Under current law when a contractor or subcontractor is paid for work performed on a public works project, they must pay subcontractors no later than ten days after receipt of payment. In the event of a good faith dispute over all or any portion of the amount due from the state or municipality to the prime contractor, or from the prime contractor or subcontractor to a subcontractor, then the state, municipality, prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount. Those not a party to a dispute are entitled to full and prompt payment of their portion of a draw, progress payment, final payment, or released retainage.

Anyone whose funds have been withheld in violation of law are entitled to receive interest at the highest rate allowed by statute for every month of non-payment from the person wrongfully withholding the funds. In any action for the collection of wrongfully withheld funds, the prevailing party is entitled to costs of suit as well as reasonable attorneys' fees.

The following subcontractors are entitled to payment no later than 30 days after work on a public works project is  satisfactorily completed or materials are delivered, regardless of when the prime contractor receives payment: 

• small businesses certified with the Office of Minority and Women's Business Enterprises (OMWBE); and
• those recognized as a women or minority owned business enterprises in a state of Washington port, county, or municipal small business or women or minority owned business enterprise program. 

• Specifies which types of contractors are eligible for prompt pay.
• Changes ?work is accepted? to ?work satisfactorily completed or materials delivered?.
• Adds provisions for incremental acceptance.
• Establishes a new effective date of July 1, 2024. 

The committee recommended a different version of the bill than what was heard. PRO: This bill marks a significant step toward equitable treatment for small minority and woman contractors in public works projects. Prompt payment is a right, not an administrative nicety. Delayed payment can be devastating for small businesses which often operate on thin margins. This will help level the playing field to give small businesses an equal opportunity to thrive alongside larger companies which often have more resources to withstand payment delays. A rising tide lifts all ships and that is precisely what this bill is meant to do. 

CON: This bill will cause unintended consequences. This will transfer a problem from one segment of the industry to another. Some general contractors are small businesses, others are certified firms. If they are forced to act as a bank and forcing them to pay before they themselves have been paid that just doesn't seem fair and could be a dire problem for small general contractors. For a solution to work well, it needs to work well for everyone. 

OTHER: There is widespread support for the underlying policy and intent of the bill, but there is concern about unintended consequences. This should be sent to CPARB for more stakeholder engagement to be brought back with recommendations for the next legislative session. One concern is that acceptance is not defined in law so it leaves ambiguity as to when the 30 day timeline begins. There are concerns about if contractors are going to be required to finance the contracts for their subcontractors.