New California Law Limits Retention on Private Works
On July 14, Governor Newsom signed into law SB 61 (Cortese). This legislation, co-sponsored by CAL SMACNA, establishes a 5% cap on retention in private works. Effective January 1, 2026, this cap will apply to all non-residential contracts.
WHY IT MATTERS
• This important measure addresses longstanding challenges in California’s construction industry by:
• Preventing excessive retention practices that force contractors to finance projects indefinitely
• Improving cash flow for contractors of all sizes
• Reducing unnecessary costs in California construction
• Creating more equitable and efficient payment practices
CAL SMACNA is proud to continue supporting and advancing legislation that strengthens efficiency, cost-effectiveness and fairness across the industry.
ON THE HORIZON: CALIFORNIA ASSEMBLY BILL 1331
While we celebrate SB 61’s success, we’re also keeping a close eye on AB 1331 (Workplace Surveillance), which was moved to the Senate Appropriations Committee’s suspense file on August 18. This is a standard step for bills with significant fiscal impacts. Stay tuned — we’ll continue to monitor and share updates as developments occur. Scan the code to view the bill’s current status and summary.