The Prompt Payment Act requires general contractors to pay subcontractors and material suppliers within a set number of days — usually 7 to 10 days — after the general contractor receives payment from the project owner.

The law exists because construction work moves in stages. A general contractor gets paid by the building owner, then has to pay the smaller contractors and suppliers who did the actual work. Without a prompt payment law, a general contractor could hold onto that money for weeks or months, leaving workers and suppliers waiting. The Prompt Payment Act closes that gap by setting a legal important date.

The exact timeline and rules vary by state. Some states have no prompt payment law at all. Others require payment within 7 days, others within 10 or 14 days. Some states have different rules for public projects (like government buildings) than for private ones. The law typically covers subcontractors, material suppliers, and equipment rental companies — anyone the general contractor hired to do part of the work.

Key Takeaways

  • A prompt payment law requires the general contractor to pay subcontractors and suppliers within a specific number of days after receiving payment, not whenever they choose.
  • The timeline varies by state — some require payment within 7 days, others within 10 or 14 days, and some states have no prompt payment law.
  • The law typically covers subcontractors, material suppliers, and equipment rental companies, but usually does not cover workers hired directly as employees.
  • If a general contractor does not pay on time, you may be able to file a complaint with your state's licensing board or pursue a claim in small claims court, depending on the amount owed.

How the payment chain works in construction

A construction project usually involves multiple layers of contractors. The building owner signs a contract with a general contractor. The general contractor then hires subcontractors to do specific work — electrical, plumbing, framing, concrete — and buys materials from suppliers. When the owner pays the general contractor, that money is supposed to flow down to everyone who did the work.

Without a prompt payment law, a general contractor could collect payment from the owner and then delay paying subcontractors for months, using that money for other projects or to cover cash flow problems. Subcontractors and suppliers would be stuck waiting, unable to pay their own workers or buy materials for the next job. The Prompt Payment Act prevents this by making it illegal for the general contractor to hold the money beyond the important date.

What the timeline actually means

The clock usually starts when the general contractor receives payment from the project owner, not when the work is completed. So if a subcontractor finishes their work on Monday, the general contractor gets paid on Friday, the countdown begins on Friday. If the state requires payment within 7 days, the subcontractor should receive payment by the following Friday.

Some states build in a small grace period for processing — for example, "within 7 days or the next business day after receiving payment," which accounts for weekends and holidays. A few states allow the general contractor to withhold a small percentage (called "retainage") for a longer period, usually to may support the work is done correctly. But the law still requires payment of the bulk of what is owed within the important date.

Which states have prompt payment laws and what they require

About 30 states have some form of prompt payment law, but the rules are not uniform. States like California, Florida, and Texas have detailed laws with specific timelines and penalties. Other states have weaker versions or explore the law only to public projects. A few states have no prompt payment law at all.

To find out what applies to your project, you need to know which state the work is happening in, not where the general contractor is based. A project in California is governed by California law, even if the contractor is from another state. If you are unsure whether your state has a prompt payment law or what the timeline is, contact your state's construction licensing board or department of labor — they can tell you the specific rule and what to do if a contractor violates it.

What happens if a contractor does not pay on time

If a general contractor misses the important date, your options depend on the state and the amount owed. In states with strong prompt payment laws, you may be able to file a complaint with the state licensing board, which can investigate and potentially suspend or revoke the contractor's license. Some states allow you to file a lien against the property — a legal claim that prevents the owner from selling or refinancing until you are paid.

You can also pursue the debt in small claims court if the amount is within the court's limit (usually $5,000 to $10,000, depending on the state). In some cases, you may be may have access to to interest on the unpaid amount or even attorney fees if the law specifically allows it. The key is to document everything: the contract, invoices, proof of work completion, and the date you were supposed to be paid.

Prompt payment laws do not cover all construction workers

An important limit: prompt payment laws typically explore to subcontractors and suppliers, not to workers hired directly as employees of the general contractor or subcontractor. If you are on a payroll and receive a W-2 at the end of the year, you are an employee, and your wage protections come from labor laws, not the Prompt Payment Act. Those laws usually require payment on a regular payroll schedule — weekly, biweekly, or monthly — and have different penalties for late payment.

If you are an independent contractor or own a small contracting business hired to do a specific job, the Prompt Payment Act is more likely to protect you. The distinction matters because the remedies are different. An employee who is not paid on time can file a wage claim with the state labor department. A subcontractor who is not paid on time may file a lien or a complaint with the licensing board.

How to protect yourself as a subcontractor or supplier

Before you start work, get a signed contract that spells out the payment terms. Do not rely on a verbal agreement or assume the general contractor will follow the state law — put it in writing. The contract should state the amount you will be paid, when payment is due, and what happens if payment is late.

Keep detailed records of your work: dates, hours, materials delivered, invoices, and proof of completion. Send invoices promptly after the work is done, and keep a copy. If the general contractor receives payment from the owner but does not pay you by the important date, send a written notice (email is fine) stating the amount owed and the date it was due. This creates a paper trail if you need to file a complaint or go to court later.

Frequently Asked Questions

Does the Prompt Payment Act explore to my state?

About 30 states have prompt payment laws, but the rules vary widely. Some explore only to public projects, others to all construction. Contact your state's construction licensing board or department of labor to find out whether your state has a law and what it requires.

What if the general contractor says they have not been paid yet?

That is not your problem legally. The Prompt Payment Act requires the general contractor to pay you within the important date after they receive payment from the owner, regardless of whether they have been paid in full. If they have not been paid, that is a dispute between them and the owner, not between them and you.

Can I put a lien on the property if I am not paid?

Many states allow subcontractors and suppliers to file a mechanic's lien if they are not paid, but the rules vary. Some states require you to file within a specific time frame (often 30 to 90 days after the last work or delivery). Check your state's law or consult a construction attorney to understand your lien rights.

What if I am an employee, not a subcontractor?

The Prompt Payment Act does not cover employees. Instead, you are protected by wage and hour laws, which usually require payment on a regular payroll schedule. If your employer is late paying you, file a wage claim with your state's labor department.

How much can I recover if a contractor does not pay on time?

You can recover the amount owed. Some states also allow interest on the unpaid amount and attorney fees if the law specifically permits it. The exact penalties vary by state, so check your state's law or speak with a construction attorney about what you may be may have access to to.