What's happening
This bill requires public owners or contractors to release subcontractor retainage within 60 days of the subcontractor's work completion and acceptance, minus specified withholdings.
Why it matters
Faster cash flow for subcontractors. By requiring retainage (the portion of payment withheld until project completion) to be released within 60 days of a subcontractor’s work being finished and accepted, the bill helps subcontractors access money they’ve earned more quickly, reducing financial strain and improving their ability to pay workers and suppliers.
Limits on reasons for withholding payment. The only allowed withholdings from the retainage are (1) up to double the value of any incomplete work remaining for the subcontractor, and (2) amounts needed to cover unresolved claims, liens, or judgments. This restricts the ability of public owners or contractors to delay payment for vague or arbitrary reasons.
Potential reduction in payment disputes. By setting a clear, uniform timeline and explicit conditions for release of retainage, the bill could reduce conflicts and legal disputes over payment, creating a more predictable environment for all parties involved in public works projects.
Encourages prompt project closeout. Since public owners and contractors must act within a fixed 60-day window, this may incentivize timely inspection and acceptance of subcontractor work, helping to avoid unnecessary project delays.
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Who cares
Public-project subcontractors
The bill would require release of retainage for their work within 60 days of completion and acceptance by the public owner, subject to deductions for unfinished items and unresolved claims, liens or judgments.
Prime contractors on public projects
They would have to meet the new retainage-release deadline but could withhold twice the value of remaining subcontractor work and amounts needed to satisfy unresolved claims, liens or judgments.
State and municipal public owners
They would face the same deadline for subcontractor retainage they hold, with the requirement applying to contracts entered into on or after the bill’s effective date.
Headline styles
Release Retainage After 60 Days
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Reported and committed to rules
- Print number 5238a
- Amend and recommit to finance
- Referred to finance
- Returned to senate
- Died in assembly
- Referred to governmental operations
- Delivered to assembly
- Passed senateVote 63–0
- Advanced to third reading
- 2nd report cal.
- 1st report cal.901
Show 1 earlier action
- Referred to finance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Release Retainage After 60 Days
In Assembly Committee · Governmental Operations · Sponsor Michael Cusick
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5238--A
2017-2018 Regular Sessions
IN SENATE
March 16, 2017
Introduced by Sens. DeFRANCISCO, YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Finance -recommitted to the Committee on Finance in accordance with Senate Rule
6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the state finance law and the general municipal law, in relation to release of subcontractor's retainage
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 2 of section 139-f of the state finance law, as amended by section 16 of part MM of chapter 57 of the laws of 2008, is amended to read as follows:
2. Payment by contractors to subcontractors. Within seven calendar days of the receipt of any payment from the public owner, the contractor shall pay each of his subcontractors and materialmen the proceeds from the payment representing the value of the work performed and/or materials furnished by the subcontractor and/or materialman and reflecting the percentage of the subcontractor's work completed or the materialman's material supplied in the requisition approved by the owner and based upon the actual value of the subcontract or purchase order less an amount necessary to satisfy any claims, liens or judgments against the subcontractor or materialman which have not been suitably discharged and less any retained amount as hereafter described. Failure by the contractor to pay any subcontractor or materialman within seven calendar days of the receipt of any payment from the public owner shall result in the commencement and accrual of interest on amounts due to such subcontractor or materialman for the period beginning on the day immediately following the expiration of such seven calendar day period and ending on the date on which payment is made by the contractor to such subcontractor or materialman. Such interest payment shall be the sole responsibility of the contractor, and shall be paid at the rate of interest in
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00257-03-7
S. 5238--A 2
effect on the date payment is made by the contractor. Notwithstanding any other provision of law to the contrary, interest shall be computed at the rate established in paragraph (b) of subdivision one of section seven hundred fifty-six-b of the general business law. The contractor shall retain not more than five per centum of each payment to the subcontractor and/or materialman except that the contractor may retain in excess of five per centum but not more than ten per centum of each payment to the subcontractor provided that prior to entering into a subcontract with the contractor, the subcontractor is unable or unwilling to provide a performance bond and a labor and material bond, both in the full amount of the subcontract, at the request of the contractor. However, the contractor shall retain nothing from those payments representing proceeds owed the subcontractor and/or materialman from the public owner's payments to the contractor for the remaining amounts of the contract balance as provided in subdivision one of this section. If the contractor has failed to submit a requisition for payment of the remaining amounts of the contract balance within ninety days of substantial completion as provided in subdivision one of this section, then any clause in the subcontract between the contractor and the subcontractor or materialman which states that payment by the contractor to such subcontractor or materialman is contingent upon payment by the owner to the contractor shall be deemed invalid. Within seven calendar days of the receipt of payment from the contractor, the subcontractor and/or materialman shall pay each of his subcontractors and materialmen in the same manner as the contractor has paid the subcontractor, including interest as herein provided above. Nothing provided herein shall create any obligation on the part of the public owner to pay or to see to the payment of any moneys to any subcontractor or materialman from any contractor nor shall anything provided herein serve to create any relationship in contract or otherwise, implied or expressed, between the subcontractor or materialman and the public owner. Notwithstanding any other provision of this section or other law, any retainage held by a public owner or contractor representing retainage for a subcontractor's work shall be released, less two times the value of any remaining items to be completed by the subcontractor and an amount necessary to satisfy any claims, liens or judgments against the subcontractor or materialman which have not been suitably discharged no later than sixty days from the completion and acceptance by the public owner of the subcontractor's work.
