Workshops covering all the important construction contract topics specifically for subcontractors. From understanding critical terms, to negotiations and getting paid.

The New Year brought us two new California laws that reshape how Subcontractors get paid and how change order/time-extension disputes get processed on private projects . In a nutshell: for private works subcontracts entered into after January 1, 2026, private owners and primes will have less flexibility to “contract around” payment timing and dispute procedures. Subs now have more statutory leverage, but your project team needs to understand these new safeguards and follow the required steps to take advantage of them. The new laws are: Civil Code § 8811, which addresses retention payments, and Civil Code § 8850, known as the Private Works Change Order Fair Payment Act, which creates a structured process for handling extra work and time-extension claims on covered private works projects. By design, these new laws look a lot like what some public-works contractors have benefited from under the Public Contract Code: a structured claims process that forces an owner to respond, identify disputed vs. undisputed amounts, and pay undisputed sums and a retention capped at 5%. Public works contractors have enjoyed statutory guardrails like Public Contract Code § 9204 (mandatory claims process) and retention-related rules like Public Contract Code § 7201 (public entity retention generally capped at 5% of progress payment). Let’s take a deeper dive into how these new laws affect Subcontractors, how they compare to similar laws for public works project. Plus, we’ll touch on some subcontract tips you can use immediately. The 5% Private Retention Cap What Changes for Private Projects? For covered private contracts entered into on/after January 1, 2026 , retention is capped at 5%  of progress payments, and total retention withheld may not exceed 5% of the subcontract price . Importantly for subs, the statute also aims to prevent retention “games” between tiers, meaning your retention rate shouldn’t exceed what the owner holds from the prime contractor, which is also now capped at 5%. There are a couple of exceptions to this cap – the new law does not apply to: (a) “a direct contractor or subcontractor if the direct contractor or subcontractor provides written notice to a subcontractor before, or at, the time that the bid is requested that a faithful performance and payment bond shall be required, and a subcontractor subsequently fails to furnish to the direct contractor or subcontractor a performance and payment bond issued by an admitted surety insurer.” (b) “an owner, direct contractor, or subcontractor on a residential project if the project is not mixed-use and does not exceed four stories.” How Section 8811 Compares to Public Works Since 2012, public owners (especially local agencies) have operated under a “5% retention” cap per Public Contract Code §7201 (unless the project has special characteristics such as being “substantially complex.”)  Both laws contain “flow-down” style retention rules that include language that the retention withheld from Subs generally may not exceed what the Owner withholds from the Prime Contractor. Subcontracting Tips: Even though the new statutes prohibit the waving of these retention rules by contracts, it is sometimes hard to “teach” the prime contractor’s accounts payable team what the law requires when your subcontract doesn’t follow the law. So, when reviewing a subcontract, watch for, and edit, subcontract provisions that contain r etention clauses greater than 5%  or greater than what the owner is holding from the contractor under the prime contract. The New Change Order / Claim Process What Changes for Private Projects? Historically, private change-order disputes were often governed by whatever the contract said—sometimes resulting in delayed decisions, withheld payment, and “we’ll sort it out at the end” dynamics. The California Legislature has finally recognized these unfair tactics and, in enacting this new law, declared the following: (1) It is in the best interests of the state and its citizens to ensure that all construction business performed on a private works project in the state that is complete and not in dispute is paid in full and in a timely manner. (2) Delays in payment for works of improvement and site improvements impose significant financial hardships on contractors, particularly small businesses, disadvantaged business enterprises, and disabled veteran business enterprises. (3) The lack of clear procedures for resolving disputes related to change orders often leads to costly litigation where a predetermined method could avoid such costs. (4) Prompt and fair payment promotes economic stability within the construction industry and ensures efficient project completion. So, starting January 1, 2026, Civil Code § 8850 introduced a statutory structure for handling certain change-order and time-extension claims on covered private projects, including required steps and timelines and a focus on paying undisputed  amounts. Even if your subcontract has a detailed claims clause, your contract language can’t safely ignore the statute on covered projects because § 8850 is designed to impose non-waivable procedural rules in many contexts. How This Compares to Public Works Since 2017, many public agencies have been subject to a mandatory claims resolution process under Public Contract Code § 9204, which requires the public entity to respond, identify what’s disputed vs. undisputed, and process payment of undisputed portions within a defined timeframe. For example, PCC § 9204 provides that once the public entity issues its written statement identifying disputed/undisputed portions, payment due on an undisputed portion must be processed and made within 60 days .  