Contractors board members in California are being told to file fewer filings to avoid paying more than $1 million in legal fees to a large state contractor.
California contractor law provides for up to 10% of a firm’s total assets to be retained for legal fees in certain cases.
The law applies to a firm only when its total assets exceed $1.5 million.
It’s the latest round of legal battles that have taken place between the California Department of Contractors and the Department of Justice over how it handles claims filed by firms that were involved in the deadly 2012 Bay Area refinery fire.
The Department of Public Health’s (DPH) own investigation into the fire revealed the fire was caused by a leaky valve, which forced oil from a nearby storage tank into the refinery, which caught fire and killed 32 people.
That report prompted the legislature to enact a law mandating a 10% cap on the total assets of firms in California.
The Legislature later amended the law, adding the cap to any firm’s overall assets.
Lawsuits against firms have grown steadily in recent years, with the California Public Defender Association estimating that there are over 1,000 pending litigation claims against California contractors.
The state has filed nearly $200 million in such claims, the state’s attorney general said in September.
But the department says that is the lowest figure for any state agency.
In a statement to TalkSPORT, a spokesperson for the California Office of Administrative Law said that the state does not have a specific cap for contractor assets.
The department says it’s not the only agency that is dealing with the issue.
The state has hired law firms to defend a number of other companies, including California-based energy services firm Transcon Corp., which is facing a class action lawsuit by its employees who say they were not paid for the time they worked for the state.
Transcon has said it did not withhold any of the workers’ wages from the company, which has not been proven in court.
Law firms are also challenging the state law that requires them to pay fees for attorneys’ fees in cases brought by California contractors in the past.
The California Public Defenders Association says that as many as 50,000 California contractors have filed claims against state agencies, mostly against agencies that have been ordered to pay them for work that was not performed.
“If there is an issue with the agency’s compliance with the law,” the association said, “we encourage them to contact us to find out if there is any way they can be reimbursed for their costs.”