CA Bus & Prof Code Section 7108.5


A prime contractor or subcontractor shall pay to any subcontractor, not later than seven days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor’s interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor to a subcontractor, the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount.


Any violation of this section shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subcontractor, of 2 percent of the amount due per month for every month that payment is not made.


In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees and costs.


The sanctions authorized under this section shall be separate from, and in addition to, all other remedies, either civil, administrative, or criminal.


This section applies to all private works of improvement and to all public works of improvement, except where Section 10262 of the Public Contract Code applies.
Last Updated

Aug. 19, 2023

§ 7108.5’s source at ca​.gov