Private Works Change Order Fair Payment Act.

Senator Ochoa Bogh's Private Works Change Order Fair Payment Act establishes a structured claims resolution process for contractors and subcontractors involved in private construction projects in California. The legislation creates a mandatory timeline for owners to respond to payment claims and implements a multi-step dispute resolution procedure.

Under the new framework, owners must review and respond to contractor claims within 30 days, specifically identifying disputed and undisputed portions. Undisputed amounts must be paid within 60 days, while disputed claims proceed through an informal conference followed by nonbinding mediation, with costs shared equally between parties. The law permits contractors and subcontractors to suspend work without penalty if payments remain outstanding after following prescribed notification procedures. Unpaid undisputed amounts and amounts later determined to be owed accrue interest at 2 percent monthly.

The legislation includes specific provisions for subcontractors lacking direct contractual relationships with owners, allowing them to have claims presented through primary contractors. The law applies to contracts entered into after January 1, 2026, excluding non-mixed-use residential projects under four stories and public entity projects. The provisions sunset on January 1, 2030, creating a four-year period to evaluate the effectiveness of these procedures.