New York Laws
Article 5-A - Public Contracts
106-B - Payment on Public Work Projects.

(b) Not later than forty-five business days after the date when the
project has reached substantial completion, as such term is defined in
the contract or as it is contemplated by the terms of the contract, the

public owner shall submit to the contractor a written list describing
all remaining items to be completed by the contractor. Not later than
five business days after receiving a written list describing all
remaining items to be completed by the contractor, the contractor shall
submit to each subcontractor from whom the contractor is withholding
retainage a written list of all remaining items required to be completed
by the subcontractor. Such list may include items in addition to those
items on the public owner's list.
(c) Each public owner other than the city of New York which is
required to make a payment from public funds pursuant to a contract and
which does not make such contract payment by the required payment date
shall make an interest payment to the contractor on the amount of the
contract payment which is due unless failure to make such contract
payment is the result of a lien, attachment, or other legal process
against the money due said contractor, or unless the amount of the
interest payment as computed in accordance with the provisions set forth
hereinafter is less than ten dollars. Interest payments on amounts due
to a contractor pursuant to this paragraph shall be paid to the
contractor for the period beginning on the day after the required
payment date and ending on the payment date for those payments required
according to this section and shall be paid at the rate of interest in
effect on the date when the interest payment is made. Notwithstanding
any other provision of law to the contrary, interest shall be computed
at the rate equal to the overpayment rate set by the commissioner of
taxation and finance pursuant to subsection (e) of section one thousand
ninety-six of the tax law. A pro rata share of such interest shall be
paid by the contractor or subcontractor, as the case may be, to
subcontractors and materialmen in a proportion equal to the percentage
of their pro rata share of the contract payment. Such pro rata share of
interest shall be due to such subcontractors and materialmen only for
those payments which are not paid to such subcontractors and materialmen
prior to the date upon which interest begins to accrue between the
public owner and the contractor. Such pro rata shares of interest shall
be computed daily until such payments are made to the subcontractors and
materialmen.
(d) For projects of a public owner other than the city of New York, if
state funds directly related to and which have been budgeted for the
construction of the project for which the payment is due have not been
received prior to the expiration of the thirty or forty-five days
specified in paragraph (a) of this subdivision, the interest provided
for in paragraph (c) of this subdivision shall not begin to accrue and
payment shall not be due, until ten days after receipt of the state
funds. Nothing in this paragraph shall prevent the public owner from
approving the requisition, subject to receipt of the state funds. State
funds shall mean monies provided to the public owner by the state, its
officers, boards, departments, commissions, or a public authority and
public benefit corporation, a majority of the members of which have been
appointed by the governor or who serve as members by virtue of holding a
civil office of the state, or a combination thereof.
2. Payment by contractors to subcontractors. Within seven calendar
days of the receipt of any payment from the public owner, the contractor
shall pay each of his subcontractors and materialmen the proceeds from
the payment representing the value of the work performed and/or
materials furnished by the subcontractor and/or materialman and
reflecting the percentage of the subcontractor's work completed or the
materialman's material supplied in the requisition approved by the owner
and based upon the actual value of the subcontract or purchase order
less an amount necessary to satisfy any claims, liens or judgments

against the subcontractor or materialman which have not been suitably
discharged and less any retained amount as hereafter described. Failure
by the contractor to make any payment, including any remaining amounts
of the contract balance as hereinafter described, to any subcontractor
or materialman within seven calendar days of the receipt of any payment
from the public owner shall result in the commencement and accrual of
interest on amounts due to such subcontractor or materialman for the
period beginning on the day immediately following the expiration of such
seven calendar day period and ending on the date on which payment is
made by the contractor to such subcontractor or materialman. Such
interest shall be the sole responsibility of the contractor, and shall
be paid at the rate of interest in effect on the date payment is made by
the contractor. Notwithstanding any other provision of law to the
contrary, interest shall be computed at the rate established in
paragraph (b) of subdivision one of section seven hundred fifty-six-b of
the general business law. The contractor shall retain not more than five
per centum of each payment to the subcontractor and/or materialman
except that the contractor may retain in excess of five per centum but
not more than ten per centum of each payment to the subcontractor
provided that prior to entering into a subcontract with the contractor,
the subcontractor is unable or unwilling to provide a performance bond
and a labor and material bond both in the full amount of the subcontract
at the request of the contractor. However, the contractor shall retain
nothing from those payments representing proceeds owed the subcontractor
and/or materialman from the public owner's payments to the contractor
for the remaining amounts of the contract balance as provided in
subdivision one of this section. If the contractor has failed to submit
a requisition for payment of the remaining amounts of the contract
balance within ninety days of substantial completion as provided in
subdivision one of this section, then any clause in the subcontract
between the contractor and the subcontractor or materialman which states
that payment by the contractor to such subcontractor or materialman is
contingent upon payment by the owner to the contractor shall be deemed
invalid. Within seven calendar days of the receipt of payment from the
contractor, the subcontractor and/or materialman shall pay each of his
subcontractors and materialmen in the same manner as the contractor has
paid the subcontractor, including interest as herein provided above.
Nothing provided herein shall create any obligation on the part of the
public owner to pay or to see to the payment of any moneys to any
subcontractor or materialman from any contractor nor shall anything
provided herein serve to create any relationship in contract or
otherwise, implied or expressed, between the subcontractor or
materialman and the public owner.
3. In the event that the terms of payment on a public works project,
as provided in this section, are pre-empted or superseded as a result of
the provisions of any federal statute, regulation or rule applicable to
the project, the terms of this section shall not apply.