Under Business and Professions Code §7108.5 (all public and private works projects) and Public Contract Code §7107 (public works projects not for a state agency) and Public Contract Code §10262 (state projects), a direct contractor must pay a subcontractor within 7 days of receipt of payment. Failure to do so subjects the offending contractor to the 2% per month prompt penalty plus attorneys’ fees in addition to whatever interest rate applies (usually 10%) or 34% interest per year! The sections were all amended in 2011 to reduce the time from 10 to 7 days.
-Robert