BDG attorney Matthew Hicks recently published the article “Does the ‘Pay If/When Paid’ Law Circumvent a Contractor’s Right to Enforce a Contractual Two-Tier Claim Process” in ABA’s Under Construction fall 2025 issue. With disputes over payment between general contractors and subcontractors becoming increasingly common, the article addresses the use of “pay if paid” and “pay when paid” clauses and whether they are truly enforceable under California law, or whether they contradict public policy and statutory protection for subcontractors.
As the article describes, while general contractors may attempt to use two-tier claim processes and contingent payment clauses to manage risk, California law places clear limits on their ability to do so at the expense of subcontractors’ statutory and contractual rights. Therefore, subcontractors may be able to challenge them if they result in unreasonable delays or loss of payment for work performed. Citing recent cases, Matthew demonstrates how California has increasingly made it clear that general contractors cannot use these clauses to circumvent subcontractors’ rights.
Read the full article with a subscription HERE