Construction & Infrastructure Law Blog : Construction & Infrastructure Lawyer & Attorney : Sheppard Mullin Law Firm : Public Works & Professional Liability

By Candace L. Matson

In California, the payment of contractors is governed by so-called "prompt payment statutes" which are sprinkled through various legislative codes, and which impose sanctions on the paying party for non-compliance. Progress payments by general contractors to their subcontractors on private and most public works of improvement are governed by section 7108.5 of the Business & Professions Code. Retention payments to subcontractors on public works of improvement are governed by section 7107 of the Public Contracts Code, and on private works of improvement by section 3260 of the Civil Code. In some cases the statutes permit withholding of payments only where there is a "good faith" dispute. But what constitutes "good faith"?
 

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By Bram Hanono and Greg Woodard

California Labor Code sections 1720 et seq. (the Prevailing Wage Law) ("PWL") require employers (including developers and contractors) engaged in public works projects to pay the prevailing wage to their employees if the project is "paid for in whole or in part out of public funds." The Second Appellate District Court of Appeal recently ruled that private developers must pay prevailing wages for the construction of all public improvements in connection with a development project if public funds are used to finance any part of the public improvements, even if the remaining public improvements are paid for with private funds. The California Supreme Court declined to hear the developer's appeal. Therefore, developers and contractors could face increased project costs as a result of this case.
 

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