Civil Code § 8850 has the same requirement with both laws imposing interest of 2% per month on undisputed amounts that are not timely paid. This means that private projects have now moved toward a “process discipline” that public works contractors have relied on to prevent indefinite payment delays. Subcontracting Tips: Subcontractors will still see subcontract language in their private works subcontracts that, in practice, will undermine these protections unless the Sub is savvy on how these laws work. Key risk clauses include: “No payment for extra work without a fully executed change order”  with no statutory-friendly alternative path. You want language that dictates payment in a defined period of time once the extra work is performed when the paperwork lags the field. Short notice provisions  are still enforceable and easy to miss (e.g., 24–48 hours) tied to waiver of all claims. Change the notice provisions to be based on business days, and add language such as: “Subcontractor’s failure to provide notice (or submit a claim) within the time required herein shall not act as a waiver of Subcontractor’s claim except to the extent such failure materially prejudices Contractor.” An example of what would “materially prejudice” a Contractor is if a Sub submits a late claim for an Owner-caused delay or change, and then the Owner has the right and does deny the Contractor’s claim because the Contractor’s notice or claim to the Owner was likewise late under the Prime Contract requirements. Broad waiver language  in form pay applications (“waive all claims through date”). If you sign these routinely, you may undercut your ability to use the statutory process effectively. Going Forward For subcontractors, these laws aren’t just “legal updates”—they’re cash-flow tools. Retention at 10% on private work has long operated like an interest-free loan from subs to the project. A 5% cap (on covered projects) can materially improve working capital—especially for trades performing work early in the project with heavy material and labor costs. Whether working on a private project or a public project, maximize your chance for success by giving timely notice of delays and extras and by aligning your internal documentation to strengthen your position  when making a claim. Focus on daily reports, T&M ticket process, RFI logs, change and directive logs, and schedule impacts. The better you understand this new landscape for private projects, the more confidence you’ll have when it’s time to assert your rights!

If you told me a few years ago that I’d be working in marketing and business development and representing a professional training company at industry events, I probably would’ve laughed. I was just some 21-year-old with a small dog training and pet care business, trying to pay rent and navigate a tough home life. I had always believed I’d become a dog trainer, herpetologist, or vet- or at least end up with a career working with the animals I love so much. But life had other plans. My career started by chance, doing data entry and research for Scholefield Construction Law. It wasn’t something I planned. I had no idea that one of my dog training clients would become my future boss- someone who would completely change the trajectory of not only my career, but my mentality and many other aspects of my life. But it turned out to be the first step on a path I didn’t even know I wanted. Learning as I Go - The “I’ll Figure It Out” Phase Over time, more opportunities came my way. I was surrounded by an incredibly supportive team and work environment, which made me want to do my part and help however I could. Whenever new tasks came up, I said yes- even if I didn’t actually know what I was doing yet. Eventually, my responsibilities shifted from data entry to including marketing tasks for a new company, OnSite Pro Development, founded by Pam Scholefield, who also leads Scholefield Construction Law. While OPD is a separate business, it was born from Pam’s vision to expand her passion for educating and empowering professionals in the construction industry. I saw that contagious passion of hers and wanted to contribute. After a year of working under Scholefield Construction Law, my employment shifted to working directly with OnSite Pro Development. I didn’t have a formal marketing background- or any marketing background, but I dove in anyway. I spent my free time studying through what we call “YouTube University,”  learning everything I could to understand my new role. When Pam offered to enroll me in a Digital Marketing Certification course, I jumped at the opportunity. That course opened my eyes to new mindsets and showed me how much there was to learn and how exciting it could be to be part of building something new. What’s Behind the Door? - Entering the Professional World for the First Time As my role grew, so did my confidence (and my nerves). My work evolved from remote marketing tasks to also including business development, which meant attending trade group events and networking in person for the first time. I’ll be honest: it was intimidating. I was 22 years old, walking into rooms full of people who had been in the industry for decades. I remember my first trade group meeting vividly- my heart was racing the whole time, and I was so unbelievably nervous when the time came to introduce myself and the company I represent. So much was running through my mind: “How do I interact in this kind of environment?” “I’m representing OPD, I need to make a good impression.” “I’m not on the same level as these business professionals.” “What if my inexperience is grossly obvious?” But I went anyway. And that decision made all the difference. That first meeting and the meetings that followed taught me that it’s okay to be new. Not only do people understand, but they can also tell when you’re trying, and most of them want to help. These experienced men and women have seen dozens of inexperienced people walk through those doors, and they were new once too. When you show up with genuine effort, people notice. You don’t have to walk in with decades of experience, you just need to show up and do your best- be present, ask questions, get to know people. What I’ve Learned One Year In - Confidence Isn’t a Finish Line Now, a year later, I’d be lying if I said I feel like I know exactly what I’m doing. There’s this idea that “when I grow up, I’ll know everything.”  But I’m learning that you’re always just going to be you - no matter your age or experience. Every new person you meet and every networking event you attend will be a new experience. But if you go in with the passion and determination to do your best- that’s all you can do. We’re only human; we don’t grow into robots, we will never know everything. There will always be “what ifs.” But nothing will happen if you let those “what ifs” prevent you from trying. The truth is, growth doesn’t come from knowing everything- it comes from showing up, trying, learning, and doing it anyway.

