AN ACT CONCERNING THE USE OF FISCAL INTERMEDIARIES BY STATE AGENCIES FOR PAYROLL SERVICES.

Plain English Breakdown

The official text defines fiscal intermediaries broadly but limits the new penalty requirement to contracts that include payroll services. It does not specify what exact number of days constitutes timely payment, leaving that detail for individual contracts.

Penalties for Late Payroll Processing by State Contractors

This law requires state agencies to include financial penalties in contracts with outside companies that handle payroll if those companies fail to pay workers on time.

What This Bill Does

• Requires new or updated contracts between state agencies and fiscal intermediaries for payroll services to promise timely wage payments.
• Mandates a penalty equal to fifty percent of the unpaid wages if an intermediary fails to process payroll within the timeframe set in the contract.
• Directs state agencies to collect these penalties from the contracting organizations.
• Allows the Attorney General to file a lawsuit in Superior Court to recover unpaid penalties upon request by a state agency.

Who It Names or Affects

• State departments, boards, councils, commissions, institutions, and other executive branch agencies.
• Fiscal intermediaries that contract with state agencies to provide payroll services.
• The Attorney General's office when collecting unpaid penalties through the courts.

Terms To Know

State agency

A department, board, council, commission, institution, or other executive branch group within the state government.

Fiscal intermediary

An organization that contracts with a state agency to provide payroll services for the state agency.

Limits and Unknowns

• The law only applies to contracts entered into, amended, or renewed on or after October 1, 2026.
• The specific timeframe considered 'timely' is not defined in this act; it depends on what each individual contract states.

Official Summary Text

To require state agency contracts with fiscal intermediaries for payroll services to provide for financial penalties in the event that the fiscal intermediary fails to timely process payroll.

Current Bill Text

LCO No. 3044 1 of 2

General Assembly Raised Bill No. 487
February Session, 2026 LCO No. 3044

Referred to Committee on GOVERNMENT ADMINISTRATION
AND ELECTIONS

Introduced by:
(GAE)

AN ACT CONCERNING THE USE OF FISCAL INTERMEDIARIES BY
STATE AGENCIES FOR PAYROLL SERVICES.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. (NEW) (Effective October 1, 2026) (a) As used in this section, 1
"state agency" means a department, board, council, commission, 2
institution or other executive branch agency and "fiscal intermediary" 3
means an organization that contracts with a state agency to provide 4
payroll, taxes or administrative services for the state agency. 5
(b) On and after October 1, 2026, any state agency that enters into, 6
amends or renew s a contract with a fiscal intermediary that includes 7
payroll services shall ensure that such contract requires wages to be paid 8
in a timely manner and includes a provision imposing financial 9
penalties to be paid by the fiscal intermediary to the state agency in the 10
event the fiscal intermediary fails to process payroll within the 11
timeframe set forth in such contract . Any such contract shall provide 12
that such penalty shall be in an amount equivalent to fifty per cent of 13
the value of the unpaid wages. 14

Raised Bill No. 487

LCO No. 3044 2 of 2

(c) The applicable state agency shall impose any penalty required 15
under this section and if the fiscal intermediary fails to pay such penalty, 16
the Attorney General, upon complaint of the state agency, may bring an 17
action in the Superior Court to recover such penalty. 18
This act shall take effect as follows and shall amend the following
sections:

Section 1 October 1, 2026 New section

Statement of Purpose:
To require state agency contracts with fiscal intermediaries for payroll
services to provide for financial penalties in the event that the fiscal
intermediary fails to timely process payroll.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]