covered contracts; governmental unit; payroll

HB2462 - covered contracts; governmental unit; payroll

Labor

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Mariana Sandoval, Cesar Aguilar, Lorena Austin, Janeen Connolly, Brian Garcia, Sarah Liguori, Elda Luna-Nájera, Aaron Márquez, Stephanie Stahl Hamilton, Betty J Villegas, Lauren Kuby, Analise Ortiz
Last action: 2026-01-21
Official status: House second read
Effective date: Not listed

Plain English Breakdown

The official bill status indicates it passed both chambers, but no effective date is listed yet.

HB2462: Payroll Records and Worker Retention for State Contracts

This law requires state agencies to collect certified payroll records from contractors paid by the hour using federal funds and mandates that new contractors offer jobs to qualified workers when taking over similar services.

What This Bill Does

Requires contractors and subcontractors on covered contracts to submit certified payroll records showing hours worked, job classifications, and wages paid.
Mandates a signed statement with each payroll record confirming the information is true and correct.
Orders new 'successor' contractors to offer employment to qualified workers from the previous contractor when taking over substantially similar services.
Limits firing or cutting hours of retained employees during the transition period unless there is cause, documented performance issues, or a lack of work.
Exempts contracts for products, fixed-price deliverables without labor reporting, and small-dollar contracts set by rule.

Who It Names or Affects

State governmental units entering into covered contracts
Contractors paid based on labor hours who use federal funds requiring payroll certification
Subcontractors working under these state agreements
Employees performing work under the initial and successor contracts

Terms To Know

Covered contract: A state agreement where payment is based on labor hours and federal money requiring payroll certification is used.
Successor contractor: A new company hired to do substantially similar work after a previous covered contract ends or expires.
Certified payroll records: Official documents listing hours worked, job classifications, and wages paid that include a signed statement of accuracy.

Limits and Unknowns

The law does not require paying prevailing wage or any minimum wage higher than what other laws already demand.
A specific dollar amount for the contract threshold exemption has not been set in this text and will be decided by rule later.

Bill History

2026-01-21 House
House second read
2026-01-20 House
House Rules: None
2026-01-20 House
House Government: None
2026-01-20 House
House Commerce: None
2026-01-20 House
House first read

Official Summary Text

HB2462 - covered contracts; governmental unit; payroll

Current Bill Text

Read the full stored bill text

HB2462 - 572R - I Ver

REFERENCE TITLE:
covered contracts; governmental unit;
payroll

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2462

Introduced by

Representatives
Sandoval: Aguilar, Austin, Connolly, Garcia, Liguori, Luna-N�jera, M�rquez,
Stahl Hamilton, Villegas;� Senators Kuby, Ortiz

AN
ACT

Amending title 41, chapter 23, article 3,
Arizona Revised Statutes, by adding section 41-2560; relating to PROCUREMENT.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 41, chapter 23, article 3,
Arizona Revised Statutes, is amended by adding section 41-2560, to read:

START_STATUTE
41-2560.

State governmental unit; covered contract; payroll records;
successor contractor; applicability; definitions

A. In a contract entered into by a
state governmental unit that meets the criteria of a covered contract, the
state governmental unit shall require the contractor and any subcontractors to
submit certified payroll records for employees performing work under the
contract, in the manner and at the frequency prescribed in the contract.

B. Certified payroll records
submitted pursuant to subsection A of this section shall do all of the
following:

1. Accurately reflect the hours
worked, job classifications and wages paid to each employee performing work
under the contract.

2. Include a signed statement of
compliance attesting that the payroll records are true and correct.

C. For a covered contract awarded to
a successor contractor to perform substantially similar services as the initial
contractor, the state governmental unit shall require contract provisions that
ensure worker retention during the transition period.

D. The successor contractor shall
offer employment to qualified employees who performed work under the initial
contractor and whose positions are necessary for performance of the covered
contract.

E. During the transition period
described pursuant to subsection C of this SECTION, retained employees may not
be terminated or have their hours reduced except for cause, documented
performance-related reasons or documented lack of work.

F. The successor contractor shall
maintain records sufficient to demonstrate compliance with this section.

G. This section does not require the
payment of a prevailing wage or any minimum wage other than wages otherwise
required by law.

H. This section does not apply to any
of the following:

1. Contracts for commodities or
commercially available off-the-shelf products.

2. Contracts priced solely on a fixed
deliverable basis without labor hour reporting.

3. Contracts below a dollar threshold
established by rule by the director.

I. A state governmental unit may rely
on payroll records or worker retention documents that are submitted to comply
with any applicable federal laws and to satisfy the requirements of this
section.

J. For the purposes of this section:

1. "Covered contract" means
a contract entered into by a state governmental unit in which all of the
following apply:

(
a
) The
contractor or subcontractor is compensated in whole or in part based on labor
hours worked.

(
b
) The
contract is funded or assisted, in whole or in part, by federal monies that
require payroll certification.

2. "Successor contractor"
means a contractor that is awarded a covered CONTRACT to perform substantially
similar services that were previously performed by another contractor under an
expired or terminated covered contract.
END_STATUTE