On October 8, 2023, the Governor signed into law a new Section to the California Business and Professions Code that imposes limits on specialty contractors. B&P Code Section 7035 prohibits a specialty contractor from entering into a contract for the performance of work on the same single project or undertaking with more than one subcontractor in the same license classification unless the subcontractor employs persons who are classified as employees to perform work in that license classification on the single project or undertaking or the specialty contractor is a signatory to a bona fide collective bargaining agreement. The law appears to prevent specialty contractors from using multiple independent sub-subcontractors to perform specialty contractor work on projects and expressly requires those who work on the project be employees of the specialty contractor. The Section grants the CSLB authority to take disciplinary action against specialty contractors who violate the Section.

Many subcontractors have subcontracts that permit them to outsource to other subcontractors portions of the work on a project. In light of the new law, it is time to have an attorney review the subcontract to ensure it complies with this new law.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.