The awarding and realization of public works in California It’s a path full of rules. For paying employees, the rules were pretty simple.
Building owners or contractors had to count the amount against their salary obligation and calculate it solely on the basis of the hours worked, it said Associated builders and contractors (ABC) on their website.
He adds that “a new law poses significant challenges for contractors because it is not just about making different calculations, but also about changing the way team time is managed, bids are structured and prepared for possible audits.”
He then warns against “not being prepared.” could cost companies a lotbecause of fines and lost bids.” The new law “affects everything from your daily operations to your long-term business strategy.”
What the new law AB 889 signed by Gavin Newsom says, which goes into effect on January 1st
Governor Gavin Newsom has signed it Law AB-889a project designed by, among others, MP Heather Hadwick that redefines How are they calculated? and credit the daily payments and benefits of workers involved in public works.
As the ABC website explains: “Now entrepreneurs must average posts to benefits under all hours worked includes both public works hours and private construction hours“.
He then gives an example: “If you pay $500 a month toward health insurance and that month you worked 100 hours in a public job and 100 hours in a private or other job, the new law requires you to spread that $500 over the 200 hours, which means your hourly credit is suddenly reduced by half.”
The new legislation this comes into force January 1, 2026eliminates any kind of exemption and therefore everyone must use the “annualization method”.
According to the bill’s text, the update aims to “modernize and clarify the state’s public works annualization process” by aligning California’s practices with the policy adopted by the federal Department of Labor under the law Davis-Bacon law.
This principle requires that the additional benefits that an employer promises to its employees (pension funds or health programs) are calculated on the basis of all hours worked during a year, without distinguishing between public and private work.
On the other hand, the law grants the labor commissioner the power to do so Deny credit to those employers who Do not provide records of payments and hours worked for personal work.
This means that the burden of proof lies with companies to prove that the calculations were carried out correctly and in accordance with the new standard.
For ABC, due to the new law, “it is likely that Increase labor costs The public works total means you have to bid higher or accept a lower profit margin to remain competitive.”
He adds that the regulations can hurt business owners’ ability to win projects, including those for school districts, which often face strict budget constraints.
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