§ 2. Subdivision 2 of section 106-b of the general municipal law, as amended by section 15 of part MM of chapter 57 of the laws of 2008, is amended to read as follows:
2. Payment by contractors to subcontractors. Within seven calendar days of the receipt of any payment from the public owner, the contractor shall pay each of his subcontractors and materialmen the proceeds from the payment representing the value of the work performed and/or materials furnished by the subcontractor and/or materialman and reflecting the percentage of the subcontractor's work completed or the materialman's material supplied in the requisition approved by the owner and based upon the actual value of the subcontract or purchase order less an amount necessary to satisfy any claims, liens or judgments against the subcontractor or materialman which have not been suitably discharged and less any retained amount as hereafter described. Failure by the contractor to make any payment, including any remaining amounts of the contract balance as hereinafter described, to any subcontractor or materialman within seven calendar days of the receipt of any payment from the public
S. 5238--A 3
owner shall result in the commencement and accrual of interest on amounts due to such subcontractor or materialman for the period beginning on the day immediately following the expiration of such seven calendar day period and ending on the date on which payment is made by the contractor to such subcontractor or materialman. Such interest shall be the sole responsibility of the contractor, and shall be paid at the rate of interest in effect on the date payment is made by the contractor. Notwithstanding any other provision of law to the contrary, interest shall be computed at the rate established in paragraph (b) of subdivision one of section seven hundred fifty-six-b of the general business law. The contractor shall retain not more than five per centum of each payment to the subcontractor and/or materialman except that the contractor may retain in excess of five per centum but not more than ten per centum of each payment to the subcontractor provided that prior to entering into a subcontract with the contractor, the subcontractor is unable or unwilling to provide a performance bond and a labor and material bond both in the full amount of the subcontract at the request of the contractor. However, the contractor shall retain nothing from those payments representing proceeds owed the subcontractor and/or materialman from the public owner's payments to the contractor for the remaining amounts of the contract balance as provided in subdivision one of this section. If the contractor has failed to submit a requisition for payment of the remaining amounts of the contract balance within ninety days of substantial completion as provided in subdivision one of this section, then any clause in the subcontract between the contractor and the subcontractor or materialman which states that payment by the contractor to such subcontractor or materialman is contingent upon payment by the owner to the contractor shall be deemed invalid. Within seven calendar days of the receipt of payment from the contractor, the subcontractor and/or materialman shall pay each of his subcontractors and materialmen in the same manner as the contractor has paid the subcontractor, including interest as herein provided above. Nothing provided herein shall create any obligation on the part of the public owner to pay or to see to the payment of any moneys to any subcontractor or materialman from any contractor nor shall anything provided herein serve to create any relationship in contract or otherwise, implied or expressed, between the subcontractor or materialman and the public owner. Notwithstanding any other provision of this section or other law, any retainage held by a public owner or contractor representing retainage for a subcontractor's work shall be released, less two times the value of any remaining items to be completed by the subcontractor and an amount necessary to satisfy any claims, liens or judgments against the subcontractor or materialman which have not been suitably discharged no later than sixty days from the completion and acceptance by the public owner of the subcontractor's work.
§ 3. This act shall take effect immediately and shall apply to all contracts entered into on or after such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the state finance law and the general municipal law, in relation to release of subcontractor's retainage
Purpose or general idea of bill
This bill amends the general municipal law and the state finance law to provide for an early release of retainage on public jobs.
Summary of specific provisions
Section 1 amends section 139-f (2) of the state finance law by adding the sentence, "Notwithstanding any other provision of this section or other law, any retainage held by a public owner or contractor represent- ing retainage for a subcontractor's work shall be released, less two times the value of any remaining items to be completed by the subcon- tractor and an amount necessary to satisfy any claims, liens or judge- ments against the subcontractor or materialman which have not been suit- ably discharged no later than 60 days from the completion and acceptance by the public owner of the subcontractor's work."
Section 2 amends section 106-b (2) of the general municipal law by adding the sentence, "Notwithstanding any other provision of this section or other law, any retainage held by a public owner or contractor representing retainage for a subcontractor's work shall be released less two times the value of any remaining items to be completed by the subcontractor and an amount necessary to satisfy any claims, liens or judgements against the subcontractor or materialman which have not been suitably discharged no later than 60 days from the completion and acceptance by the public owner of the subcontractor's work."
Justification
Currently, subcontractors who have finished their work on a public job must wait until the entire project is complete before receiving their retainage. This creates hardships for subcontractors who must finance their work in advance and wait for unreasonably long periods of time for payment. Line item listing and early release of retainage will cure this unfairness and will insure subcontractor's payment within a reasonable time, thereby avoiding potential payment disputes and liens on the job.
Prior legislative history
2016-215: A.4266 - Died in Assembly Governmental Operations/S.2924-Passed Senate; 2013-2014: A.1660 - Died in Rules/ S.1974 - Passed Senate; 2012: A.5024 Died in Assembly Governmental Operations; 2010: A.2372 - Died in Assembly Governmental Operations.
Fiscal implications
None.
Effective date
This act shall take effect immediately and shall apply to all contracts entered into on or after such effective date.
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