It seems like something is always under construction in Florida. If you’re a contractor, you know about the challenges of working in this field of work—especially when it comes to getting paid for the work you’ve done. Whether you’re a contractor, a subcontractor, or supplier, you work hard for your money and deserve to be compensated to keep your business running and your employees paid. That’s why we’ve put together some guidelines for the different procedures you need to follow to avoid getting ignored by a customer in Southwest Florida, whether it be a commercial client or a homeowner.
The Florida Prompt Payment Act—This state legislation is intended to ensure protections for contractors, subcontractors, and suppliers so that they receive timely payments for completed work. Technically, the Prompt Payment Act involves three different statutes, pertaining to private jobs, projects for the state government of Florida, and projects for local governments within the state.
Payment for private projects – After a contractor has completed a construction project and upheld the terms of its contract, the owner of the property receives a request for payment. Under the provisions of The Florida Prompt Payment Act, the owner must provide payment within 14 days once that request is received. That timeline can be modified, depending on the terms of the contract between the owner and the contractor; for example, full payment could take longer to be issued if the contract calls for installment payments to be made.
Prime contractors and their subcontractors— Prime contractors and their subcontractors— If you are a contractor who regularly works with subcontractors and suppliers, you are subject to the provisions of the Florida Prompt Payment Act. Once you, the prime contractor, have been compensated, any subcontractors or suppliers need to be paid within 30 days of either when payment became due after the labor or materials they contributed, or after the prime contractor received a request for payment. Whichever of those dates is later dictates the timeline to which you are held. In the event of a late payment or incomplete payment, any remaining balance is subject to interest at a rate of 4.25% (as of July 1, 2021). If payment is still not received and the matter goes to the courts or arbitration, then the party that loses the dispute may also have to pay the winning party’s attorney fees.
Payment for public projects – As a contractor, have you been working on public projects which require being paid by the state or local government entities? Construction projects for state and local governments are subject to a different set of terms than those terms for private homeowners or even commercial construction projects. And they fall under two different statutes. State projects fall under The Florida Prompt Payment Act, but local public jobs are subject to Chapter 218 titled Local Government Prompt Payment Act. For state projects, full payment is due 30 days after the state receives a request for payment. Any local public projects—defined as being done for a municipal government, county government, school board, or school district—must have full payment made to the prime contractor within 25 days after the final invoice has been approved. The timeline shrinks to 20 days if there is no need to approve the final invoice.
Department of Transportation Projects—There’s another category of public projects in the Florida Prompt Payment Act and it pertains to work done for the Department of Transportation. On these jobs, final payment must be made to the prime contractor within 74 days of the acceptance of the final invoice.
Paying Your Subcontractors for Public Projects—On any type of public project, after you, the prime contractor, has received payment, you have 10 days to pay any subcontractors. In cases of late or incomplete payments, interest builds at 1% per month until full payment of the debt has been made. The attorney fee stipulation pertains to disputes between contractors and their subcontractors or suppliers. If you need assistance with a construction contract contact Brian Zinn at ZinnLaw for a consultation.