The Legislature recently passed and Governor Brown approved Senate Bill No. 293 (“SB 293”), which brings changes to the Business and Professions Code, Civil Code, and Public Contract Code. Most significantly, SB 293 reduces maximum retention amounts that can be withheld on public works projects.
Except under certain specific circumstances, SB 293 caps retention proceeds on public projects at 5 percent of payments for public works contracts entered into, on or after January 1, 2012. The cap applies to contracts between a public entity and an original contractor, contracts between an original contractor and a subcontractor; and contracts between subcontractors. There was no cap prior to the passage of SB 293. The cap will remain in effect until January 1, 2016, unless extended by a later enacted statute.
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