Legal Question in Construction Law in California

Prompt payment laws - progress payments to subcontractors on public works

This involves an elementary school gymnasium. In other words, a public work. Subcontractor has installed gym floor of vinyl tile. The floor has been used for its intended purpose for the last three months, but someone at the school is unhappy with the workmanship because in a few places the tile does not line up perfectly. Sub claims school is not being reasonable and that the floor meets industry standard. In spite of the complaint, school has paid prime contractor 90% of the contract. Only the 10% retention is being held. Prime contractor is withholding 100% from sub due to the dispute. Sub has been paid NOTHING. Is this a violation of the prompt payment laws which state that progress payments must be paid within 10 days after receipt of payment by owner?


Asked on 12/26/05, 4:20 pm

1 Answer from Attorneys
Gary Redenbacher Redenbacher & Brown, LLP

Re: Prompt payment laws - progress payments to subcontractors on public works

It sure sounds like a violation of the prompt payment laws. If a prime contractor receives payment from the public entity for a subcontractor's work, he has to turn that payment over within 10 days unless otherwise agreed to in writing.

A general contractor can withhold up to 150% of any amount that is in dispute, though. So, if the general legitimately believes that the work needs correction and he has received a price of $1000 to correct the work, he can withhold $1500 from the progress payment.

I'd contact the CSLB immediately and ask for a disciplinary investigation. I'd also file a stop notice with the school district and make a claim on the payment bond. You can, of course, immediately file a lawsuit, but this is the most expensive of the procedures available to you. Remember, however, that stop notice procedures and payment bond claims have a number of deadlines so don't wait on these remedies.

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Answered on 12/26/05, 6:20 pm


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