We take on a lot of construction law cases at ZinnLaw, and here in Florida there’s a lot of construction going on all the time. We know very well about the challenges of working as a contractor in this state—and one of the biggest challenges is getting paid in a timely manner for the construction work you’ve done. We know you work hard, and it doesn’t matter whether you are a contractor, a subcontractor, or a supplier of construction materials, you deserve to be paid for the work you do in order to keep your employees paid, and your business running. Whether you are doing work for a homeowner or a commercial client, in Southwest Florida there are procedures you need to follow in order to meet the requirements of the Florida Prompt Payment Act when filing a claim of nonpayment. That’s why we’re providing you with some guidelines to follow.
What is The Florida Prompt Payment Act?
This state legislation involves several different statues that depend on the category of construction project you are working on whether it is construction for the private sector either homeowners or commercial properties; public projects for local government entities like cities or counties; or Florida state government contracts. These statues were created to ensure that contractors, subcontractors and suppliers receive timely payments for properly completed work.
Payment for private projects – As a contractor, if you’ve completed a construction project and upheld the terms of that contract, you should send the owner of the property an invoice or request for payment. According to the terms of The Florida Prompt Payment Act, the owner must pay that invoice within 14 days of receiving the request. However, that timeline can be modified if the terms of the contract you both signed spell it out differently. An example of that may be if your contract provided terms that call for payments to be made in specific installment amounts over time.
Payment for public projects – When it comes to working on public projects for your local government or state government, the payment terms are different than for private projects, including commercial construction projects. In fact, terms for local government projects fall under a different statute than state public projects. Local public projects are defined as construction being done for county governments, municipal governments and school boards or school districts. These types of local public projects fall under the Local Government Prompt Payment Act, which states that full payment must be made to the prime contractor within 25 days after the final invoice has been approved. If there’s no need to approve the final invoice, the act states payment must be made within 20 days. All state public construction projects still fall under The Florida Prompt Payment Act, which states that full payment is due 30 days after the state receives the request for payment invoice.
Payment for Department of Transportation projects— Projects completed for the state Department of Transportation fall within another category of the Florida Prompt Payment Act. For those projects, the final payment must be made to the prime contractor within 74 days of acceptance of the final invoice.
Payment to subcontractors from their prime contractor for private projects— Many contractors hire subcontractors to complete the projects they are working on, and if you’ve done that, you are also subject to the provision of the Florida Prompt Payment Act. Once you’ve been compensated as the prime contractor on a projects, you need to pay your subcontractors and suppliers either within 30 days after you’ve received payment or within 30 days after the labor is complete or the materials delivered. The timeline to which you are held is dictated by whichever of those two dates is later. As of July 2021, the Act also provides for an additional interest rate of 4.25% to be paid on the remaining balance in the event of late or incomplete payment. If, as a prime contractor you still don’t provide payment to your subcontractors and they take the matter to court or to arbitration, the losing party may also have to pay the winning party’s attorney fees.
Payment to your subcontractors for public projects—As a prime contractor for a public project, you have 10 days to pay your subcontractors after you’ve received payment. The Florida Prompt Payment Act builds in an interest rate of 1% per month for late or incomplete payments until full payment of the debt has been made.
The Construction Contract Prompt Payment Act
If you’ve worked on a public project and haven’t been paid or payment is late, there is another Act a suit can be filed under, The Construction Contract Prompt Payment Act. This act states that any overdue payment starts accruing interest following the 15th day it is late or goes unpaid. When the project you worked on was a public project, there are a few more logistical hurdles to deal with when pursuing payment legally, but it begins with filing a complaint.
Here’s the information we will need to file the complaint:
- You need to provide us with the contract which should stipulate you are providing labor and/or materials to improve a real property
- We will need a statement that labor and materials were provided in accordance with terms of the contract and a full description of said labor and/or materials.
- Provide us with the total price of the contract, as well as with the amount of money you’ve received if any
- You need to provide proof of the amount of money still unpaid, along with a statement that the money has been due for more than 30 days.
After we’ve filed the complaint, the case will go to court for an evidentiary hearing. This should be done within 15 days of when the other party receives written notice of the complaint. There will be a presiding judge who will review evidence from both parties, and make a decision, in an abbreviated version of the trial process. Once we’ve won the case, resolution could include a temporary injuction, an accounting of the disputed payment or any one of a number of remedies the judge finds appropriate to resolve the matter and render payment.
In What Cases Would Withholding Payment Be Deemed Appropriate in Court?
Whether your payment is being withheld by a private client, a government entity or a primary contractor, there may be cases where a judge will find in their favor. There are typically three reasons a judge will find in favor of withholding payment:
- Improper pay application, this may be an issue with the invoice or written request.
- A bona fide dispute over the amount of money owed or the work performed on the project.
- A material breach of contract, which is defined as something that renders the written agreement “irreparably broken,”
Payment for labor or materials that were furnished for the project and are not in dispute cannot be withheld unless the contract states otherwise. A payor may only withhold the amount of payment that is in question in the dispute.