New Notice Requirements for Contracting Out Services under the MMBA

10.29.2025

On October 13, 2025, Governor Gavin Newsom signed Assembly Bill 339 (“AB 339”) into law, adding Section 3504.1 to the California Government Code. This legislation expands upon existing provisions of the Meyers-Milias-Brown Act (“MMBA”), which governs labor-management relations for local public agencies. Under current law, public agencies are required to meet and confer in good faith with recognized employee organizations regarding wages, hours, and other terms and conditions of employment. Public employers must also generally provide written notice of any proposed action involving a matter within the scope of representation.

Background

PERB and the courts have supplied a balancing test for managerial decisions, which may nonetheless be subject to the duty to meet and confer.^[i] Both tribunals have applied this balancing test to find that decisions to contract or subcontract work performed by represented employees remain negotiable under many circumstances.^[ii]Specifically, if a public employer is motivated by cost savings to contract and/or subcontract out services previously performed by represented employees, the decision is subject to bargaining.^[iii] However, even if this decision is negotiable, the MMBA did not previously govern the process by which a public agency solicited costing or proposal information from potential vendors. In fact, many agencies include provisions in their memoranda of understanding regarding the process a public agency must follow to inform affected unions that it is considering whether to contract out work done by represented employees.

AB 339 now codifies the timing of required disclosures by establishing specific procedural requirements for public agencies when contracting out services, or renewing or extending an existing contract, that fall within the scope of work outlined by existing job classifications represented by the recognized employee organization.

Requirements of AB 339

Under AB 339, public agencies must now:

Provide no less than 45 days’ written notice to the recognized employee organization before:

Issuing a Request for Proposals (RFP) or Request for Quotes (RFQ).
Renewing or extending an existing contract for services.

And include in the notice:

The anticipated duration of the contract
The scope of work to be performed.
The anticipated cost of the contract
A draft solicitation or any information that would typically be included in a solicitation
The reason the agency believes the contract is necessary.

Further, if an emergency or exigent circumstance prevents full compliance with the 45-day notice requirement, the public agency must provide as much advance notice as practicable.

Exemptions

AB 339 does not apply to contracts for:

Construction, alteration, demolition, installation, repair, or maintenance work subject to Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code, or a contract for highly specialized data, software, or services related to that construction, alteration, demolition, installation, repair, or maintenance work.
Services described in Section 4525 or 4529.10 or that are related to the planning, design, administration, oversight, review, or delivery of public works, residential, commercial, industrial buildings, or other infrastructure projects subject to adopted uniform codes or standards.

Of primary importance to public employers, any existing MOUs in effect at the time of AB 339’s passage remain in effect; their provisions control and trump the provisions of this law. AB 339 also does not modify or otherwise change pre-existing bargaining rights (union or employee) derived from other provisions of the MMBA, and/or from PERB decisional authority.

Employer impacts

While AB 339 does not alter or invalidate current MOUs, it reinforces the importance of adhering to established bargaining rights and procedures when making contracting decisions that affect represented job classifications. Further, the bill marks a significant departure from present practice and procedure under the MMBA, in which PERB has declined to impose time-specific deadlines on the bargaining process and/or dictate particular information which must be shared during the bargaining process. Public employers would do well to reconsider their bargaining strategies and/or timelines, should it involve contemplated subcontracting decisions to avoid the now-escalated risk of liability for bad faith bargaining.

Conclusion

AB 339 reflects a growing legislative emphasis on transparency and union involvement in public contracting decisions. We will continue to monitor any changes and provide updates to this Alert. In the meantime, please feel free to contact the Authors of this Alert or your regular AALRR counsel.

[i] In a previous firm alert, we covered a recent PERB decision, in which the Board clarified the balancing test to be used in assessing whether certain managerial decisions (including the decision to contract out) are negotiable. See https://www.aalrr.com/newsroom-alerts-3958.

[ii] See e.g. Building Material & Construction Teamsters’ Union v. Farrell (1986) 41 Cal.3d 651; County of Kern & Kern County Hospital Authority (2019) PERB Dec. No. 2659-M.

[iii] See Rialto Police Benefit Assn. v. City of Rialto (2007) 155 Cal.App.4th 1295.