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New Change-Order Bill Becomes Law

New Change-Order Bill Becomes Law (Brett M. Hill) – A new statute (RCW 39.04.360) became effective on June 6, 2024, and it applies to extra work performed by contractors and subcontractors on public and private projects in Washington State. The intent of the original bill was to allow contractors and subcontractors to get paid sooner for undisputed additional work. The statute does not apply to private residential projects of 12 units or less. The statute allows for recovery of interest for contractors/subcontractors at 1% per month (12% per year) on the value of the additional work if the statute is violated.
Here are the requirements of the new statute:
Public and private owners must issue a change order for the undisputed amount of additional work performed by a contractor, subcontractor, or supplier no later than 30 days after the work is satisfactorily completed and the change is requested by the contractor.
General contractors, and subcontractors with lower-tier subs, must issue a change order to their subcontractors impacted by the change within 10 days after receipt of the approved change order from the owner/upper-tier contractor.
General contractors, and subcontractors with lower-tier subs, need to request that the owner/upper-tier contractor issue a change order for work performed by a subcontractor no later than 30 days after satisfactory completion of the additional work authorized by the owner and a request from the subcontractor that the change order be issued. Contractors who make this timely request to the owner/upper-tier are not liable for interest under the statute if the owner/upper-tier does not timely issue the change order.
In addition to the remedy of interest at 1% for a statutory violation, an aggrieved party can also recover attorneys fees and costs in any civil action brought to enforce the statute. This bill modified the existing RCW 39.04.360, which only applied to public projects and only gave rights to interest to general contractors.
Comment: The bill was supported by contractors and subcontractors who told stories of having to wait years to get change orders on projects and the financial impacts that had on their businesses. There are terms in the statute that were not defined, like “undisputed,” that will need to be interpreted by judges now that the bill is effective. The statute does not state that it applies retroactively to existing contracts and, thus, it is likely that it will be applied to only new contracts signed after June 6, 2024. Contractors are encouraged to seek legal counsel to assist in complying with the statute.

Brett M. Hill / Ahlers Cressman & Sleight

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