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HB 1950

Requiring subcontractors on public works contracts to be indemnified for certain expenses incurred as a result of late payments from a contractor or a subcontractor.

2025-2026 Regular Session Introduced by Debra Entenman and 4 co-sponsors

HB 1950 mandates that public works contractors indemnify subcontractors for financial losses caused by late payments, protecting small suppliers from payment delays cascading down the contract chain.

Public hearing in the House Committee on Capital Budget at 1:30 PM.
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Bill Summary · HB 1950

Legislative bill overview

HB 1950 requires contractors and higher-tier subcontractors on public works projects to indemnify (compensate) lower-tier subcontractors for financial losses caused by late payments. The bill creates a legal obligation ensuring that payment delays don't cascade down the construction supply chain, protecting smaller subcontractors from bearing the cost of upstream payment failures.

Why is this important

Late payments on public works projects create cash flow crises for small subcontractors and suppliers, potentially forcing them to take out high-interest loans or cease operations. By shifting the financial burden of late payments to responsible parties rather than vulnerable subcontractors, the bill aims to stabilize the construction industry and protect small businesses that depend on timely payment to survive.

Potential points of contention

  • Cost pass-through concerns: Contractors may argue that indemnification requirements increase their liability insurance costs and project bidding prices, which could be passed to public agencies or taxpayers
  • Definition and scope disputes: Unclear language around what constitutes "certain expenses" (interest charges, legal fees, lost profits?) could create litigation and disputes about compensation amounts
  • Administrative burden: Public agencies may face increased claims processing and dispute resolution responsibilities, requiring additional staffing or oversight mechanisms

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

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