When does a contractor have to be paid in California?

California's prompt payment statutes set the clocks: on private works, owners generally must pay direct contractors' progress payments within 30 days of a proper demand (Civil Code section 8800), contractors must pay subcontractors within days of receiving payment (Business and Professions Code section 7108.5), and wrongful withholding accrues a two percent monthly penalty.

Prompt payment in California construction is statutory, not just contractual. On private works, owners who fail to pay direct contractors progress payments when due face the prompt payment rules of Civil Code section 8800, and a direct contractor receiving a progress payment must generally pay each subcontractor its share within seven days (Business and Professions Code section 7108.5). Retention, the percentage withheld from each payment as security, has its own track: owners must release it within 45 days after completion, with subcontractor shares passed through promptly after receipt (Civil Code section 8810 et seq.). The teeth are uniform: wrongfully withheld amounts accrue a penalty of two percent per month in place of interest, and the prevailing party in a collection action recovers attorney fees. Withholding is permitted only up to 150 percent of a genuinely disputed amount. Public works follow parallel statutes. These remedies stack with, not replace, mechanics lien and stop payment notice rights, each on its own calendar.

Authority: Cal. Civ. Code § 8800