CT
Connecticut House Bill HB05685

Connecticut 2025 Regular Session

Connecticut House Bill HB05685 Compare Versions

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3+LCO No. 299 1 of 1
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4-LCO No. 5155 1 of 5
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6-General Assembly Committee Bill No. 5685
5+General Assembly Proposed Bill No. 5685
76 January Session, 2025
8-LCO No. 5155
7+LCO No. 299
98
109
1110 Referred to Committee on GENERAL LAW
1211
1312
1413 Introduced by:
15-(GL)
14+REP. VAIL, 52nd Dist.
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1716
1817
19-AN ACT PROHIBITING PAY-IF-PAID CLAUSES IN CONSTRUCTION
20-CONTRACTS AND ENSURING TIMELY PAYMENT OF
21-CONSTRUCTION SUBCONTRACTORS AND SUPPLIERS.
18+AN ACT PROHIBITING THE USE OF PAY -IF-PAID CLAUSES IN
19+CONSTRUCTION CONTRACTS AND CONCERNING THE TIMELY
20+PAYMENT OF CONSTRUCTION SUBCONTRACTORS.
2221 Be it enacted by the Senate and House of Representatives in General
2322 Assembly convened:
2423
25-Section 1. Section 42-158j of the general statutes is repealed and the 1
26-following is substituted in lieu thereof (Effective October 1, 2025): 2
27-(a) Each construction contract shall contain the following provisions: 3
28-(1) A requirement that the owner pay [any] all amounts due to any 4
29-contractor in a direct contractual relationship with the owner, or due to 5
30-any subcontractor or supplier in a direct contractual relationship with 6
31-the contractor, whether for labor performed or materials furnished, not 7
32-later than thirty days after the date any written request for such 8
33-payment has been made to the owner by such contractor, subcontractor 9
34-or supplier; (2) a requirement that the contractor pay [any] all amounts 10
35-due any subcontractor or supplier, whether for labor performed or 11
36-materials furnished, not later than [twenty-five] seven days after the 12
37-date the contractor receives payment from the owner which 13
38-encompasses labor performed or materials furnished by such 14
39-subcontractor or supplier or sixty days after the date the subcontractor 15
40-Committee Bill No. 5685
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42-
43-LCO No. 5155 2 of 5
44-
45-or supplier performed such labor or furnished such materials, 16
46-whichever occurs first; and (3) a requirement that the contractor shall 17
47-include in each of its subcontracts a provision requiring each 18
48-subcontractor and supplier to pay [any] all amounts due any of its 19
49-subcontractors or suppliers, whether for labor performed or materials 20
50-furnished, not later than twenty-five days after the date such 21
51-[subcontractor or supplier receives a payment from the contractor which 22
52-encompasses] labor was performed or materials were furnished by such 23
53-subcontractor or supplier. 24
54-(b) Each payment requisition submitted by a contractor or 25
55-subcontractor in accordance with the requirements of subsection (a) of 26
56-this section shall include a statement showing the status of all pending 27
57-construction change orders, other pending change directives and 28
58-approved changes to the original contract or subcontract. Such 29
59-statement shall identify the pending construction change orders and 30
60-other pending change directives, and shall include the date such change 31
61-orders and directives were initiated, the costs associated with their 32
62-performance and a description of any work completed. As used in this 33
63-section, "pending construction change order" or "other pending change 34
64-directive" means an authorized directive for extra work that has been 35
65-issued to a contractor or a subcontractor. 36
66-(c) (1) If payment is not made by an owner in accordance with the 37
67-requirements of subdivision (1) of subsection (a) of this section or any 38
68-applicable construction contract, such contractor, subcontractor or 39
69-supplier shall set forth its claim against the owner through notice by 40
70-registered or certified mail. All amounts due from the owner pursuant 41
71-to this subsection and subdivision (1) of subsection (a) of this section 42
72-shall be limited to the amount owed to the contractor by the owner for 43
73-work performed under the contract at the date such notice is provided. 44
74-(2) If payment is not made by a contractor in accordance with the 45
75-requirements of subdivision (2) of subsection (a) of this section or any 46
76-applicable construction contract, the subcontractor or supplier shall set 47
77-Committee Bill No. 5685
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80-LCO No. 5155 3 of 5
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82-forth its claim against the contractor through notice by registered or 48
83-certified mail. 49
84-(3) If payment is not made by a subcontractor or supplier in 50
85-accordance with the provisions of subdivision (3) of subsection (a) of 51
86-this section, the subcontractor or supplier to whom money is owed shall 52
87-set forth its claim against the subcontractor or supplier who has failed 53
88-to comply with the provisions of said subdivision (3) through notice by 54
89-registered or certified mail. 55
