A general contractor receives payment from an owner for work performed by subcontractors. Under Business and Professions Code Section 7108.5, how long does the contractor have to pay the subcontractors after receiving payment?
Correct Answer
C) 7 days
Business and Professions Code Section 7108.5 requires contractors to pay subcontractors within 7 days after receiving payment from the owner for work performed by those subcontractors. This prompt payment requirement helps maintain cash flow throughout the construction payment chain and prevents payment delays.
Why This Is the Correct Answer
Business and Professions Code Section 7108.5 is California's prompt payment law for contractors. Upon receiving payment from an owner for work performed by a subcontractor, the general contractor must disburse the subcontractor's share within 7 days. Failure to comply can result in license discipline by the CSLB and liability for the withheld amount plus interest.
Why the Other Options Are Wrong
Option A: 10 days
10 days is a plausible figure but exceeds the statutory requirement. California's law is designed to keep money flowing quickly through the payment chain to prevent cash-flow hardship for lower-tier contractors and their workers.
Option B: 15 days
15 days significantly exceeds the statutory 7-day requirement. This timeframe appears in some other payment contexts (e.g., retention release periods) and is designed to mislead candidates who confuse different prompt payment provisions.
Option D: 5 days
5 days is shorter than the statutory requirement. While it might seem more protective of subcontractors, the law specifies 7 days — knowing the exact figure matters because CSLB enforcement and contractual compliance depend on the precise statutory deadline.
Memory Technique
Think '7108.5 = 7 days.' The last digit of the code section (5 in 7108.5) doesn't match, but the first meaningful number (7) ties directly to the 7-day payment requirement. 'Section 7108.5, seven days, sub gets paid.'
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