Prime Payments & Public Works Regulation

Will public works contractors face more regulatory hurdles in the future? A ‘partnership’ taking a new direction may need help. But first, subs will appreciate reading more about legal requirements that they get paid on time without any excuses…

Q: I am a plumbing subcontractor and do a lot of work for General Contractors (GC). Lately some of the GC’s have been late on their payments. A few (who I know have been paid by the owner) are more than 60 days past due. Isn’t there a law which states they have to pay a sub on time?

A: You’re correct! B&P Code 7108.5 requires a prime contractor to pay their subcontractors within 10 days of receiving a statement for each progress payment (unless otherwise agreed to in writing). I know times are tough for many contractors, but that’s no excuse not to pay a sub in a timely manner. According to the CSLB, violation of this statute is a cause for disciplinary action and can result in an administrative citation up to $2000. In addition, with any action to collect funds that are wrongfully withheld, “the prevailing party shall be entitled to his or her attorney’s fees and costs.”

This code section goes on to state, that these sanctions “shall be separate from and in addition to all other remedies either civil, administrative or criminal”.

Q: My partner and I both own 50% of a corporation. We have both been active participants in the business since 2000. I no longer want to have an active role in the day-to-day operations; however, my partner wants to continue the business. Can she replace me as the qualifying officer and would any testing be involved?

A: Thank you for the email. Since the company has been active, and in good standing for nearly a decade your “partner” (i.e. the remaining officer) should be able to replace you with a waiver of the law and trade exams. The new Responsible Managing Officer (RMO) will need to file the appropriate application and show at least 5 years experience in the trade presently held by the corporation. A written request for waiver under B&P Code Section 7065.1(c) should also be submitted with the application.

According to the California Legislature’s Senate Committee on Business, Professions and Economic Development, Senate Bill 258 (Oropeza) would Establish a public works certification requirement under a “yet to be determined state agency” for licensed contractors and subcontractors who perform public works projects.

The Committee’s analysis, should it become law, says this bill would establish the Legislature’s intent that “only the most qualified contractors perform on public works projects in order to promote the safety of California’s publicly owned facilities and ensure the best use of tax dollars”.

In addition, beginning January 1, 2012, the bill would prohibit a contractor or subcontractor from handling a public work project (state or any other public agency), unless the contractor has obtained this public works certification.

There are many details to work out in this legislation and it is a long way from becoming law. The bill has a hearing pending in the Senate Appropriations Committee.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply