Many owners and contractors assume that their construction contract controls how claims and disputes will be handled. After all, substantial time is often spent negotiating notice provisions, mediation requirements, dispute resolution procedures, and payment terms.
Beginning with many private construction contracts entered into on or after January 1, 2026, that assumption may no longer be entirely correct.
California’s Private Works Change Order Fair Payment Act (Civil Code § 8850) establishes a mandatory statutory process for certain construction claims. The Act creates specific requirements governing claim notices, response deadlines, payment obligations, mediation, and, in some circumstances, work-suspension rights.
Perhaps most importantly, the Act is generally non-waivable. In other words, parties should not assume they can simply contract around these requirements.
Because these provisions have now been effect for a few months, claims implicating these new laws will likely soon arise. The default of looking at what the parties’ contract dictates may no longer going to be enough.
Why This Matters
Many construction contracts already contain detailed claim and dispute-resolution provisions. The new statute does not necessarily replace those provisions, but it may require parties to comply with a separate statutory framework before or concurrently with pursuit of contractual remedies.
That creates a practical challenge for project participants. Compliance with contractual procedures alone may not satisfy the Act’s statutory requirements. Parties may also need to satisfy the Act’s statutory requirements.
For example, the Act establishes deadlines for owner responses and payment of undisputed amounts. It also creates a process for informal conferences, mediation, and, in some situations, contractor work-suspension rights.
Failure to comply can carry significant consequences, including prompt-payment penalties and potential project disruption.
What Should Owners and Contractors Do Now?
Project participants should review their existing contracts and internal claim-handling procedures to determine whether they account for the statute’s requirements.
Owners, contractors, and subcontractors should ensure that project teams understand:
- Claim submission requirements
- Response deadlines
- Payment obligations
- Mediation procedures
- Potential work-suspension rights
An administrative process that worked under prior contracts may no longer be sufficient.
Learn More
Stoel Rives recently published a comprehensive alert discussing California’s new Private Works Change Order Fair Payment Act, including claim procedures, mediation requirements, payment deadlines, subcontractor claims, and work-suspension rights.
We have also developed a California Construction Remedies Timeline that summarizes the Act’s key deadlines and procedural requirements in a practical, easy-to-reference format.