90-(4) Ten days after the receipt of any notice specified in subdivisions 56
91-(1), (2) and (3) of this subsection, the owner, contractor, subcontractor or 57
92-supplier, as the case may be, shall be liable for interest on the amount 58
93-due and owing at the rate of one per cent per month. Such interest shall 59
94-accrue beginning on the date any such notice is received. In addition, 60
95-such owner, contractor, subcontractor or supplier, upon written 61
96-demand from the party providing such notice, shall be required to place 62
97-funds in the amount of the claim, plus such interest of one per cent per 63
98-month, in an interest-bearing escrow account in a bank in this state, 64
99-provided such owner, contractor, subcontractor or supplier may refuse 65
100-to place the funds in escrow on the grounds that the party making such 66
101-demand has not substantially performed the work or supplied the 67
102-materials according to the terms of the construction contract or that the 68
103-funds so demanded are not due under the owner's contract with the 69
104-contractor. In the event that such owner, contractor, subcontractor or 70
105-supplier refuses to place such funds in escrow and such owner, 71
106-contractor, subcontractor or supplier is found to have unreasonably 72
107-withheld payment due a party providing such notice, such owner, 73
108-contractor, subcontractor or supplier shall be liable to the party making 74
109-demand for payment of such funds and for reasonable attorneys' fees 75
110-plus interest on the amount due and owing at the rate of one per cent 76
111-per month. In addition, any owner, contractor, subcontractor or supplier 77
112-who is found to have withheld payments to a party providing such 78
113-notice in bad faith shall be liable for ten per cent damages. 79
114-Committee Bill No. 5685
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117-LCO No. 5155 4 of 5
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119-(d) No payment may be withheld from a subcontractor or supplier 80
120-for work performed or materials furnished because of a dispute between 81
121-a contractor and another contractor, subcontractor or supplier. 82
122-(e) This section shall not be construed to prohibit progress payments 83
123-prior to final payment of the contract and is applicable to all 84
124-subcontractors and suppliers for material or labor whether they have 85
125-contracted directly with the contractor or with some other subcontractor 86
126-on the work. Each owner that enters into a contract under this section 87
127-and fails or neglects to make payment to a contractor for labor and 88
128-materials supplied under a contract, as required pursuant to this section, 89
129-shall, upon demand of any person who has not been paid by the 90
130-contractor for such labor and materials supplied in the performance of 91
131-the work under the contract, promptly pay the person for such labor or 92
132-materials. Demand for payment shall be served on the owner and a copy 93
133-of each demand shall be sent to the contractor by certified mail, return 94
134-receipt requested to any address at which the owner and contractor 95
135-conduct business. If the owner fails to make such payment, the person 96
136-shall have a direct right of action against the owner in the superior court 97
137-for the judicial district in which the project is located. The owner's 98
138-obligations for direct payments to the contractor, subcontractors or 99
139-suppliers giving notice pursuant to this section shall be limited to the 100
140-amount owed to the contractor by the owner for work performed under 101
141-the contract at the date such notice is provided. 102
142-(f) Any provision in a construction contract that violates the 103
143-provisions of this section or purports to waive or release any right of a 104
144-contractor, subcontractor or supplier under this section shall be void 105
145-and of no effect. 106
146-This act shall take effect as follows and shall amend the following
147-sections:
148-
149-Section 1 October 1, 2025 42-158j
150-
151-Committee Bill No. 5685
152-
153-
154-LCO No. 5155 5 of 5
155-
24+That (1) the general statutes be amended to prohibit the use of pay-if-1
25+paid clauses in construction contracts, and (2) section 42-158j of the 2
26+general statutes be amended to ensure payment from a contractor to a 3
27+subcontractor is made (A) not later than seven days after the date the 4
28+contractor receives payment from the owner that encompasses labor 5
29+performed or materials furnished by the subcontractor, or (B) sixty days 6
30+after the date of satisfactory completion of the labor performed or 7
31+materials furnished by the subcontractor, whichever is sooner. 8
15632 Statement of Purpose:
157-To prohibit pay-if-paid clauses in construction contracts and ensure
158-timely payment of construction subcontractors and suppliers.
159-
160-[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
161-that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
162-underlined.]
163-
164-Co-Sponsors: REP. VAIL, 52nd Dist.
165-
166-H.B. 5685
167-
168-
33+To prohibit the use of pay-if-paid clauses in construction contracts and
34+to ensure timely payment to construction subcontractors.