What to know about Ohio’s prompt payment law as a subcontractor

| Jul 28, 2020 | Business Litigation |

When you make your living as a subcontractor, you may have firsthand knowledge that receiving payment on time is not always easy. Often, subcontractors find themselves waiting for higher-tier contractors to pay them for work they perform, and this has the potential to take a serious financial toll.

Per the Ohio Revised Code, you may have recourse available to you when a contractor working above you fails to pay you within a timely manner. The state of Ohio recognizes something called the Prompt Payment Act, which seeks to help people facing the same circumstances collect a payment within a reasonable timeframe.

The Prompt Payment Act

So, how does Ohio’s Prompt Payment Act help you? The act, which applies to private as well as public projects, gives contractors an incentive to pay subcontractors working underneath them within a specific timeframe after receiving payment from the property owner.

More specifically, the Prompt Payment Act dictates that a contractor must pay you for subcontracting work within 10 days of the date he or she receives payment from the property owner.

Penalties for noncompliance

If a contractor breaks the terms of the Prompt Payment Act, he or she may face steep penalties. If the contractor fails to pay you within 10 days of receipt of payment from the property owner, he or she must also pay interest on the balance due. If 30 days pass and you still receive nothing, you may file a civil lawsuit against the contractor in an effort to collect what he or she owes you.

Find more about collecting what others owe you on our webpage.