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 Section 42-158j of the general statutes is repealed and the 1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