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Bill

S 4028

Limits amount of payment that State agency as property owner may withhold from certain contractors on State construction contracts to two percent of amount due.

2024-2025 Regular Session Introduced by Paul Sarlo

New Jersey bill caps state agencies' construction contract payment withholding at 2% to improve contractor cash flow while maintaining quality oversight on public projects.

Received in the Assembly, Referred to Assembly Labor Committee
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Bill Summary · S 4028

Legislative bill overview

S 4028 caps the amount of money New Jersey state agencies can withhold from construction contractors at 2% of payment due, rather than allowing larger withholdings. This applies specifically to state construction contracts where the state acts as property owner. The bill passed the Senate unanimously and is currently under review in the Assembly Labor Committee.

Why is this important

Payment withholding (retainage) is a common practice in construction to ensure contractors complete work properly, but excessive withholding can create cash flow problems for contractors and subcontractors. By limiting withholding to 2%, the bill aims to improve contractor liquidity while still protecting the state's interests in project completion and quality.

Potential points of contention

  • Definition of "due": Disputes may arise over what constitutes the "amount due" baseline—whether it includes disputed charges or only undisputed work completion amounts
  • Project protection trade-off: State agencies may argue that limiting withholding reduces their leverage to enforce contract compliance and quality standards on complex projects
  • Subcontractor vs. contractor impact: The bill's effect on subcontractors' access to withheld funds versus prime contractors' responsibilities remains unclear from the language

Compiled from official sources — confirm details with the bill’s official record.

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