SB 1241

SB1241:v98#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 1241

An act to amend Sections 2600, 2600.5, 2601, and 2603, of the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL'S DIGEST

SB 1241, as amended, Smallwood-Cuevas. Skilled and trained workforce requirements.

Existing law establishes requirements with respect to public contracts that apply when a public entity is required by statute or regulation to obtain an enforceable commitment that a bidder, contractor, or other entity will use a skilled and trained workforce to complete a contract or project, as specified. Existing law requires a public entity subject to skilled and trained workforce requirements to include a specified notice in all bid documents. Existing law specifies that a failure of a public entity to include the required notice that a project is subject to the skilled and trained workforce requirement does not excuse a public entity from those requirements.

This bill would expand the circumstances under which those requirements apply to specified instruments and laws, including development agreements and resolutions, as provided. The bill would make various technical and conforming changes.

Existing law requires a contractor or bidder, among others, to submit a monthly report to the public entity while the project or contract is being performed demonstrating compliance with skilled and trained workforce requirements, as specified. Existing law authorizes the Labor Commissioner to assess specified civil penalties against a contractor or subcontractor for a violation of the skilled and workforce requirements, and authorizes reduction or waiver of a penalty for specified conditions. Among these conditions is whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with the skilled and trained workforce requirements.

This bill would prohibit the Labor Commissioner from waiving penalties for an incomplete or absent monthly compliance report and a material misrepresentation. The bill would impose the highest penalty for violations of skilled and trained workforce requirements committed after a noncompliance notice, as specified. The bill would expand the conditions that the Labor Commissioner should consider when setting a monetary penalty for failure to use a skilled and trained workforce, including including, for the first violation in the prior 3 years, whether a contractor or subcontractor submitted and followed a substantial compliance plan to remedy noncompliance. The bill defines would define various terms for these purposes, including “substantial compliance plan” and “material misrepresentation.”

Existing law provides that if the Labor Commissioner finds a contractor or subcontractor to be in violation of the skilled and trained workforce requirements with the intent to defraud, the contractor or subcontractor, among others, is ineligible to bid on or be awarded a public works contract, as specified.

This bill would, instead, provide that whenever a contractor or subcontractor is found by the Labor Commissioner to have committed a material representation under the skilled and trained workforce requirements, the contractor or subcontractor, among others, is ineligible to bid on or be awarded a public works contract, as specified. The bill would require the Labor Commissioner to accept and timely investigate complaints from a labor-management committee, as provided, alleging a skilled and trained workforce violation by a contractor or subcontractor.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 2600 of the Public Contract Code is amended to read:

2600.

(a) This chapter applies when a public entity is required by statute, regulation, rule, resolution, ordinance, permit condition, permit streamlining condition, public funding condition, development agreement, or public contract to obtain an enforceable commitment that a bidder, contractor, or other entity will use a skilled and trained workforce to complete a contract or project.

(b) A public entity may require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project regardless of whether the public entity is required to do so by a statute or regulation.

(c) When the use of a skilled and trained workforce to complete a contract or project is required pursuant to subdivision (a) or (b), the public entity shall include in all bid documents and construction contracts for such work a notice that the project is subject to the skilled and trained workforce requirement.

SEC. 2.

Section 2600.5 of the Public Contract Code is amended to read:

2600.5.

The failure of a public entity to provide a notice pursuant to subdivision (c) of Section 2600 shall not excuse either of the following:

(a) The public entity from the requirement to obtain an enforceable commitment that a bidder, contractor, or other entity will use a skilled and trained workforce to complete a contract or project.

(b) A bidder, contractor, or other entity from the obligation to use a skilled or trained workforce if such a requirement is imposed by a statute, regulation, rule, resolution, ordinance, permit condition, permit streamlining condition, public funding condition, development agreement, or public contract.

SEC. 3.

Section 2601 of the Public Contract Code is amended to read:

2601.

For purposes of this chapter:

(a) “Apprenticeable occupation” means an occupation for which the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations had approved an apprenticeship program pursuant to Section 3075 of the Labor Code before January 1, 2014.

(b) “Chief” means the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations.

(c) “Graduate of an apprenticeship program” means either of the following:

(1) An individual that has been issued a certificate of completion under the authority of the California Apprenticeship Council for completing an apprenticeship program approved by the chief pursuant to Section 3075 of the Labor Code.

(2) An individual that has completed an apprenticeship program located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.

(d) “Skilled and trained workforce” means a workforce that meets all of the following conditions:

(1) All the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief.

