California Construction Law: Navigating Key Changes and Insights

06.12.2025

Over the past year, the California Legislature introduced significant additions and amendments to more than 50 statutes, including 14 statutes that directly affect contractor licensing laws and construction practices. These legislative developments reflect the state’s increasing focus on labor and employment standards, energy sustainability, healthcare infrastructure, affordable housing, and other important issues. This article examines key developments in California construction law, with particular attention to AB 2293, AB 2235, AB 1034, AB 2579, AB 2696, SB 1162, and AB 3190.

AB 2293: Non-Profit Healthcare Joint Agreement

AB 2293 aims to facilitate collaboration between public agencies and private, nonprofit health care providers to provide health care services through 2025 and into the foreseeable future. Assembly Bill 2293 (AB 2293) authorizes one or more private, nonprofit mutual benefit corporation to be formed for purposes of providing health care services to create a Joint Powers Authority (JPA) or enter into a Joint Powers Agreement with one or more public entities. The purpose of this bill is to expand access to healthcare services in consideration of the growing shortage of healthcare providers throughout the state.

A Healthcare JPA formed under AB 2293 shall be deemed a public entity and must be formed to provide health care services. A Healthcare JPA formed under AB 2293 is prohibited from incurring debt or engaging in specific other acts, including employing physicians or surgeons, or charging for professional services rendered by physicians and surgeons, or otherwise engage in the practice of medicine. A Healthcare JPA, despite its private-public collaboration, maintains a public entity status that must be governed by a board of directors and prohibits the representation of private-nonprofit mutual benefit corporations on the board of directions from exceeding 50%.

Notably, a Healthcare JPA must obtain an enforceable commitment that any entity undertaking construction or refurbishment of health facilities projects will use a skilled and trained workforce, unless the Healthcare JPA has entered into a project labor agreement that will bind all contractors and subcontractors performing work on the project to use a skilled and trained workforce binding all contractors and subcontractors at every tier performing work on the project. AB 2293 requires private entities performing the work on projects for the Healthcare JPA to certify, in writing and under penalty of perjury, that prevailing wages will be paid to workers on the project.

AB 2235: Pier Wind Project (City of Long Beach)

AB 2235 is designed to expedite the Port of Long Beach’s Pier Wind Project to construct floating offshore wind turbines to generate renewable energy for the state of California. A proposed 400-acre terminal project at the Port of Long Beach will benefit from lower costs and efforts to streamline its design and construction. According to the Port of Long Beach, fully assembled turbines would be towed to wind lease areas 20 to 30 miles off the coast in Central and Northern California.

Under AB 2235, the Port of Long Beach is authorized to use alternative construction delivery methods to design and build the Pier Wind Project. Pier Wind would serve as a staging, storage and assembly site for some of the world’s largest offshore wind turbines. AB 2235 permits local agencies to use alternative methods, such as “best value procurement”, and avoid being subject to competitive bidding under the traditional design-bid-build system; leading to more efficient and cost-effective projects. Utilizing alternative methods allows local agencies to streamline the procurement process and potentially achieve better project outcomes at lower costs.

The proposed project is undergoing environmental review by local, state and federal regulatory agencies along with input from Long Beach residents. If approved, construction of the $4.7 billion project could start as soon as 2027, with the first 200 acres completed in 2031, and the final 200 acres coming online in 2035. This project would result in job creation in manufacturing, assembly, operations, and maintenance of offshore wind projects on the West Coast and contribute towards California’s long-term energy goals.

AB 1034: PAGA Exemption Extension for Construction

The current law allows Private Attorney General Actions (PAGA) to be brought on behalf of construction industry employees for alleged Labor Code violations and civil penalties when the work was performed under a valid collective bargaining agreement that was in effect at any time before January 1, 2025.

AB 1034 extends the PAGA exemption for construction industry employees until January 1, 2038. This exemption applies to employees covered by collective bargaining agreements (CBA) meeting criteria including wages, hours, and working conditions, and premium wage rates for overtime. The applicable CBA must prohibit violations of the labor code that are redressable pursuant to PAGA and provide for a grievance and binding arbitration process. Furthermore, the CBA must expressly waive PAGA requirements in clear and unambiguous terms and authorize the arbitrator to award any and all remedies available under the CA Labor Code, with the exception of penalties otherwise awardable to the Labor & Workforce Development Agency (LWDA). This extension provides employers in the construction industry with extended relief from PAGA litigation risks.