Subcontractors often step into projects where key risks are lurking in the dark, hidden within pages of legal language that seem routine or harmless. These provisions can quietly shift major responsibilities, costs, and liabilities downstream — until it’s too late to react. To avoid being caught off guard, subcontractors need to shine a light on hidden risks. By understanding and managing certain high-risk clauses, you can protect your business, maintain control over your work, and navigate contracts with confidence instead of fear . 1. Don’t Get Bitten by Prime Contract Terms Sample Provision: “Subcontractor agrees to be bound to Contractor by all terms and conditions of the Prime Contract between Contractor and Owner, and to assume toward Contractor all obligations that Contractor assumes toward the Owner, insofar as applicable to Subcontractor’s work.” Why It’s Risky: This is one of the most deceptive clauses found in most subcontracts. At first glance, you recognize it as “standard” language — but it effectively makes you subject to the entire prime contract, even if you’ve never seen it . The prime contract may contain obligations that drastically affect your payment rights, notice deadlines, indemnity responsibilities, or dispute procedures. For example, if the prime contract requires claims to be filed within five days, and you’re unaware of that, you could lose your right to additional payment or time extensions. Courts often enforce these “flow-down” obligations, leaving subcontractors exposed to unseen terms. How to Shine a Light: Always request a full copy  of the prime contract before signing. Limit incorporation  to specific provisions relevant to your work (such as insurance, warranties, or safety). Add a conflict clause  stating that if the subcontract and prime contract differ, the subcontract governs. Understand all prime contract terms  so you do not underinsure, miss notice deadlines, or fail to follow payment application processes or close-out procedures. When you illuminate the fine print, you can see where the true obligations lie — and prevent being bit by unseen risks. 2. Schedule Changes That Shift on a Whim Sample Provision: “Subcontractor shall promptly comply with any changes in the construction schedule issued by Contractor, without additional compensation, and shall take all steps necessary to maintain the progress of the project as directed by Contractor.” Why It’s Risky: This clause gives the contractor full control over the project’s tempo — and your costs. A sudden acceleration or delay can throw your labor, deliveries, and coordination into chaos. Worse, if the subcontract says you must comply “without additional compensation,” you may have no right to recover the costs of overtime, inefficiency, or disruption. Essentially, the contractor can change the rules mid-game while you bear the cost of catching up. These schedule changes often come quietly, buried in updated project calendars or coordination meetings. How to Shine a Light: Revise the language  to state that you’ll “use reasonable efforts” to meet schedule changes, not “shall comply.” Protect your right to compensation  for added costs or acceleration, at least when the change is the contractor’s or other subs’ fault, and also to the extent allowed in the prime contract for owner-caused delays. Establish a clear notice procedure for your team for reporting delays or disruptions per the times required in your subcontract and the prime contract. Keep daily logs and correspondence  to prove the impact of any schedule change. By making the schedule obligations visible, plus documenting and providing proper timely notice, you avoid being cornered by sudden changes that can drain your resources. 3. Responsibility for Others’ Work Sample Provision: “Subcontractor shall coordinate its work with other subcontractors and shall be responsible for any damage or defect in others’ work arising out of or related to Subcontractor’s operations or adjacency to such work.” Why It’s Risky: This clause sounds like a call for cooperation, but it often lurks as a liability trap . It can make you responsible for problems caused by another trade — even if your work was flawless. If your drywall touches someone else’s plumbing, or your roofing adjoins another contractor’s flashing, you could be blamed for any resulting issue simply because your work was “adjacent” or “related.” These vague terms invite conflict and confusion, leading to finger-pointing and potential claims that your insurance may not cover. How to Shine a Light: Narrow the clause  so you’re only responsible for damages caused by your negligence or lack of coordination. Clarify that overall coordination  of trades is the contractor’s duty, not yours. Seek mutual responsibility language  so each trade is accountable only for its own actions. Document and report  interference, damage, or conflicts caused by others immediately — with photos and written notice. By drawing clear lines of responsibility, you illuminate where your duties end — and prevent blame from creeping out of the shadows. 4. Responsibility for Work Until Project Completion Sample Provision: “Subcontractor shall be responsible for the protection, maintenance, and repair of its work until Substantial Completion and acceptance by the Architect, Owner and Contractor.” Why It’s Risky: This is a classic case of liability that lingers long after your work is done. If your portion finishes early — for example, electrical rough-in or concrete foundations — you could still be held responsible months later if another trade damages your work. By that point, you’ve likely moved on, and the cost of returning to fix or replace damaged work can be significant. It also delays payment and warranty periods, leaving your money and risk tied up until the entire project wraps — even when you’ve fulfilled your obligations. How to Shine a Light: Negotiate responsibility cutoffs:  State that your responsibility ends when your work is inspected and accepted by the contractor. Transfer risk upon turnover:  Make clear that once other trades work over or around your completed scope, responsibility shifts to the contractor. Request early retainage release  and warranty start dates tied to your completion, not the overall project. Document site conditions  at demobilization with photos and written confirmation of acceptance. By clarifying when your obligation ends and documenting site conditions, you mitigate your exposure from stretching far into the future where you have no control. Conclusion Standard subcontract terms often favor general contractors by extending liability, compressing schedules, and shifting risks downstream. The four provisions discussed — incorporation of the prime contract, unilateral schedule changes, responsibility for adjacent work, and extended responsibility until project completion — are common examples of hidden traps that can erode a subcontractor’s profitability. The best defense is vigilance: read every clause carefully, request copies of referenced documents, negotiate fair limits, and keep thorough written records.  By addressing them early, subcontractors can enter projects confidently and on stronger footing to avoid costly surprises down the road. In an industry where surprises often hide in the shadows, vigilance and clarity are the best light you can bring to every project.

