BILL ANALYSIS
AB 1119
Page 1
ASSEMBLY THIRD READING
AB 1119 (Emmerson)
As Amended May 5, 2009
Majority vote
BUSINESS & PROFESSIONS 8-0JUDICIARY 10-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|Feuer, Tran, Brownley, |
| |Conway, Eng, Hernandez, | |Evans, Jones, Knight, |
| |Nava, Niello, Smyth | |Krekorian, Lieu, Monning, |
| | | |Nielsen |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : States legislative intent to reconsider prompt payment
statutes regarding public and private works of improvement to
aid in their clarity and application.
EXISTING LAW :
1)Requires an owner of a private work of improvement to release
retention proceeds withheld from any payment within 45 days
after the date of completion; and, requires a public entity to
release retention proceeds entity within 60 days after the
date of completion.
2)Requires an original contractor to pay any subcontractor
within 10 days of receipt of a progress payment, unless
otherwise agreed to in writing.
3)Requires an original contractor to pay any subcontractor
within 10 days of receipt of any portion of retention
proceeds.
4)Imposes a penalty of 2% on the amount due per month on funds
that are improperly withheld in a contract dispute relating to
public and private works of improvement, as specified.
AB 1119
Page 2
5)Requires a state agency that fails to make any progress
payment within 30 days after receipt of a payment request to
pay interest at the rate of 10% per year.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS : According to the author's office, "Current law
requires that there must be timely payments to general
contractors by project owners and to subcontractors by general
contractors in several code sections. However, these provisions
are not only inconsistent but lead to confusion, misapplication,
missed deadlines, and delays in both payments and recourse."
Retention proceeds represent a percentage of the amount of a
contract that is withheld from a progress payment by the public
entity to the original contractor or the original contractor
from one of its subcontractors. By withholding a percentage of
a contract, the public entity or the original contractor
maintains a degree of financial control over a project.
Analysis Prepared by : Rebecca May / B. & P. / (916) 319-3301
FN: 0000945