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CalPERS board adopts revised Responsible Contractor Policy and directs study on prevailing wage and labor peace feasibility
Summary
The CalPERS Board of Administration approved a refreshed Responsible Contractor Policy after an 18-month review. The policy adds manager expectations on worker organizing and expands apprenticeship language; the board also directed staff to scope a market study on mandating prevailing wages and labor peace agreements.
The Board of Administration of the California Public Employees' Retirement System adopted a revised Responsible Contractor Policy (RCP) during its March 17, 2025 meeting, approving the third reading of a refresh that updates manager expectations and apprenticeship language and directing staff to scope a market study on prevailing-wage mandates and labor peace agreements.
The RCP governs U.S. real estate and infrastructure assets in which CalPERS holds more than a 50% interest and applies to contracts of $100,000 or more. Board members and staff said the updated policy clarifies manager responsibilities, strengthens reporting, and aims to protect CalPERS investments from operational and human-capital risks tied to contractor workforce practices.
CalPERS staff described the changes as the product of an 18-month review that included manager outreach, stakeholder meetings, peer benchmarking and fiduciary analysis. Tamara Sells, Associate Investment Manager, Sustainable Investments, outlined the principal edits: adding a “Manager's Expectation” stating CalPERS “supports managers cooperating and bargaining in good faith with workers who have chosen to be represented by unions,” broadening apprenticeship language in the contractor certification form to reference hiring from registered federal or state apprenticeship programs, and incorporating the full text of CalPERS’ labor principles into the policy documents.
Board members praised the staff effort but said the policy stops short of mandating certain labor practices requested by unions. President Theresa Taylor said staff “did a really good job trying their best to do the work within our fiduciary duty and the policy parameters that we have.” Several trustees pressed staff on two items left out of the adopted language: requiring prevailing wages on CalPERS-funded projects in California and mandating labor peace agreements for projects exposed to strike risk. Staff and fiduciary counsel told the board those steps would require additional market and legal analysis before a mandate could be implemented. The board amended the motion before the vote to direct staff to return with the scope and cost of a market study to test the feasibility of mandating prevailing wages and labor peace agreements.
Labor stakeholders who testified during public comment urged stronger language. Jeremy Smith of the State Building and Construction Trades Council of California said the policy as proposed “does not do what you all want it to do, protect workers on CalPERS-funded projects.” Susan Minato, co-president of Unite Here Local 11, urged trustees to reject the draft and add more robust tools to mitigate strike risk. Union representatives at the public hearing called for stronger certification requirements and for affirmative pathways to hire apprentices from joint labor-management programs; several speakers said the current self-certification approaches lack “teeth.”
CalPERS staff and the board said the revised RCP will take effect July 1, 2025, and includes a centralized bidding website and improved reporting to better track contractor compliance and manager outreach. Staff reported that for fiscal year 2023–24, all responsible-contractor managers certified compliance and that certified contractors received more than $1 billion in payments under the policy; managers also reported no material adverse investment impacts or formal RCP complaints during that period.
Trustees approved the amended motion. The board also recorded direction to staff to return with a cost and scope estimate for a market study on prevailing wages and labor peace agreements so the board can evaluate whether and how to incorporate mandates in a later revision. That study will inform any future change to the adopted policy.
What happens next: the revised policy is effective 07/01/2025. Staff will implement the new centralized bidding system and begin enhanced outreach and reporting under the updated RCP; the requested market-study scope and cost will be brought back to the board for consideration as a separate deliverable.
