We are proud to announce that Governor Gavin Newsom has signed SB 440 (Ochoa Bogh), our industry-sponsored change order reform bill. SB 440 extends the successful public works change order process (AB 626, 2016) to private construction projects, creating a fair, transparent, and timely framework for resolving contractor-initiated change order claims.

Change orders are common in construction, typically used to modify a project’s scope, design, schedule, or cost. Without clear procedures, unresolved or unpaid change orders can cause significant delays, costly disputes, and financial strain on contractors. SB 440 addresses these challenges head-on.

Key reforms include:

• Allowing contractors to initiate the payment process for work performed outside the original contract scope.
• Requiring private project owners to review and respond to change order claims within a defined time period.
• Maintaining the owner’s right to dispute or reject claims, while requiring prompt payment of all undisputed amounts in accordance with California’s prompt payment laws.
• Mandating non-binding mediation before litigation to encourage early and cost-effective dispute resolution.

The new law takes effect January 1, 2026, and will apply to all nonresidential private works of improvement contracts executed on or after that date.

We extend our sincere appreciation to the member contractors, association leaders, and staff who supported this effort through our grassroots outreach program. Your engagement was instrumental in achieving this important reform for California’s construction industry.