Bill > HF552

This bill modifies Minnesota's state contract laws to provide additional protections for subcontractors when prime contractors fail to pay or become insolvent. Currently, prime contractors must pay subcontractors within ten days of receiving state payment and pay interest penalties for late payments. The new provisions allow state agencies to use contract retainage (funds held back from a contractor's payment) to compensate subcontractors if a prime contractor goes out of business or declares bankruptcy. If the retainage is insufficient to cover all subcontractors' claims, the funds will be distributed pro-rata based on the amounts owed. Additionally, for state agency contracts without a performance and payment bond or similar financial guarantee, the agency must now pay subcontractors directly upon satisfactory work completion. These changes aim to ensure subcontractors are paid for their work, even if the prime contractor encounters financial difficulties. The new rules will apply to contracts entered into on or after July 1, 2025, giving state agencies and contractors time to prepare for the updated requirements.

Labor and Employment

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF0552&ssn=0&y=2025