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

This bill requires state agencies that hire fiscal intermediaries to handle payroll to include financial penalty clauses in their contracts. Starting October 1, 2026, any contract for payroll services must specify that the intermediary must pay a penalty equal to 50% of unpaid wages if they fail to process payroll on time. The state agency responsible for the contract will enforce these penalties, and if the intermediary does not pay them, the Attorney General can sue to recover the amount. This change directly affects state departments and other executive branch agencies that currently use outside organizations to manage employee pay.