Effective January 1, 2026, California Senate Bill 440—the Private Works Change Order Fair Payment Act—fundamentally changes how payment and time-extension disputes over change order work are handled on private construction projects. For contractors and subcontractors, SB 440 represents a significant shift away from owner-controlled, contract-driven approval regimes and toward a mandatory statutory process that creates enforceable rights, deadlines, and remedies.
SB 440 applies to private works contracts entered into on or after January 1, 2026, and remains in effect through January 1, 2030. It is codified at Civil Code sections 8850 et seq. and cannot be waived by contract.
Why SB 440 Matters to Contractors
Historically, owners have relied on contract provisions requiring advance written approval of change orders as a condition precedent to payment. In practice, those provisions often allowed owners to delay or deny payment for extra work—even where the work was performed and undisputed—by simply withholding approval.
SB 440 changes that dynamic. The statute regulates the claims process itself, not merely the timing of payment for approved work. It imposes firm deadlines on owners, requires early engagement, mandates partial payment of undisputed amounts, and creates a nonwaivable statutory right to stop work if owners fail to comply.
Who Is Covered
SB 440 applies to contractors and subcontractors performing work on private construction projects pursuant to contracts entered into on or after January 1, 2026.
The SB 440 Claims Process
To invoke SB 440’s protections, contractors must follow its procedures carefully.
- Submit a Written Claim. Contractors and subcontractors may submit a written claim for payment or time extensions arising from change order work. The claim must be supported by reasonable documentation.
- Owner Response Deadline (30 Days). Within 30 days of receiving a qualifying claim, the owner must issue a written response identifying which portions of the claim are disputed and which portions are undisputed.
- Meet and Confer (30 Days). If the contractor disputes the owner’s response, it may demand a meet-and-confer conference, which must occur within 30 days.
- Second Response (10 Days). Within 10 days after the conference, the owner must issue a second written statement clarifying what remains disputed and what does not.
- Payment of Undisputed Amounts. Any undisputed amounts must be paid within 60 days. Failure to do so triggers interest at 2% per month.
- Mandatory Mediation. Disputed portions of the claim must proceed to nonbinding mediation before litigation or arbitration—unless the parties expressly agree in writing to waive mediation.
The Nonwaivable Right to Stop Work
SB 440’s most consequential feature is its nonwaivable stop-work right. Private construction contracts frequently prohibit suspension of work for payment disputes. SB 440 overrides those provisions when its conditions are met.
If an owner fails to comply with SB 440’s timelines or refuses to participate in required mediation, a contractor may take the following sequential steps:
- Provide a 30-day notice stating that payment is due.
- Provide a 10-day notice of intent to suspend work.
- Suspend performance on the project.
Contract language attempting to waive or delay this right is void as against public policy.
What Contractors Should Do Now
SB 440 is one of the most significant changes to California private construction law in decades. By imposing a mandatory statutory framework—with firm deadlines, interest penalties, mediation requirements, and a stop-work remedy—the legislation fundamentally alters leverage and risk allocation in change order disputes.
For contractors, SB 440 is more than another compliance obligation. It is a powerful new statutory tool that will shape project administration, claims strategy, and dispute resolution on California private projects for years to come. SB 440 creates meaningful leverage for contractors who use it correctly. Failure to follow its procedures precisely may result in forfeiture of its protections.
Contractors should consider taking the following steps:
- Revise internal change order procedures to align with SB 440’s timelines.
- Document change order work thoroughly and contemporaneously.
- Calendar statutory deadlines immediately upon claim submission.
- Coordinate closely with counsel before invoking stop-work rights.
- Revisit contract templates to ensure consistency with the statute.
Recognized for excellence in the field, the attorneys in Alston & Bird’s Construction Practice Group are well equipped to provide practical advice to clients navigating this significant change in the law.
If you have any questions, or would like additional information, please contact one of the attorneys on our Construction team.
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