agency or private individual or corporation, from asking an applicant for employment to disclose, or from utilizing as a factor in determining any condition of employment, information concerning an arrest or detention that did not result in a conviction, or information concerning a referral or participation in, any pretrial or post trial diversion program, except as specified. Existing law also prohibits an employer, as specified, from asking an applicant to disclose, or from utilizing as a factor in determining any condition of employment, information concerning a conviction that has been judicially dismissed or ordered sealed, except in specified circumstances. Existing law specifies that these provisions do not prohibit an employer at a health facility, as defined, from asking an applicant for a specific type of employment about arrests for certain crimes. Existing law makes it a crime to intentionally violate these provisions.

 This bill would also prohibit an employer from asking an applicant for employment to disclose, or from utilizing as a factor in determining any condition of employment, information concerning or related to an arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to the process and jurisdiction of juvenile court law. The bill, for the purposes of the prohibitions and exceptions described above, would provide that “conviction” excludes an adjudication by a juvenile court or any other court order or action taken with respect to a person who is under the jurisdiction of the juvenile court law, and would make related and conforming changes. The bill would prohibit an employer at a health facility from inquiring into specific events that occurred while the applicant was subject to juvenile court law, with a certain exception, and from inquiring into information concerning or related to an applicant’s juvenile offense history that has been sealed by the juvenile court. The bill would require an employer at a health facility seeking disclosure of juvenile offense history under that exception to provide the applicant with a list describing offenses for which disclosure is sought.

RECENT BILLS SIGNED BY THE GOVERNOR THAT MIGHT AFFECT YOU

Although some of these bills might not effect you, it is a good idea to keep your eye on the what your government is doing to you, good or bad.  

  • AB 736 by Assemblymember Ken Cooley (D-Rancho Cordova) – State teachers' retirement: executive positions

 

The Teachers’ Retirement Law creates the State Teachers’ Retirement System and State Teachers’ Retirement Plan for the purpose of providing teachers and other specified employees with financially sound retirement plans. The law provides for the administration of the system and the plan by the Teachers’ Retirement Board and authorizes the board to appoint employees as necessary for those purposes. The law requires the board to fix the compensation of specified executive and managerial positions, including chief executive officer, chief investment officer, and general counsel.

 

This bill would provide the duty to fix the compensation of specified executive and managerial positions, described above, applies to a single position in the various job categories. The bill would additionally require the board to fix the compensation of a chief operating officer and a chief financial officer. The bill would impose specified limits on the annual percentage increase in salary paid to a person who served in either of those positions on January 1, 2016, and who does not separate from service in that position prior to the date on which the increase is applied.

 

Existing law prohibits, among others, a chief of staff, deputy chief executive officer, or an equivalent senior management position, for a period of 2 years after leaving that position, from appearing before or communicating with the board for the purpose of influencing actions or proceedings, for compensation, as specified.

 

This bill would remove that restriction from the positions listed above and instead apply the restriction to the chief operating officer and individuals who held career executive assignment positions that reported directly to either the chief executive officer or the chief operating officer.

 

  • AB 1687 by Assemblymember Ian C. Calderon (D-Whittier) – Customer records: age information: commercial online entertainment employment service providers

 

Existing law requires a business that owns, licenses, or maintains personal information about a California resident to implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure. Existing law provides specified civil penalties for a violation of these provisions.

 

This bill would prohibit a commercial online entertainment employment service provider that enters into a contractual agreement to provide specified employment services to an individual paid subscriber from publishing information about the subscriber’s age in an online profile of the subscriber and would require the provider, within 5 days, to remove from public view in an online profile of the subscriber certain information regarding the subscriber’s age on any companion Internet Web site under the provider’s control if requested by the subscriber. The bill would define terms for purposes of these provisions. Under the bill, a provider that permits the public to upload or modify content on its own Internet Web site or any Internet Web site under its control without prior review by that provider would not be in violation of these provisions unless the subscriber first requested the provider to remove age information.

 

AB 2844 by Assemblymember Richard H. Bloom (D-Santa Monica) – Public contracts: discrimination

 

  • AB 1875 by Assemblymember Rocky Chávez (R-Oceanside) – State teachers' retirement: option beneficiaries: trusts

 

Existing law, the Teachers’ Retirement Law, establishes the State Teachers’ Retirement System (STRS) and creates the Defined Benefit Program of the State Teachers’ Retirement Plan, which provides a defined benefit to members of the program, based on final compensation, credited service, and age at retirement, subject to certain variations. STRS is governed by the Teachers’ Retirement Board. Existing law establishes the Cash Balance Benefit Program, administered by the Teachers’ Retirement Board, as a separate benefit program within the State Teachers’ Retirement Plan in order to provide a retirement plan for persons employed to perform creditable service for less than 50% of full-time service. Existing law permits members of STRS to select option beneficiaries and participants in the Cash Balance Benefit Program to select annuity beneficiaries for the purpose of receiving a retirement allowance or an annuity, respectively, upon the member’s or the participant’s death. Existing law specifically prohibits a trust from being an option beneficiary under STRS.

 

This bill would permit irrevocable trusts, with specified characteristics, that are established for individuals who are disabled to be an option beneficiary or annuity beneficiary, as described above, for the defined benefit program and the Cash Balance Benefit Program. The bill would require the trust to be for the sole benefit of a single beneficiary and that any other beneficiaries be limited to successor beneficiaries. The bill would require, with respect to the trust’s interest in the member’s or in the participant’s benefits, that the beneficiary of the trust be considered the designated beneficiary for the purpose of determining eligibility for, and the amount and determination of, benefits.

 

The bill would require a member or participant to provide specified documentation if a trust is to be designated an option beneficiary, including a certification that the trust meets relevant requirements, to be signed by the member or participant and acting trustees. The bill would require trustees acting at the time of the death of the member or participant to provide a similar, signed certification and additionally certify that the trust has not been revoked, modified, or amended, in a manner that would cause the certification to be incorrect. The bill would allow a member or participant to change a beneficiary designation without penalty for the purpose of designating a trust as a beneficiary if certain requirements are met. The bill would require, if the trust becomes invalid or terminates, that the benefit or annuity be paid to the beneficiary, if eligible, with associated rights and responsibilities also accruing to that person. The bill would provide that the board is not required to determine the powers of a trustee or the validity of a trust in the context, that such a determination shall not be inferred and, provided the board acts in good faith, as specified, would immunize the board, system, and plan from liability. The bill would make conforming changes and, with respect to the Cash Balance Benefit Program, revise the circumstances under which a participant may change an option beneficiary after retirement changes.

_Update provided by:

Phyllis W. Cheng