What the Prompt Payment Act requires

The Prompt Payment Act is a state law that requires contractors and project owners to pay construction workers and material suppliers within a set number of days — typically 7 to 14 days after they submit an invoice. The law exists because construction projects often involve long chains of payment: the owner pays the general contractor, who pays subcontractors, who pay workers and suppliers. Without this law, money can get stuck at any point in that chain, leaving workers unpaid for weeks or months.

The specifics vary by state. Some states have a Prompt Payment Act; others handle it through construction lien laws or payment bond requirements. If you work in construction or supply materials to projects, your state's version determines how quickly you must be paid and what you can do if payment is late. The law typically applies to public construction projects (government-funded work) and sometimes to private projects as well, depending on the state.

The core protection is simple: once you submit an invoice for work completed or materials delivered, the person who owes you money has a deadline to pay. If they miss it, you may have the right to stop work, file a lien, or pursue other remedies without waiting months to see if you'll ever get paid.

Key Takeaways

  • Prompt Payment Acts require contractors and owners to pay invoices within 7 to 14 days, depending on your state and the type of project.
  • The law typically covers public construction projects and sometimes private ones, but the rules differ significantly by state.
  • If payment is late, you may have the right to stop work, file a lien, or recover interest and attorney fees without losing your legal claim.
  • Payment must flow down the chain: a general contractor cannot hold a subcontractor's money while waiting to be paid by the owner.
  • Your state's construction lien law and payment bond requirements work together with the Prompt Payment Act to protect you.

How payment timing works under the law

When you submit an invoice for work or materials, the clock starts. In most states with a Prompt Payment Act, the contractor or owner must pay you within 7 to 14 days. Some states allow a few extra days if the invoice is incomplete or disputed, but the deadline is still measured in days, not weeks.

The payment deadline usually begins when the invoice is received, not when the work is done. This matters: if you finish a job on a Friday and email the invoice that day, the 7-day clock starts Friday, not Monday. Some states require the invoice to be in a specific format or include certain information, so check your state's rules before submitting.

If the person owing you money does not pay by the deadline, the law typically allows you to charge interest on the overdue amount. The interest rate varies by state — some set it at a fixed percentage (like 1.5% per month), others tie it to a federal rate. You may also recover attorney fees and collection costs if you have to pursue the debt in court, which makes it more expensive for the contractor or owner to ignore you.

What happens if payment is late

Late payment under a Prompt Payment Act does not automatically void your contract or end the project. Instead, it gives you specific remedies. The most common is the right to stop work without breaching your own contract. If you are a subcontractor and the general contractor has not paid you by the deadline, you can typically walk off the job and still hold the contractor liable for the work you completed.

You also retain your right to file a construction lien, which is a legal claim against the property itself. A lien does not get you paid immediately, but it prevents the owner from selling or refinancing the property without settling your debt. Many owners and contractors will resolve payment disputes quickly rather than deal with a lien on the project.

Some states allow you to file a complaint with a state agency or construction board if payment is persistently late. Others let you recover penalties — additional money beyond the invoice amount — if the contractor or owner violates the Prompt Payment Act. These penalties vary widely, so check your state's specific law.

How the law protects payment down the chain

One of the Prompt Payment Act's key features is that it requires payment to flow down the construction chain. A general contractor cannot hold a subcontractor's payment while waiting to be paid by the owner. The general contractor must pay the subcontractor within the deadline even if the owner has not yet paid the general contractor.

This rule prevents the common scenario where a project owner delays payment and the delay ripples down, leaving workers and suppliers unpaid for months. The general contractor is responsible for paying subs on time, and subs are responsible for paying workers and material suppliers on time. Each party in the chain has the same deadline to pass payment down.

If a contractor in the middle of the chain fails to pay, the person they owe money to can still file a lien and pursue the contractor directly. The lien can attach to any project the contractor works on, not just the one where the payment was late, which gives contractors a strong incentive to stay current.

Differences between public and private projects

Most Prompt Payment Acts apply to public construction projects — work funded by government agencies, schools, municipalities, or other public entities. Public projects are often subject to stricter payment rules because they use taxpayer money and are subject to public bidding and bonding requirements.

Private projects (residential and commercial work funded by private owners) may or may not be covered, depending on your state. Some states extend Prompt Payment Act protections to all construction work. Others limit it to public projects and rely on construction lien laws to protect workers and suppliers on private jobs. A few states have separate payment rules for private residential construction.

Payment bonds — insurance-like guarantees that a contractor will pay workers and suppliers — are required on most public projects and some large private projects. A payment bond gives you an additional avenue to recover money if the contractor fails to pay. You can file a claim against the bond instead of (or in addition to) filing a lien.

State variations and where to find your rules

Because the Prompt Payment Act is a state law, the details vary significantly. The payment deadline might be 7 days in one state and 14 days in another. The interest rate on late payments, the penalties for violations, and whether the law covers private work all depend on your state.

To find your state's Prompt Payment Act, search your state legislature's website for "Prompt Payment Act" or "prompt payment law." You can also contact your state's construction board, contractor licensing agency, or attorney general's office. Many states post the law and guidance documents online for free.

If you work across multiple states, keep a simple reference sheet with each state's deadline, interest rate, and coverage rules. The difference between a 7-day and 14-day deadline can affect your cash flow significantly, especially on large projects with many invoices.

What to do if you are not paid on time

Document everything: keep copies of your invoice, proof of delivery or completion, and any communication about payment status. If the deadline passes without payment, send a written notice to the contractor or owner stating that payment is overdue and citing your state's Prompt Payment Act. Many disputes resolve at this point because the other party realizes you know your rights.

If payment still does not arrive within a few days of your notice, consult a construction attorney in your state. An attorney can advise you on whether to file a lien, stop work, pursue a payment bond claim, or take other action. The cost of a brief consultation is usually far less than the cost of losing a large invoice to non-payment.

Do not ignore late payment hoping it will resolve on its own. The longer you wait, the harder it becomes to enforce your rights. Some states require you to file a lien within a specific window (often 90 days to one year after the last work or delivery), so acting quickly protects you.

Frequently Asked Questions

Does the Prompt Payment Act cover residential construction?

It depends on your state. Some states apply the Prompt Payment Act to all construction work, including residential. Others limit it to public projects or commercial work. Check your state's specific law or contact your state construction board to confirm whether residential projects are covered in your area.

Can a contractor refuse to pay me if they say the work is defective?

Not indefinitely. Most Prompt Payment Acts allow a contractor to withhold payment only if they can document a specific defect and the amount withheld is proportional to the defect. They cannot withhold the entire invoice because of a minor issue. If they withhold payment, they must notify you in writing and explain why within a set timeframe.

What if I am a worker and my employer has not paid me for work on a construction project?

Workers are usually covered by Prompt Payment Acts and construction lien laws, though the exact rules vary by state. You may have the right to file a lien or claim against a payment bond. Consult a construction attorney or your state's labor department to understand your options, as wage laws and construction payment laws sometimes overlap.

Can I charge interest on late payment before I file a lien?

Yes. Most Prompt Payment Acts allow you to charge interest on overdue invoices automatically, without filing a lien or taking other action. The interest rate is set by state law and typically ranges from 1% to 2% per month. You can include the interest charge in a demand letter before pursuing more formal remedies.

How long do I have to file a lien if payment is late?

The deadline varies by state, typically ranging from 90 days to one year after the last work or material delivery. Do not wait. File a lien as soon as you are confident payment will not arrive, because missing the deadline can eliminate your right to a lien entirely. Your state's construction board or a construction attorney can confirm the exact deadline in your area.