                                 CODE OF VIRGINIA

REQUIRED CONTRACT PROVISIONS IN CONSTRUCTION CONTRACTS (§ 11-4.6)

A. As used in this section, unless the context requires a different meaning:
			&#8220;Construction contract&#8221; means a contract for the construction,
alteration, repair, or maintenance of a building, structure, or appurtenance
thereto, including moving, demolition, and excavation connected therewith, or
any provision contained in any contract relating to the construction of projects
other than buildings, except for contracts awarded solely for professional
services as that term is defined in &#xA7; 2.2-4301.
			&#8220;Contractor&#8221; or &#8220;general contractor&#8221; means the same
as that term is defined in &#xA7; 54.1-1100, except that such term shall not
include persons solely furnishing materials.
			&#8220;Owner&#8221; means a person or entity, other than a public body as
defined in &#xA7; 2.2-4301, responsible for contracting with a general
contractor for the procurement of a construction contract.
			&#8220;Subcontractor&#8221; means the same as that term is defined in &#xA7;
2.2-4347.

B. 1. In any construction contract between an owner and a general contractor,
the parties shall include a provision that requires the owner to pay such
general contractor within 60 days of the receipt of an invoice following
satisfactory completion of the portion of the work for which the general
contractor has invoiced. An owner shall not be liable for amounts otherwise
reducible due to the general contractor&#8217;s noncompliance with the terms of
the contract. However, in the event that an owner withholds all or a part of the
amount invoiced by the general contractor under the terms of the contract, the
owner shall notify the general contractor within 45 days of the receipt of such
invoice, in writing, of his intention to withhold all or part of the general
contractor&#8217;s payment with the reason for nonpayment, specifically
identifying the contractual noncompliance and the dollar amount being withheld.
Failure of an owner to make timely payment as provided in this subdivision shall
result in interest penalties consistent with § 2.2-4355. Nothing in this
subdivision shall be construed to apply to or prohibit the inclusion of any
retainage provisions in a construction contract.

   2. Any construction contract in which there is at least one general contractor
   and one subcontractor shall be deemed to include a provision under which any
   general contractor is liable to any subcontractor with whom the general
   contractor contracts for satisfactory performance of the subcontractor&#8217;s
   duties under the contract. Such contract shall require such general contractor
   to pay such subcontractor within the earlier of (i) 60 days of the receipt of
   an invoice following satisfactory completion of the portion of the work for
   which the subcontractor has invoiced or (ii) seven days after receipt of
   amounts paid by the owner to the general contractor or by the contractor to
   the subcontractor for work performed by a subcontractor pursuant to the terms
   of the contract. Such contractors shall not be liable for amounts otherwise
   reducible due to the subcontractor&#8217;s noncompliance with the terms of the
   contract. However, in the event that a contractor withholds all or a part of
   the amount invoiced by any subcontractor under the contract, the contractor
   shall notify the subcontractor within 50 days of the receipt of such invoice,
   in writing, of his intention to withhold all or a part of the
   subcontractor&#8217;s payment with the reason for nonpayment, specifically
   identifying the contractual noncompliance, the dollar amount being withheld,
   and the subcontractor responsible for the contractual noncompliance. Payment
   by the party contracting with the contractor shall not be a condition
   precedent to payment to any subcontractor, regardless of that
   contractor&#8217;s receiving payment for amounts owed to that contractor,
   unless the party contracting with the contractor is insolvent or a debtor in
   bankruptcy as defined in &#xA7; 50-73.79. Any provision in a contract contrary
   to this section shall be unenforceable. Failure of a contractor to make timely
   payment as provided in this subdivision shall result in interest penalties
   consistent with &#xA7; 2.2-4355. Nothing in this subdivision shall be
   construed to apply to or prohibit the inclusion of any retainage provisions in
   a construction contract. Every subcontract between a subcontractor and a
   lower-tier subcontractor or supplier, of any tier, shall contain the identical
   payment, notice, and interest requirements as those provided in this
   subdivision if (i) such construction contract is related to a project other
   than a single-family residential project and (ii) the value of the project, or
   an aggregate of projects under such construction contract, is greater than
   $500,000.

C. 1. Any construction contract between a general contractor and its
subcontractor and any lower tier additional subcontract entered into on or after
July 1, 2020, shall be deemed to include a provision under which the general
contractor, its subcontractor, and the additional subcontractor at any lower
tier are jointly and severally liable to pay the employees of any additional
subcontractor at any lower tier the greater of (i) all wages due to a
subcontractor&#8217;s employees or to the lower tier subcontractor&#8217;s
employees at such rate and upon such terms as shall be provided in the
employment agreement between the subcontractor and its employees or (ii) the
amount of wages that the subcontractor or any lower tier subcontractor is
required to pay to its employees under the provisions of applicable law,
including the provisions of the Virginia Minimum Wage Act (§ 40.1-28.8 et seq.)
and the federal Fair Labor Standards Act (29 U.S.C. § 201 et seq.).

   2. A general contractor shall be deemed to be the employer of any
   subcontractor&#8217;s employees for purposes of &#xA7; 40.1-29. If the wages
   due to the subcontractor&#8217;s employees under the terms of the employment
   agreement between a subcontractor and its employees are not paid, the general
   contractor shall be subject to all penalties, criminal and civil, to which an
   employer that fails or refuses to pay wages is subject under &#xA7; 40.1-29.
   Any liability of a general contractor pursuant to &#xA7; 40.1-29 shall be
   joint and several with the subcontractor that failed or refused to pay the
   wages to its employees.

   3. Except as otherwise provided in a contract between the general contractor
   and the subcontractor, the subcontractor shall indemnify the general
   contractor for any wages, damages, interest, penalties, or attorney fees owed
   as a result of the subcontractor&#8217;s failure to pay wages to the
   subcontractor&#8217;s employees as provided in subdivision 1, unless the
   subcontractor&#8217;s failure to pay the wages was due to the general
   contractor&#8217;s failure to pay moneys due to the subcontractor in
   accordance with the terms of their construction contract.

   4. The provisions of this subsection shall only apply if (i) it can be
   demonstrated that the general contractor knew or should have known that the
   subcontractor was not paying his employees all wages due, (ii) the
   construction contract is related to a project other than a single family
   residential project, and (iii) the value of the project, or an aggregate of
   projects under one construction contract, is greater than $500,000. As
   evidence a general contractor or any subcontractor may offer a written
   certification, under oath, from the subcontractor in direct privity of
   contract with the general contractor or subcontractor stating that (a) the
   subcontractor and each of his sub-subcontractors has paid all employees all
   wages due for the period during which the wages are claimed for the work
   performed on the project and (b) to the subcontractor&#8217;s knowledge all
   sub-subcontractors below the subcontractor have similarly paid their employees
   all such wages. Any person who falsely signs such certification shall be
   personally liable to the general contractor or subcontractor for fraud and any
   damages the general contractor or subcontractor may incur.

HISTORY: 2020, c. 1038; 2021, Sp. Sess. I, c. 511; 2022, cc. 726, 727, 771;
2023, cc. 675, 676.