Labor-related liabilities: direct contractor and subcontractor.

Removed line-by-line numbering, page headers/footers, and amendment tracking header; replaced with enrolled bill format showing Senate passage (Sept 9, 2025), Assembly passage (Sept 8, 2025), and Governor receipt lines.

Corrected the duplicated word 'Federal federal' to 'federal' in references to the Labor Management Cooperation Act of 1978.

Replaced the enrolled bill header (Senate and Assembly passage dates, Secretary signatures, Governor receipt block) with the standard chaptered law header: 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL,' Chapter 774 designation, and notation that the Governor approved it on October 13, 2025 and it was filed with the Secretary of State the same day.

Page numbering changed from the enrolled bill's internal pagination (page 94) to the Statutes pagination (page 93), and page headers were reformatted from 'SB 597' to 'Ch. 774.'

Direct contractor liability expanded from 'indebtedness for the performance of labor' to 'any indebtedness, including any indebtedness for the performance of labor,' meaning contractors can now be held responsible for all types of unpaid obligations (not just wages) arising from their subcontractors.

The joint-check payment exemption was narrowed. Previously a contractor was protected from liability 'to the extent they make a payment with respect to fringe or other benefit contributions.' Now the protection only applies to indebtedness 'with respect to fringe or other benefit contributions,' limiting the scope of what the joint check can offset.

Cleaned up a drafting error in the Labor Code cross-reference for the joint labor-management cooperation committee's standing to sue, changing from a garbled 'Section 218.7 or 218.8 218.7, 218.8, or 218.9' to the correct 'Section 218.7, 218.8, or 218.9.'

The bill now amends Government Code Sections 65912.131, 65913.4, and 65913.16 in addition to the Labor Code provisions it previously covered, expanding it from a pure labor liability bill into a combined labor and housing streamlining measure.

Government Code Section 65913.4 is amended to add detailed site eligibility criteria for streamlined housing approval, including requirements that sites be in urbanized areas, have at least 75 percent of perimeter adjoining urban uses, and exclude sites in coastal zones, prime farmland, wetlands, very high fire hazard severity zones, hazardous waste sites, earthquake fault zones, and 100-year flood plains.

The joint check exemption in Labor Code Section 218.8 was narrowed: direct contractors are no longer exempt from liability for all payments made by joint check; the exemption now applies only to fringe or other benefit contributions paid by joint check, not to wage payments.

Affordable housing requirements are tied to locality housing element compliance: localities that have not adopted a compliant housing element or have underproduced housing must require developers to dedicate a minimum percentage of units (generally 10 percent at or below 50 percent AMI for for-rent, or 10 percent at or below 80 percent AMI for for-sale) as affordable housing to qualify for streamlined approval.

New Government Code Section 65912.131 requires construction contractors on streamlined housing developments of 50 or more units to participate in a state-approved apprenticeship program and make health care expenditures equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents ages 0 to 14.

Construction contractors on covered developments must submit payroll records directly to the Labor Commissioner at least monthly, including a statement of fringe benefits, and must report changes in apprenticeship participation or health care expenditures to the local government within 10 business days.

New civil penalties: 10 percent of the dollar value of construction work per month (capped at $10,000) for failure to submit monthly compliance reports, and $200 per day per worker for non-compliance with apprenticeship or health care requirements. Penalties may be assessed within 18 months of project completion.

Joint labor-management cooperation committees established under the federal Labor Management Cooperation Act of 1978 are granted standing to sue construction contractors for failure to make required health care expenditures on streamlined housing developments.

Amendment date updated from July 10, 2025 to September 2, 2025, with the prior date retained as a secondary line.

Page numbers changed from 96 to 95 throughout the bill, causing text to reflow across different page boundaries. No content was added or removed as a result.

A typo was introduced in two places: 'Federal Labor Management Cooperation Act of 1978' became 'Federal federal Labor Management Cooperation Act of 1978' (duplicated word).

New safe harbor in Section 218.9(b)(8): a direct contractor is not liable for unpaid fringe benefits if it (A) pays using a joint check made payable to both the subcontractor and the trust/plan/fund/program, (B) receives the trust's identifying information from the subcontractor, and (C) notifies the trust that it paid via joint check. This applies only to contracts entered into on or after January 1, 2026.

New limitation in Section 218.9(a)(1): direct contractor liability is now capped at payments for labor required by the subcontractor's agreement with the laborer or the subcontractor's collective bargaining agreement with the labor organization representing the laborer. This prevents a direct contractor from being held liable for amounts exceeding what the subcontractor contractually owed.

Corrected typo in Section 218.8(a)(3): 'liquidates liquidated damages' changed to 'liquidated damages.'