The decade's long battle between general contractors and their subcontractors over timely payment took a new turn this year with the passage of AB 1223, sponsored by the American Subcontractors Association and supported by twenty other groups.
The bill was signed into law by Governor Brown October 8th and will go into effect January 1st. The new law requires, within 10 days of making a construction contract payment, a state or local agency to post the following information on its website:
- The project for which the payment was made.
- The name of the construction contractor or company paid.
- The date the payment was made or the date the state agency transmitted instructions to the Controller or other payer to make the payment.
- The payment application number or other identifying information.
- The amount of the payment.
The new law exempts from these provisions construction contracts valued less than $25,000 and specified progress payments published in the California State Contracts Register under existing law (Section 10262.3).
This law will enable subcontractors to verify that public project owners have paid their general contractors and will allow subcontractors to enforce their right to be paid timely. The existing law generally requires a general contractor to pay any subcontractor within seven days of receipt of a progress payment. Therefore, it will also help subcontractors ascertain when general contractors have been paid and provide public notice that they can refer to when requesting payment within seven days as required under the existing law.
This bill will enable construction subcontractors to verify that public project owners have paid their general contractors for work performed by the subcontractors. This will streamline the payments to subcontractors who, under existing law, are entitled to receive their payment within seven days of the general contractors receiving their pay.