Labor Compliance Meets Land Use: What California’s Environmental Law Reforms Mean for Construction Employers

Takeaways

• California’s rollback of parts of its environmental law to accelerate housing and infrastructure development is expected to increase demand for construction workers.
• The new California Environmental Quality Act exemptions for certain new developments come with strings attached, such as mandatory prevailing wage and skilled workforce rules for construction employers.
• Employers could consider incorporating project labor agreements or labor compliance frameworks into RFQs, construction contracts, and zoning applications to reduce risks.

Article

For employers in the construction industry, the need for workers is expected to increase following a significant rollback of parts of the landmark California Environmental Quality Act (CEQA). Intending to accelerate building and development in the state, two new laws exempt certain projects from CEQA’s lengthy environmental reviews.

Framed primarily as tools to boost housing development and infrastructure projects, Assembly Bill 130 (AB 130) and Senate Bill 131 (SB 131) also carry labor compliance implications for employers and contractors — particularly those operating in construction, affordable housing, healthcare, and public services.

Construction industry employers considering CEQA-exempt projects or qualifying for CEQA streamlining must navigate requirements for prevailing wages and the use of a skilled and trained workforce, which carry enforcement risks and operational impacts. One potential tactic for mitigating these compliance risks is utilization of project labor agreements that include payment of prevailing wages and use of a skilled and trained workforce.

Prevailing Wage

AB 130 adds a section to the Public Resources Code, creating a statutory exemption from CEQA for housing development projects up to 20 acres (or five acres for builder’s remedy sites) that meet a strict list of criteria. If “100 percent of the units within the development project are dedicated to lower income households,” then “all construction workers … shall be paid at least the general prevailing rate of per diem wages for the type of work and geographic area ….”

For construction companies and developers looking to participate in building affordable housing, this means all contractors and subcontractors on the job must meet all the prevailing wage requirements, including certifying and documenting prevailing wage payments.

Some recordkeeping requirements and enforcement mechanisms are inapplicable if all contractors and subcontractors performing work on a development are subject to a project labor agreement. A qualifying project labor agreement would require payment of prevailing wages and provide for enforcement of that obligation through arbitration. Your Jackson Lewis attorney could help evaluate whether this approach is a good fit for your project.

Skilled and Trained Workforce

On certain projects, contractors and subcontractors must commit to using a skilled and trained workforce (or STW) for all project or contract work that falls within an apprenticeable occupation. This must be documented in monthly reports that will be public record.

As with prevailing wage requirements, certain compliance issues can be avoided by the use of a qualifying project labor agreement that can be evaluated in cooperation with counsel.

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As California accelerates housing and infrastructure development, these CEQA reforms put labor requirements alongside environmental exemptions. Labor compliance can be part of requests for quotes, construction contracts, and zoning applications. For employers, the message is clear: Future development requires future-ready labor compliance. Employers can consider preparing by being familiar with the prevailing wage requirements and adopting robust compliance programs. Contact your Jackson Lewis attorney for more information on strategic planning aligned with this development.