Pennsylvania Gov. Tom Wolf (D) signed H.B. 566 into law as a way to strengthen the commonwealth’s existing Contractor and Subcontractor Payment Act. In addition to giving contractors and subcontractors the right to stop work for nonpayment (without penalty), the legislation prohibits parties from being contractually required to give up their payment rights. It also establishes minimum notice provisions for suspension of work.
The new law requires owners to explain in writing why they’re withholding payment within 14 days of receiving an invoice. Failure to do so compels the owner to make the payment in full. The same rules apply to a contractor withholding payment from a subcontractor.
Another provision allows a contractor or subcontractor to facilitate the release of retainage upon substantial completion of its scope of work by posting a maintenance bond for 120 percent of the amount of retainage being held.
