Governor Signs Industry Sponsored Legislation to Protect Contractors

Governor Newsom has signed AB 830 to protect contractors who use a “Responsible Managing Employee” (RME) as the qualifier on their contractor license. The legislation clarifies that an RME qualifier on a contractor license is a valid qualifier and that the requirements for “supervision and control” on a construction project may be accomplished by the RME either directly, or indirectly by supervising designated employees.

AB 830 was necessary in response to recent litigation; D.A. McCosker Construction Co. v. California Department of Water Resources. In the case, a judge in the Superior Court of Sacramento found that because the contractor was working on multiple projects, the RME could not be satisfactorily involved in the California Department of Water Resources project, and as such, the contractor was operating as an unlicensed contractor.  By the judge determining independently what “supervision and control” means and declaring the contractor unlicensed, he placed the contractor in a position of being disgorged of all funds paid on the project.  As a result of the Court’s decision, it became possible for an RME’s status as a qualifier on a license to no longer be determined by regulation, but instead by individual judges.

As a practical matter, contractors and subcontractors who perform work on large public and private construction projects have multiple jobs underway at any given time.  Each project is assigned a project manager who is responsible for managing each individual project, whereas the RME is often an employee responsible for managing the operations of the licensee.  Pursuant to the Judge’s ruling, it would be unclear how a contractor whose license is held by an RME could continue perform on multiple jobs without being placed in jeopardy of being found to be unlicensed.

AB 830 address this issue long term, by placing in state law, clarity that an RME is a valid qualifier on a license and can provide “supervision and control” either directly, or indirectly by supervising designated employees.

 

This content was provided by WPCCA professional counsel and is for general informational purposes only. Readers should contact their own professional counsel for company specific matters in the relevant jurisdiction.

Recent Posts

WPCCA Webinar: How Technology is Transforming the Construction Industry

Technology is driving dramatic changes throughout the construction industry and every company is being affected. There is growing use of established software solutions while a host of emerging technologies and digital processes are rapidly gaining traction. Users are learning to…

February 29, 2024

WPCCA Microsoft Project Level 1 Course – Lesson 1

Join us for our first lesson of Microsoft Project Level 1 Course taught by Microsoft Certified Professional, James Law. This lesson will provide training on getting started with Microsoft Project. Attendees will learn how to identify project management concepts from…

February 27, 2024

HubSpot Platform Demo and Q&A

Join us learn more about HubSpot– a holistic customer platform that makes it easy for an entire company to work together — from marketing and sales to customer service. HubSpot provides an all-in-one solution. This demo will focus on their…

February 15, 2024

WPCCA Economic Outlook Webinar: The Good, The Bad, & The Ugly

Has the Federal Reserve successfully engineered a soft landing?  Or, is the confluence of geopolitical conflict, a presidential election, rising consumer debt levels, and still high interest rates conspiring to produce economic downturn in 2024?  It is difficult to know…

January 30, 2024

Clarity On State Law & Drug Testing In The Construction Industry

In 2022, Governor Newsom signed legislation (AB 2188) making cannabis users a protected class of employee. AB 2188 contained a delayed implementation date and took effect on January 1, 2024. The measure prohibited employers from discriminating in hiring, firing or…

January 29, 2024
MORE STORIES