How We Train Our time-tested, dynamic workshop environment keeps your team more engaged, which provides an enjoyable experience. Our minds are way more open to learning when we are enjoying the process! Current industry topics are integrated with established law to provide a deeper understanding of contract terms and pro-active contract management. We provide training three ways: (1) Workshops Online - These are periodic live webinars designed to tackle the unique issues subcontractors face. (2) Workshops On Site - These provide convenience and privacy to your team in a venue that allows optimal understanding for all participants. This also encourages open dialog to target the specific information your team needs most. Select from a wide variety of topics so that your workshop can be tailored to meet your team's specific needs. (3) Subcontractor Summits - These are full-day workshops open to any attendees who register. Workshops Online WORKSHOPS online are designed to resolve the unique issues faced by contractors and focus on topics such as understanding and editing subcontracts, tackling claims procedures, and performing work. Unique to our Workshops, we also provide actionable strategies for you to implement what you've learned, including how to become an effective communicator and negotiator. Each Workshop begins with an energetic classroom session with live Q and A, and many include specific hands-on challenges such as redlining subcontract terms or our entertaining “project gone wrong” hypothetical case studies where you put your newfound skills to the test. Who Should Attend? Company Owners and Management Project Managers and Project Engineers Risk Managers Contract Administrators Superintendents Why Train? Increase Profits: Projects are bid with tight margins to ensure success of an award. But, those thin margins are soon eaten up by avoidable mistakes that often result from simply being ignorant as to your contractual obligations and how to work the system to your advantage. Focused training by a professional increases your team's ability to properly and confidently manage the contract and assert your rights! Talent Retention and Productivity: According to Indeed.com: "Implementing training programs in the workplace will help employees feel like the company is invested in them. By continuing to teach your employees new skills and abilities, they will not just become better workers, they will feel like more productive members of the organization. This will improve their morale as well as their workplace capabilities." Our Most Popular On Site Workshops Understanding and Negotiating Contract Terms Learn More The Devil is in the Details - Managing Project Documentation Learn More Changes and Claims - Do it Right or Lose Your Rights Learn More Articles Start Now, Contract Later: Using LOIs and MOUs Without Getting Burned Pam Scholefield a few seconds ago 4 min read Will Your Work Ethic Help You or Haunt You? Pam Scholefield Sep 19 2 min read Secrets to Slaying the Dispute Dragon Pam Scholefield Aug 19 3 min read Playing the Game on Two Fields – Bond Claims for State vs. Federal Projects Pam Scholefield Jul 29 3 min read Is the GC Hiding the Ball on Owner Payments? Pam Scholefield Jul 8 4 min read Why Wait? Resolve Extra Work Payments Now! Pam Scholefield Jun 23 4 min read

Thank you for your interest! You will be one of the first to get personal notices when we publish new articles and we'll let you know about our upcoming Workshops and Summits when scheduled. SIGN UP AND STAY UPDATED! Subscribe Now Thanks for submitting to stay in the know! Follow Us on LinkedIn: Back to Home

The 2024 San Diego Subcontractor Summit was a rousing success! Pam Scholefield - "Negotiation Workshop" Brittany Russell -"Mindful Negotiation" Oliver Craig -"Evaluating Bonded Work" Pam Scholefield’s high energy style kept everyone engaged and focused on the important stuff for negotiating subcontract terms, contract management, and claims drafting. Brittany Russell with Mindful Synergy Solutions provided an insightful session on mindfulness during negotiations, which was very well received. Oliver Craig with Cavignac offered useful information on bonds and fielded questions as they relate to subcontractors. We are excited that the Subcontractor Summit was met with such positive feedback. Please Send Me More Information on upcoming Summits First Name Last Name Email Message Send Now Thanks for submitting!