New California Laws 2026
AB 339: A new procedural layer for contracting out public services in California
By Alexander Volberding C alifornia cities, counties and special districts contemplating the outsourcing of bargaining unit work under the Meyers-Milias-Brown Act (MMBA) have long operated within a framework that treats most contracting decisions involving work performed by represented employees as subject to the obligation to meet and confer negotiations before engaging in such contracting. The Public Employment Relations Board (PERB) has repeatedly concluded that, when a contracting decision is motivated by cost savings or challenges related to public agency personnel, the contracting decision ordinarily falls within the scope of represen- tation requiring the meet and confer. Historically, many agencies have started the con- tract solicitation process by issuing Requests for Quotes (RFQ) or Requests for Proposals (RFPs) and reviewing submissions before making a firm deci- sion to engage in the contracting and notifying the affected labor organization. Unions have asserted that receipt of notice at that late stage in the process prevents meaningful bargaining over the agency’s decision to contract for services that the employees represented by the labor organization could arguably perform. Beginning Jan. 1, 2026, Assembly Bill 339 (AB 339) addresses those concerns by imposing an ad- vance notice requirement that significantly reshapes the contracting timeline for local public agencies. AB 339 adds Government Code section 3504.1 and requires a 45-day notice to affected labor orga- nizations before an agency issues an RFP, an RFQ, or a renewal or extension of an existing contract in- volving services that are within the “scope of work” performed by represented employees. The statutory purpose behind the legislation is to provide greater transparency around decisions to contract out pub- lic services and to allow for labor organizations to engage public agencies earlier in the contract solic- itation process, prior to the agency making a firm decision to engage in the contracting. While certain contracts fall outside this new frame- work (e.g., public works contracts covering construc- tion, alteration, demolition, installation, repair, or maintenance and certain specialized professional services contracts), for covered solicitations or con- tract renewals and extensions, agencies must now provide unions with detailed information regarding the contract, which will likely lead to an increase in
the number of requests for information about public agency contracting, which may slow the process and the delivery of contracted services to the public. While the statute does not create a meet-and-con- fer obligation explicitly tied to the issuance of an RFP, RFQ, solicitations or contract renewals and ex- tensions, labor organizations are nevertheless likely to request to meet and confer with public agencies prior to such agencies reaching a firm decision to en- gage in such contracting. Under the new law, exist- ing meet and confer obligations remain unchanged, and agencies must still meet and confer in good faith on negotiable outsourcing decisions when the agen- cy makes a firm decision on such contracting deci- sions, which may further delay already slow public procurement processes. The law does not address whether the AB 339 no- tice requirements apply to other types of contract solicitations, such as Requests for Qualifications, and is vague and ambiguous regarding key terms, including which contracted services may be within the “scope of work” performed by represented em- ployees and other material requirements. As a result, public agencies should approach the new law and its obligations cautiously with a conservative approach to compliance. Early discussions with labor groups, consolidated notices for multiple solicitations, and careful classifi- cation reviews may help mitigate disputes. Agencies should also facilitate coordination between human resources and procurement personnel to ensure timely compliance with the new 45-day notice period to prevent further delays in procurement. While AB 339 reshapes the public contracting landscape, agencies can manage compliance risk through coordination between key personnel, timely notice, clear documentation and continued adher- ence to MMBA meet and confer standards.
Alexander Volberding is a partner at Liebert Cassidy Whitmore.
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