You finished the job three weeks ago. The GC accepted the work. Your invoice was submitted on time. And yet here you are, still waiting for payment while your suppliers and crew expect to be paid.
Sound familiar?
Every day I talk to subcontractors who don't realize they have legal rights when it comes to payment timelines. Most states have "prompt payment" laws that set specific deadlines for how long contractors have to pay subcontractors. And when those deadlines are missed, you may be entitled to interest, penalties, and even attorney's fees.
Let me walk you through what you need to know — because understanding these laws could literally put thousands of dollars back in your pocket.
The Federal Prompt Payment Act: Where It All Started
Before we dive into state laws, let's start with the federal standard that set the tone for construction payment timelines across the country.
The Federal Prompt Payment Act of 1982 applies to federal construction projects and requires prime contractors to pay subcontractors within 7 days of receiving payment from the government. If they don't? Interest accrues automatically at rates set by the Treasury Department.
This federal law became the model for state prompt payment legislation. The thinking was simple: if it's good enough for Uncle Sam, it should work for state and local projects too.
State Prompt Payment Laws: The Big Picture
Here's what you need to understand about state prompt payment laws:
Most states require payment within 7 to 30 days after invoice submission or after the prime contractor receives payment from the owner (sometimes called "pay-when-paid" provisions).
About two-thirds of states have specific prompt payment laws for private construction projects. The remaining third rely on general commercial law or have limited construction-specific protections.
Penalties for late payment vary widely — from simple interest to doubled or tripled interest rates, and sometimes including attorney's fees.
Payment Timeline Examples by State
Let me give you some specific examples so you can see how this plays out in practice.
California
Payment due within 7 days of when prime receives payment. Private projects have a 30-day maximum from invoice date. Late payments incur 2% monthly interest.
Texas
Payment due within 7 days of prime receiving payment. 10 days for government projects. Interest at 1.5% per month on late amounts.
Florida
Payment due within 30 days for private work, 7 days for prime to pay sub after receiving payment on public projects. Interest at 1% per month plus attorney's fees.
New York
Payment due per contract terms, but "pay-when-paid" clauses are enforceable. Interest and attorney's fees available for improper withholding.
Illinois
Payment due within 15 days of billing cycle end. Public projects have 30-day limit. Interest at 10% annually on late payments.
Pay-When-Paid vs. Pay-If-Paid: Critical Difference
I can't overstate how important this distinction is.
A "pay-when-paid" clause says the contractor will pay you when they get paid. Courts generally interpret this as establishing timing, not a condition. If the GC never gets paid because of something unrelated to your work, most courts say you're still entitled to payment — just with a reasonable delay.
A "pay-if-paid" clause is nastier. It says you only get paid if the contractor gets paid. Period. In states that enforce these clauses, if the owner goes bankrupt and never pays the GC, you might be out of luck.
Here's the good news: many states have banned or severely limited "pay-if-paid" clauses. States like California, New York, and North Carolina won't enforce them. Other states like Texas require very specific contract language for them to be valid.
Always check your state's stance on "pay-if-paid" before signing any contract.
What to Do When Payment is Late
Okay, so you know the deadline and the GC has blown past it. What now?
Step 1: Document Everything
Note the date your invoice was submitted, when the GC received payment from the owner (if you can find out), and every day that passes beyond the deadline.
Step 2: Send a Written Demand
Reference the specific state prompt payment law. State the amount owed, the deadline that was missed, and the interest now accruing. Be professional but firm.
Step 3: Calculate Your Interest
Using the state-mandated interest rate, calculate what you're owed. Include this in your demand letter. Let them see the number growing.
Step 4: Escalate if Necessary
If the written demand doesn't work, consider filing a mechanics lien (if you're still within the deadline), contacting a construction attorney, or pursuing mediation or arbitration.
Calculating Interest on Late Payments
Let's do some math. Say you're owed $50,000 in Florida, and payment is 60 days late.
Florida's rate is 1% per month. That's $500 per month in interest. Over 60 days (2 months), you're owed $1,000 in interest on top of your $50,000.
Some states compound this interest monthly. Others calculate it daily. Either way, it adds up fast — which is exactly the point. These laws are designed to make prompt payment more attractive than slow payment.
Public Projects vs. Private Projects
The rules often differ depending on whether you're working on a public or private project.
Public projects (federal, state, municipal) typically have stricter payment timelines and easier remedies. The Miller Act (federal) and "Little Miller Acts" (state) provide payment bond protection that doesn't exist on private work.
Private projects rely more heavily on mechanics lien rights. The timelines are often longer, and the burden of enforcement falls more squarely on you.
Know which type of project you're on before you need the information.
What GCs Don't Want You to Know
General contractors often hope subcontractors don't know their rights. They might tell you payment timelines are "standard practice" when they're actually violating state law. Or they'll include contract language that tries to waive your prompt payment rights — which is illegal in many states.
Here's the reality: GCs who consistently pay late are banking on your ignorance or your fear of confrontation. Don't let them.
The subcontractors who get paid fastest are the ones who know their rights and aren't afraid to reference them professionally. A simple line like "Per [state] Prompt Payment Act, interest will begin accruing on [date]" often accelerates payment dramatically.
How SubPaid Helps Track Payment Deadlines
One of the hardest parts of enforcing prompt payment rights is simply tracking all the deadlines. Between different projects in different states with different payment terms, it gets complicated fast.
That's one reason we built SubPaid with automatic payment tracking and deadline alerts. The system knows your contract terms, knows your state's laws, and tells you exactly when payment is due and when you should escalate.
It's like having a payment watchdog that never sleeps.
Frequently Asked Questions
Do prompt payment laws apply to all construction projects?
Most states have different rules for public versus private projects. Some only cover public work. Check your specific state's law to understand what's covered.
Can a contract waive my prompt payment rights?
In many states, contract provisions that waive prompt payment rights are void and unenforceable. However, this varies by state. Get legal advice before assuming any waiver is invalid.
What if the GC claims the owner hasn't paid them?
In most states, "pay-when-paid" only delays your payment — it doesn't eliminate it. The GC typically has obligations to pursue the owner and keep you informed. Document everything.
How do I find my state's specific prompt payment law?
Search "[your state] construction prompt payment act" or consult with a local construction attorney. These laws are typically found in the state's commercial code or public contracts code.
Is it worth pursuing small late payment amounts?
Absolutely. Even $500 in interest adds up across multiple invoices. More importantly, enforcing your rights sends a message that you won't tolerate late payment — which improves future behavior.