(2) (A) For work performed on or after January 1, 2017, at least 30 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in the occupation of teamster.

(B) For work performed on or after January 1, 2018, at least 40 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.

(C) For work performed on or after January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.

(D) For work performed on or after January 1, 2020, at least 60 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.

(3) For an apprenticeable occupation in which no apprenticeship program had been approved by the chief before January 1, 1995, up to one-half of the graduation percentage requirements of paragraph (2) may be satisfied by skilled journeypersons who commenced working in the apprenticeable occupation before the chief’s approval of an apprenticeship program for that occupation in the county in which the project is located.

(4) The apprenticeship graduation percentage requirements of paragraph (2) are satisfied if, in a particular calendar month, either of the following is true:

(A) At least the required percentage of the skilled journeypersons employed by the contractor or subcontractor to perform work on the contract or project meet the graduation percentage requirement.

(B) For the hours of work performed by skilled journeypersons employed by the contractor or subcontractor on the contract or project, the percentage of hours performed by skilled journeypersons who met the graduation requirement is at least equal to the required graduation percentage.

(5) The contractor or subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if, during the calendar month, the contractor or subcontractor employs skilled journeypersons to perform fewer than 10 hours of work on the contract or project.

(6) A subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if both of the following requirements are met:

(A) The subcontractor was not a listed subcontractor under Section 4104 or a substitute for a listed subcontractor.

(B) The subcontract does not exceed one-half of 1 percent of the price of the prime contract.

(e) “Skilled journeyperson” means a worker who either:

(1) Graduated from an apprenticeship program for the applicable occupation that was approved by the chief or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.

(2) Has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the chief.

(f) “Substantial compliance plan” means a written plan that does both of the following:

(1) Ensures full compliance with the apprenticeship graduate workforce percentage requirements and skilled journeyperson requirements set forth in this chapter on all work performed after acceptance of the plan.

(2) Substantially remedies prior violations of skilled and trained workforce requirements through exceeding the minimum apprenticeship graduate requirements on future work.

(g) “Material misrepresentation” means a false statement or omission made regardless of intent. “Material misrepresentation” includes a certification in a monthly report, substantial compliance plan, or other submission required by this chapter that would tend to affect a determination of compliance.

SEC. 4.

Section 2603 of the Public Contract Code is amended to read:

2603.

(a) If the Labor Commissioner or their designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.

(b) For the purposes of this section:

(1) “Any interest” shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.

(2) “Contractor or subcontractor” shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.

(3) “Entity” shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.

(c) (1) The amount of any monetary penalty under subdivision (a) may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:

(A) Whether the violation was intentional, which shall include intentional. A violation is intentional if the contractor had actual knowledge of the skilled and trained workforce requirements and failure failed to take reasonable steps to comply.

(B) Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.

(C) Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation so that and any subsequent violation violations did not occur.

(D) The extent or severity of the violation.

(E) Whether If the violation is the first violation by the contractor or subcontractor within the prior three years, whether a contractor or subcontractor submitted and followed a substantial compliance plan, as defined in Section 2601, and the extent to which the compliance plan remedied prior noncompliance.

(F) The Labor Commissioner shall not waive penalties for failure to timely submit a required monthly report, material misrepresentation, or continued noncompliance after notice.

(2) A substantial compliance plan may only be submitted for a first violation by a contractor or subcontractor within a three-year period.

(3) Failure to timely submit the required monthly report, failure to remedy an incomplete monthly report, or continued failure to use a skilled and trained workforce after notice of a violation shall result in a mandatory penalty equal to the maximum allowable under Sections 2600 to 2603, inclusive.

(d) The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.

(e) The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.

(f) If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractor’s failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:

(1) For contracts entered into on or after January 1, 2019, the contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.

(2) The contractor shall periodically monitor the subcontractor’s use of a skilled and trained workforce.

(3) Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.

(4) Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.

(g) The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.

(h) Whenever a contractor or subcontractor is found by the Labor Commissioner to have intentionally committed a material misrepresentation in filing reports under this chapter, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:

(1) Bid on or be awarded a contract for a public works project.

(2) Perform work as a subcontractor on a public works project.

(i) Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:

(1) Bid on or be awarded a contract for a public works project.

(2) Perform work as a subcontractor on a public works project.

(j) The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.

(k) The Labor Commissioner shall publish on the commissioner’s Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors’ State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors’ State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.

(l) (1) If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.

(2) The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.

(m) The Labor Commissioner shall accept and timely investigate complaints from a joint labor-management committee established pursuant to the Labor Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) alleging that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter.