Contractor's Right to Stop Work for Nonpayment Amendment Act of 2025

Full Bill Text

1 ______________________________ 2 Councilmember Kenyan R. McDuffie 3 4 5 6 7 A BILL 8 __________ 9 10 COUNCIL OF THE DISTRICT OF COLUMBIA 11 ____________________ 12 13 14 To amend the Private Contractor and Subcontractor Prompt Payment Act of 2013 to prohibit clauses in 15 construction contracts that preclude contractors or subcontractors from stopping work if they 16 have not been paid for completed work within a reasonable timeframe, to establish a 17 procedure and minimum timeline for contractors and subcontractors to provide notice of 18 nonpayment and intent to suspend work, to establish notification requirements and timelines 19 for owners, contractors, and subcontractors to withhold payment for deficient items, to require 20 non-deficient items to be paid according to the District's prompt pay statute, and to require 21 owners, contractors, and subcontractors to notify other contractors or subcontractors of errors 22 in an invoice and to provide an explanation of the errors. 23 24 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act 25 may be cited as the "Contractor's Right to Stop Work for Nonpayment Amendment Act of 2025". 26 Sec. 2. The Private Contractor and Subcontractor Prompt Payment Act of 2013, effective 27 November 5, 2013 (D.C. Law 20-34; D.C. Official Code§ 27A-101 et seq.), is amended as follows: 28 (a) Section 2 (D.C. Official Code§ 27A-101) is amended as follows: 29 (1) Paragraph (1) is redesignated as paragraph (1A) 30 (2) A new paragraph (1) is added to read as follows: 31 “(1) Billing period” means a payment cycle agreed to by the parties or, in the absence of 32 an agreement, the calendar month within which work is performed.”. 33 (3) A new paragraph (2A) is added to read as follows: 34 “(2A) “Deficiency item” means work performed but which an owner, contractor, or 35 subcontractor, or any inspector authorized by an owner, contractor, or subcontractor, will not certify as 36 being completed according to the specifications of the contract.”. 1 37 (b) Section 3 (D.C. Official Code§ 27A-102) is amended as follows: 38 (1) A new subsection (d) is added to read as follows: 39 "(d) A contract provision that creates a default by the contractor for suspending work 40 when the contractor has not received payment pursuant to subsections(a), (b), and (c) of this section, or 41 has the effect of prohibiting a contractor from suspending work for a violation of this act is against 42 public policy and is void and unenforceable.". 43 (c) Section 4 (D.C. Official Code§ 27A-103) is amended to read as follows: 44 (1) The lead-in language is redesignated as (a). 45 (2) New subsections (b), (c), and (d) are added to read as follows: 46 "(b)(l) If payment is not received by a contractor within the deadlines established by § 47 27A-102 subsections(a), and (c), the contractor shall have the right to suspend performance of any 48 work, without penalty, until payment is received according to the terms of the contract. 49 "(2) A contractor may suspend performance for a violation of this act only if: 50 "(A) The contractor provides written notice to the owner or the owner's 51 authorized agent, via electronic mail or postal service, stating that the payment is at least 15 days 52 delinquent according to the deadlines established by subsections (a) or (c) of this section; 53 "(B) At least 15 calendar days have passed since the written notice in 54 subparagraph (A) of this paragraph was sent; and 55 "(C) The contractor has provided at least 10 calendar days' written notice, via 56 certified mail, of the contractor's intent to suspend performance to the owner or the owner's authorized 57 agent. 58 "(c)(1) An owner may withhold payment for deficiency items or disputed amounts 59 according to the terms of a construction contract. Notwithstanding the above, the owner shall pay the 60 contractor according to the provisions of this act for any items that appear on the invoice or payment 61 request and have been satisfactorily completed or are undisputed. 2 62 "(2) If an owner withholds payment from a construction contractor for a 63 deficiency item, the amount withheld shall be reasonable and the owner shall notify the contractor of 64 the deficiency item by a written explanation of its good faith reason within 14 calendar days of the date 65 that the invoice is received. 66 "(A) Failure to comply with paragraph (2) shall constitute a waiver of the 67 basis to withhold payment and necessitate payment of the contractor in full for the invoice. 68 "(d)(1) If an invoice is filled out incorrectly or incompletely by the contractor or if there 69 is any other defect or impropriety in an invoice or payment request, the owner shall give written notice 70 to the contractor within 7 business days of receipt of the invoice or payment request. The notice shall 71 plainly list any deficiencies contained in the contractor's invoice or payment request. 72 "(2) Pursuant to § 27A-102(a), (c) and subsection (c) of this section, shall not 73 apply until such time as the contractor resubmits an invoice or payment request that cures all 74 deficiencies listed in the notice required by paragraph (1) of this subsection. 75 (c) Section 6 (D.C. Official Code§ 27A-105) is amended as follows: 76 (1) The lead in language is designated as paragraph (b) 77 (2) New subsections (a-1), (a-2), (a-3), (a-4), and (a-5) are added to read as follows: 78 "(a-1) A contract provision that creates a default by the contractor for suspending work 79 when the contractor has not received payment pursuant to§ 27A-102 subsections(a), (b), and (c), or has 80 the effect of prohibiting a contractor from suspending work for a violation of this act is against public 81 policy and is void and unenforceable.". 82 "(a-2) Any contract provision which creates a default by the subcontractor for 83 suspending work under the contract when the contractor has received payment pursuant to subsection 84 (a) of this section or has the effect of prohibiting a subcontractor from suspending work under a 85 contract is against public policy and is void and unenforceable.". 86 "(a-3)(1) If payment is not received by a subcontractor within the deadlines established 3 87 by § 27A-104 subsections(a), the subcontractor shall have the right to suspend performance of any 88 work, without penalty, until payment is received according to the terms of the contract. 89 "(2) A subcontractor may suspend performance for a violation of this act only if: 90 "(A) The subcontractor provides written notice to the owner or the 91 owner's authorized agent, via electronic mail or postal service, stating that the payment is at least 30 92 days delinquent according to the deadlines established by subsection (a) of this section; 93 "(B) At least 30 calendar days have passed since the written notice in 94 subparagraph (A) of this paragraph was sent; and 95 "(C) The subcontractor has provided at least 10 calendar days' written 96 notice, via certified mail, of the subcontractor's intent to suspend performance to the owner or the 97 owner's authorized agent. 98 "(a-4)(1) A contractor or subcontractor may withhold payment for deficiency items or 99 disputed amounts according to the terms of the construction contract. 100 "(2) If a contractor or subcontractor withholds payment from a subcontractor for 101 a deficiency item, the amount withheld shall be reasonable, and the owner shall notify the subcontractor 102 of the deficiency item by a written explanation of its good faith reason within 14 calendar days of the 103 date that the invoice is received. 104 "(A) Failure to comply with paragraph (2) shall constitute a waiver of the 105 basis to withhold payment and necessitate payment of the subcontractor in full for the invoice. 106 "(a-5)(1) If an invoice is filled out incorrectly or incompletely by the subcontractor or if 107 there is any other defect or impropriety in an invoice or payment request, the contractor or 108 subcontractor shall give written notice to the subcontractor within 7 business days of receipt of the 109 invoice or payment request. The notice shall plainly list any deficiencies contained in the 110 subcontractor's invoice or payment request. 111 "(2) Pursuant to § 27A-104(a) and (a-2) of this section, this shall not apply until 4 112 such time as the subcontractor resubmits an invoice or payment request that cures all deficiencies listed 113 in the notice required by paragraph (a-5)(1) of this section. 114 Sec. 3. Fiscal impact statement. 115 The Council adopts the fiscal impact statement in the committee report as the fiscal impact 116 statement required by section 4a of the General Legislative Procedures Act of 1975, approved October 117 16, 2006 (120 Stat. 2038; D.C. Official Code§ 1-301.47a). 118 Sec. 4. Effective date. 119 This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, 120 action by the Council to override the veto), a 30-day period of congressional review as provided in 121 602(c)(2) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. 122 Official Code§ 1-206.02(c)(l)), and publication in the District of Columbia Register. 5