If an owner wrongfully withholds an undisputed progress payment from a general contractor, California prompt payment law allows a penalty of:

Explanation

Civil Code §8800(a) makes the owner pay a progress payment as to which there is no good faith dispute within 30 days after notice demanding payment; §8800(b) lets the owner withhold up to 150 percent of a disputed amount; and §8800(c) sets the sanction at 2 percent per month on the amount wrongfully withheld, in place of any interest otherwise due, with costs and a reasonable attorney's fee to the prevailing party. 1.5 percent a month is not the statutory rate, and the 10 percent annual legal rate is what applies to ordinary contract judgments, which is precisely what §8800(c) displaces. The idea that only the principal is recoverable is the rule §8800(c) was enacted to change.