AB 2579: Building Inspections of Elevated Exterior Elements

The current law provides authority for an enforcement agency to inspect any buildings or premises when necessary to secure compliance with or prevent a violation of the California Building Standards Code. By requiring inspections, AB 2579 aims to address potential safety hazards, such as dry rot or structural damage, in exterior elevated elements. Existing law required inspection by January 1, 2025, and every six years thereafter for all exterior elevated elements and associated waterproofing elements, as defined, including decks and balconies, for buildings with three or more multifamily dwelling units.

AB 2579 extends the deadline for initial inspection until January 1, 2026. If the property was inspected within 3 years prior to January 1, 2019, as specified, no new inspections are required until January 1, 2026. This extension helps property owners who have encountered delays or challenges related to Covid-19 restrictions or other unforeseen circumstances, comply with California requirements and find qualified professionals to complete inspections. Property owners will need to ensure buildings are inspected and maintained to meet applicable safety standards ahead of the January 1, 2026, deadline.

AB 2696: Direct Contractor Liability for Unpaid Wages

AB 2696 aims to clarify and strengthen the enforcement of labor-related liabilities for direct contractors on private works of improvement. AB 2696 expands the enforcement authority of joint labor-management cooperation committees, which previously only could bring lawsuits against subcontractors. AB 2926 allows joint labor-management cooperation committees to directly sue contractors for unpaid wages, benefits, penalties, liquidated damages and interest on private work projects. AB 2696 enables committees to pursue legal action against direct contractors for workers’ wages and benefits. Direct contractors should be mindful of potential liability and ensure compliance with all applicable California labor and wage laws.

SB 1162: Pay Transparency and Apprenticeship Programs

SB 1162, also known as California’s Pay Transparency Law, aims to provide pay equity and transparency for employees by requiring employers to disclose pay ranges and provide pay scale information to employees. For employers, the law promotes fairer hiring practices, the development of more equitable compensation policies, the attraction of a wider pool of qualified candidates through pay transparency, and helps reduce bias in hiring decisions. For employees, the law provides access to salary ranges in job postings and the ability to negotiate more effectively during the hiring process.

SB 1162 amends section 2602 of the Public Contract Code by adding section 2604 to the Public Contract Code. The amendment requires monthly compliance reports to include the full name of the identity of the apprenticeship program name, location, and graduation date, of all workers relied upon to satisfy the apprenticeship graduation percentage requirement of a contract. Furthermore, this amendment requires the creation and maintenance of a public online database to verify that a worker graduated from a California apprenticeship program. This database will be particularly useful to all parties involved on projects as labor compliance and reporting standards become more stringent on both public and private projects throughout California.

AB 3190: Prevailing Wage Expansion for Affordable Housing

AB 3190 amends Labor Code section 1720 and aims to expand the application of public works laws to certain affordable housing projects. AB 3190 expands the definition of what is considered to be a prevailing wage project to include projects paid using credits against a tax, including certain low – income housing tax credits. AB 3190 ensures that affordable housing projects, which are often funded by tax credits, are subject to the same prevailing wages and labor standards as other public works projects. AB 3190 aims for construction workers on these affordable housing projects are afforded the same protections and held to the same labor standards as those working on other public works projects.

The law exempts from public works provisions, private residential projects built on private property when the public funds are less than $3 million for a project that is the acquisition or rehabilitation of a specified residential project. Please note that tax breaks may trigger prevailing wage requirements. A cost-benefit analysis is recommended to determine whether any tax breaks or credits may be offset by the potential increase in costs to pay prevailing wages.

Conclusion

The legislative developments outlined in this article reflect the California Legislature’s ongoing focus on strengthening labor protections, advancing energy sustainability, and enhancing healthcare infrastructure—resulting in changes to construction law and related labor codes. It is important to stay informed of these legal updates for maintaining regulatory compliance, identifying strategic opportunities, and avoiding potential liabilities.

If you have any questions concerning contractor licensing, changes in legislation affecting the California construction industry, or how these laws may apply to your business, please contact your AALRR attorney or the authors of this Alert.