Prompt payment statutes are laws that require the payment of contractors and subcontractors within a certain period of time, and prescribe interest and penalties for late payments. In some states these laws only apply to public works construction projects that are funded by the government—and sometimes only to public works projects over a certain dollar amount. There is also a federal Prompt Payment Act for federal construction projects.
In Maine, prompt payment statutes are designed to ensure that contractors and subcontractors are paid in a timely manner for their work on construction projects. Maine's prompt payment laws apply to both private and public construction projects. Under Maine law, payments to contractors on private projects are typically due within 20 days after the end of the billing period, unless a different timeframe is agreed upon in the contract. For public projects, the payment to the contractor is due within 30 days after the approval of the invoice. Subcontractors must be paid within 7 days of the contractor receiving payment. If payments are not made within these timeframes, interest may accrue on the unpaid amount at a rate specified by the statute. The Maine Prompt Payment Act does not set a minimum project amount for these rules to apply. For federal construction projects, the Federal Prompt Payment Act requires agencies to pay contractors within a certain period of time after receiving an invoice and mandates interest on late payments.