House Bill 566, which amends the state’s Contractor and Subcontractor Payment Act (otherwise known as Prompt Pay), was signed into law on June 12th. The amendments provide contractors and subcontractors with the ability to suspend work without penalty due to nonpayment. The suspension of performance provision requires that certain notification timelines are followed. The bill will take effect in October 2018.
Important Changes
Contractors and Subcontractors will be permitted to suspend work on a project if payment is not received per the terms of the construction contract. Any Contract language that exceeds the newly enacted procedures around the suspension of performance will no longer be enforceable. The work stoppage clause is triggered if 30 days from the end of the billing cycle have passed without payment. The contractor must then provide written notice of the intent to suspend performance. After an additional 30 days have passed without payment, a notice of intent to suspend performance must be sent at least 10 calendar days prior to the suspension of performance.
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